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The only way to overcome the UK’s regional imbalances is to have a massive re-organisation of local and national governance

August 30, 2014

First time YDM blogger, Wayne Chadburn, argues that the only way to overcome the UK’s regional imbalances is to have a massive re-organisation of local and national governance.

Wayne Chadburn writes:

If I was being flippant, I could suggest that if Kim Jong Il was the British Prime Minister he would feel relatively comfortable at the way power and influence is concentrated in Westminster.  The UK is one of the most centralised countries in the developed world.  Decision making at nearly every level lies in the hands of a small elite within Westminster – an elite which, more and more, seem to come from the same socio-economic background.  This would not be a major issue if each of the regions of the UK had an equal share in the economic spoils.  However, as we know, as well as being a highly centralised country, the UK is also one of the most regionally imbalanced economies in the developed world.

To try to demonstrate the regional imbalance that exists within the UK let us consider one of the measures that economists use to assess the value (and hence power and influence) of a region’s economy – gross value added (GVA).  GVA per capita gives a good indication of the value of each region’s economy.  As it is stated per capita, it accounts for differing populations in each of the UK’s regions.  In London, the GVA per capita is in excess of £37,000.  The only other region which has a figure above £20,000 is the South East which is in excess of £23,000.  Yorkshire and the Humber’s figure is only £17,500 – less than half that of London.

Is this because those in Yorkshire, the North East or South West are lazier or more inefficient than our London brethren? No!  Whilst the capital of every country should expect to lead the rest of the country economically, the degree with which our capital dominates is unprecedented.  The reason is not laziness nor is it lack of potential.  It is, to a large extent, because decision making at Westminster is focused primarily on what is best for the economy of London with the hope that trickle-down economics will ensure that regions like Yorkshire will get some of the tit-bits to fall from London’s table.  To arrest this growing inequality – without detracting from the strength of the London economy – radical and urgent action is needed so that important decisions are made not just to benefit London, but to benefit the whole UK.  The only way this can happen successfully is to allow each region the power to decide and direct its own economic strategy, building on its strengths and developing its weaknesses.

Attempts by government in the near past and present have all failed to address the crux of the problem – a transfer of power from Westminster to the regions. The last government put in place the QUANGO regional development agencies.  These were abolished by the current coalition government and in their place are smaller scale Local Enterprise Partnerships and City Regions.  Labour have said that if they return to power in 2015, they will build upon these and devolve an extra £4bn to the City Regions – but they will have no democratic mandate and will lay at the whims of changes in the future composition of Westminster.

An English parliament has been mooted by some as an answer but how would this be any different to the current status quo?  Whether they based the parliament in London, Leeds or Louth the central problem would still remain – decision making would still be based on the dominant needs of London first and the rest later.  The Lib Dems have probably come further along the road by offering ‘devolution on demand’ where a single council or councils comprising more than a million people would be able to apply to have powers devolved such as those enjoyed by the Welsh assembly.

To me as a current Lib Dem supporter, this is too weak and doesn’t go far enough.  Firstly, the threshold to this happening would be difficult to overcome – at least a two-thirds majority on each council involved.  Secondly, imagine the ridiculous situation where a city, say, has no devolved powers, but the surrounding area does.  It could lead to an even more confusing patchwork of devolved authorities and areas with centralised control.  No, we need to be far braver and more radical.

We need a massive re-organisation of local and national governance.  Regional assemblies of the kind promoted by the last Labour government are not the answer.  These were just talking shops which added an extra level of local governance with no real power exchange.  No, regional assemblies will work if they are large enough to have economic muscle but not too large that they are dominated by one area, as currently happens.  They should have real and meaningful powers – similar to those given to currently to Scotland, potentially going as far as scrapping VAT and introducing a local sales tax, levied by the region to increase each regions self sufficiency.  Clearly the devolution of many powers will cut the influence of Westminster and the number of MPs sent there should be cut accordingly, helping to pay for regional government.  Lower down, district, unitary, city, metropolitan and county councils should be abolished offering yet more financial savings.  Many of their powers would lie, along with those devolved from Westminster, with the regional assemblies.  Other more local responsibilities could be devolved down to parish and town councils.  This would produce a simpler and potentially cheaper (or at least cost neutral) governance.

Some of the most successful economies on Earth use this much more federal system – the USA, Canada and Germany to name just three – why can’t we?  The recent Grand Depart of the Tour de France showed Yorkshire in all its glory.  It also, I believe, generated a confidence in what Yorkshire can achieve which hasn’t been seen before, certainly in my lifetime.  I have always been proud to be from Yorkshire, but never before have I felt so sure that Yorkshire can do so much more for itself if it is allowed the power to do it.  I know I am not alone in this and I feel sure similar sentiments would be echoed across the UK.

Wayne Chadburn (@waynechadburn) is a Liberal Democrat member from Penistone.

 

 

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5 Comments
  1. Yorkshire Nige permalink

    Fantastic piece, Wayne, summing up the problems and the solution exactly!

  2. afiq permalink

    True enough. Look at Germany, all their big companies are spread around different cities. Berlin, Munich, Frankfurt, Stuttgart all have multiple global 500 headquartered companies in their cities, while if you look at United Kingdom, almost every big companies are headquartered in London. France is even worse. Lyon is doing just ok, while Marseille is a dead city, unemployment is very2 high over there. Also German have a much2 lower cost of living compared to virtually any other European cities. Their property prices are very low. I think its because people are not scrambled into just one cities. When you scrambled the majority of your total population into a small area land, land scarcity will occurs, thus creating a higher prices for property. This is exactly what is happening in London and Paris. Time for them to spread economic activity beyond London and Paris.

    • You make some great points – many thanks. It’s true to say that London creates a huge imbalance in UK economy and society. House prices is just one example. A report within the last week showed that the average house price in London and the south-east is now double that compared to Yorkshire (£300,000 compared to £150,000). Have you thought about joining us btw? You’d be very welcome.

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