A new House of Lords will not be built in York for a simple reason: such an endeavour is replete with political risk for the governing party while unlikely to sway many votes at the next election. Building a fully functioning modern legislature would cost hundreds of millions while paying the expenses of peers between London and York would invite the same ridicule as the European parliament’s daft journeys between Brussels and Strasbourg. Poring over the details of construction costs would be a boon for tabloid journalists but a millstone for the Tories at the next election. And even if it were to happen, it would be a mere token. So what would a real plan to address regional inequality entail?
The scale of the challenge cannot be overstated. The gap between the richest and poorest regions in the UK in 2020 is wider than that between east and west Germany at the time of the fall of the Berlin wall. London is the wealthiest region in northern Europe, while six of the 10 poorest regions are found elsewhere in the UK. Productivity (what each worker produces in an hour) in London and the south-east is 30% higher than every other region of England as well as Wales and Northern Ireland. Scotland does somewhat better – but productivity there is still 20% lower. There are no quick fixes.
Politicians naturally gravitate towards investment in infrastructure. There is no doubt that the disparities in investment between London and the rest of the country are enormous. As more and more infrastructure, from Crossrail to Heathrow, is applied to London’s economy, the gap with the rest of the country grows. Given that London’s productivity is 30% higher than most of the rest of the country, the economic returns from investment will almost always be greater. But such a cost-benefit approach fails adequately to recognise the social and economic costs of inequality. Investment in infrastructure is vital to bring the country together in every sense.
But infrastructure alone is not enough. Better public transport and improved road maintenance would certainly improve the quality of life in the regions and nations of the UK, and thousands of construction jobs would be created at the same time. Yet to close the gap in economic performance, the UK also needs to support new economic activity. That means diversifying the country’s economy, developing the industries of the future and leveraging the know-how locked up in Britain’s world-class universities – which are located across the whole UK. The country needs to embrace a new era of industrialisation, with well paying jobs created outside London and the south-east.
That will require a much more proactive and well-financed industrial strategy that stretches across the country. Even when recent governments have claimed otherwise, they have in fact pursued a narrow industrial strategy. Each of the UK’s most successful sectors – financial services, pharmaceuticals, aerospace and defence, as well as the automotive and creative industries – have been backed by government. From the implicit guarantees given to the banks, to successive prime ministers acting as salespeople for weapons makers, these strongest sectors have been beneficiaries of government intervention. And they are all predominately located in London and the south-east.
The real test of whether Boris Johnson’s government is serious about addressing regional inequality is whether the failed free-market ideology of the 1980s is junked. That means raising public investment to at least the G7 average of 3.5%, embracing a larger role for the state in guiding private investment and abandoning the dogma that the whole UK can prosper with a withering industrial sector across the country made up for by a thriving finance sector in London. With recent noises off from the chancellor about diverging from the EU to pursue a deregulatory agenda, the signs are not promising.
Reversing decades of structural economic decline will not be easy. These kinds of changes are highly complex, and the lead time from intention to impact is decades not years. Starting with an unlikely plan to shift the House of Lords to York is nothing but a waste of precious time. A large majority in parliament and a full parliamentary term ahead may have lulled Johnson into believing that time is on his side. In truth, with rising discontent after a decade of austerity and stagnating living standards, he has no time to spare. In December the voting public demanded change, and many have merely lent the Tories their votes. Expect their patience to wear thin fast.
• Tom Kibasi is a writer and researcher on politics and economics