London is important, but it can’t go it alone

The UK is making schoolboy errors with its economic development policy.

Ed Cox is director of IPPR North

In schoolboy rugby you often come across teams that are built around one giant individual. For the first 20 minutes all goes to plan, they give the ball to the giant he rumbles down the pitch and they take an early lead.

But as the game wears on, the big kid gets tired, the opposition realise he’s a one-trick pony their success runs out of steam.

With no Plan B, the opponents’ strength in depth starts to tell, their ability to pass the ball around and to win possession at the breakdowns makes all the difference and by the end of the match they wonder how they’d ever conceded the early lead.

While Evan Davis is talking ‘nightclub economics‘, the academic evidence shows us that the UK is making schoolboy errors with its economic development policy. As China, Germany, France and Russia are busy investing in their mid-sized cities – connecting them to one another and into global markets – we keep handing hospital passes to the giant kid in the hope he won’t keep toppling over.

But all the evidence shows he’s overheated and he will.

There is no question London dominates the UK economy, accounting for one fifth of its wealth and with productivity rates that compete with the very best.

But we celebrate this at the expense of our other key players.

England’s 8 core cities make up 27 per cent of England’s wealth with some pretty healthy potential for expansion. The North of England – increasingly the kind of interconnected ‘metro-region’ much celebrated in the US – is twice the size of Scotland and would be the eighth biggest state in the EU were it a country in its own right.

IPPR

Source: ONS Regional Gross Value Added 2013

But we continue to overlook our potential strength in depth. In vital areas like R&D the government spent £1.2bn in London and the South East in 2011, compared to just £83m in the North West – despite its huge strengths in biotech, graphene, advanced manufacturing and creative arts and media.

And we plunge vast resources into mitigating the costs of congestion to keep the capital moving: in the latest National Infrastructure Plan we’re proposing to spend £4893 for every single person in London over the next decade, compared to just £250 per person in the North East.

There’s investing in success, but there’s also hanging out to dry – and that for the only player that boasts a positive balance of trade.

But it’s not just about money. London benefits not so much in its own right but because it’s home to central government.

The powers that the London mayor has over transport and planning and the big investors in his backyard may well be the envy of other cities, but he – along with all the other city leaders – needs more freedom from Whitehall.

Whether it’s skills, innovation, inward investment, transport or housing, too much is tied up at the centre; a fact highlighted by Heseltine in his apparently long-forgotten strategy for more balanced growth but which might still become a mini battleground at the next election as Adonis, Lyons, Leese and Cruddas all set out similar stalls.

So what do we do about the big kid?

Well of course he needs nurturing just like any other. But if we’re building a team that has any hope of surviving longer into the ‘global race’ then we need to lift the pressure, pass it around, connect in other players and build their confidence.

London is an important asset but it can’t go it alone.

One Response to “London is important, but it can’t go it alone”

  1. uglyfatbloke

    And of course we will all get the opportunity – sorry, the obligation – to pay for HS2 which will help to drain money out of the north and into London. Yippee.

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