FORGET city regions and combined authorities, the only way to halt the economic decline of the regions – that’s everywhere apart from London – is to introduce federal states with the power to raise their own funding.
This was the conclusion of Professor Jeff Henderson who last Wednesday afternoon delivered a powerful analysis of the toxic effect that the over-development of the capital has on the rest of the UK.
Speaking at Leeds Metropolitan University, the academic maintained that nothing short of deep economic restructuring is required to rejuvenate the North of England.
“With the sole exception of maybe Japan, Britain has the most centralised state of any major country in the world,” said Prof Henderson, who is an expert in international economic development at Bristol University.
He said tinkering with local government structures will not achieve much as agencies and authorities do not have the capacity to generate their own finance. “Without that, they remain beholden on central government, on bargaining with central government with the funds they need to help drive economic development,” he added. “State financial autonomy is central to the possibility of economic rejuvenation.”
Federal states have the political and constitutional authority to raise finance and engage in meaningful strategic economic planning, said Prof Henderson.
Without this radical approach, the regions will continue to decline as London becomes ever more powerful in political, economic and cultural terms.
It is a compelling argument and one that deserves some consideration, particularly as we are having the wider debate about an independent Scotland.
If it is in Scotland’s best interests to go it alone, might it be in Yorkshire’s too?
n THE chorus for devolution is growing louder by the week. How long before the Westminster Government feels the need to properly address it?
The Sheffield Political Economy Research Institute (SPERI) at Sheffield University publishes a paper today looking at the failure of the UK economy to rebalance towards exports in spite of the depreciation of sterling.
“Sterling depreciated significantly following the financial crisis, and its value has remained low against the euro and the dollar for several years,” says the report.
“Yet, unlike previous episodes of depreciation, this has not resulted in an improved trade balance.
“Depreciation – which has in part been brought about by the quantitative easing programme – represented the ideal opportunity for the UK economy to be rebalanced towards exports and away from domestic consumption.
“It seems, however, that the UK’s deep-rooted economic problems have prevented any such transformation.”
Dr Craig Berry, research associate at SPERI, believes that the Government is concentrating on boosting the London property market rather than rejuvenating manufacturing in the North.
He said the £375bn quantitative easing programme has boosted asset values, largely to the benefit of the City rather than the real economy.
Dr Berry said: “The UK economy is currently experiencing a very strange situation in which the value of the pound is very low, but we’re still importing far more than we export. This is not just a product of the recession, but decades of under-investment in tradable sectors like manufacturing.
“Greater devolution of powers to the UK regions is certainly part of the answer to this problem.
“Regions like Yorkshire should have the capacity and funding to support local industries. At the moment, the UK’s centralised model of economic development is unbalanced and risks recreating another economic crisis.”
It seems unlikely that the Government will act on these rumblings of discontent from the regions. After all, Chancellor George Osborne is presiding over a strong economic recovery.
The Bank of England has raised its GDP growth forecast this year to 3.4 per cent, which would see Britain outpacing the likes of Brazil and Russia, two of the fabled BRIC growth markets.
But Mr Osborne should be aware that not everyone feels as though they are taking part in his recovery, particularly outside London.