Jack Hands has worked for the UK Conservative Delegation in the European Parliament and as a researcher to a Conservative MP. He is now a Public Affairs Consultant for Fleishman Hillard.
We need more spending outside of London. It is difficult for anyone who travels occasionally from city to city in Britain to not see the vast disparity between London and non-London life. The divide is not just economic and it is growing rapidly.
England is almost uniquely centralised among comparable countries. 77 per cent of all Government spending comes from Whitehall, and there are very few countries where such a small group of officials control such vast powers over taxation and spend. It is no coincidence then that London, which almost exclusively controls the vast majority of ministerial budgets and the subsequent power which follows, has boomed whilst the rest of the UK is trickling along. The gap between London and the rest growing ostensibly year on year.
A Centre for Cities report found that since 2010, 79 per cent of private sector jobs growth has occurred in London whilst Britain’s next nine largest cities accounted for just 10 per cent of all new private sector jobs created. London has morphed into an economic giant, creating a black hole, sucking in the best talent from the rest of the UK. It now feels less alien to travel from London to other major European capital cities than it does from London to other cities in the UK. This goes beyond being just an economic problem. In the long term, it is Britain’s national identity which is at stake.
Public demand for more powers to our regions is growing, and the Conservative Party needs to be on the front foot on an issue which if it is not now, will become a bigger issue in the coming years as people feel more and more distanced as a result of London’s dominance.
What powers exactly should the regions receive? Boris Johnson argued that council tax, capital gains tax, business rates, the annual tax on developed dwellings and stamp duty should all be raised, levied and kept locally, to give the largest local authorities more control over tax and spend. At the very least, local authorities should be given the powers to fund economic growth projects, in the same way the Mayor of London was able to when he issued a business rate levy to pay for the enormous Crossrail project, the biggest construction site in Europe.
Let’s take corporation tax, which will be lowered to 20 per cent next year, one of the lowest rates in the western world. This is fantastic for business – but what incentives exist for a business to set up in, say, the North East? If local authorities had more power to reduce tax rates in certain sectors they could aim to build hubs of excellence in a range of different sectors, helping to provide well paid, middle income jobs which in turn would help build the local economy.
The Government initially acted fast on this issue, and many of the potential solutions were published in 2012. Lord Heseltine’s ‘No Stone Unturned’ report came up with 89 proposals, with the goal of shifting almost £49 billion over four years from central government to English regions. It was both an incredibly detailed and practical look at how we can rebalance the economy. Take, for example, the suggestion to wield the axe on a wide range of national projects administered in Whitehall, and put up to £70 billion into a “single pot” which local enterprise partnerships can bid for. A radical yet sensible move which would go some way to rebalancing the economy.
Placing more faith in our regions and giving power to our towns and cities should be encouraged. Taking the radical action needed, will require both political courage and faith that local officials can be trusted to spend wisely. This is the party which believes in giving local people a real say, and England, now more than ever before, needs a solution to rejuvenate towns and cities which are struggling to adapt to today’s brave new world.