Jeffrey Henderson: The North must escape from London’s grip to thrive

While we’re still waiting to see the beneficial effects of the economic crumbs from London’s table, we continue to suffer the consequences of the wasting of the North’s manufacturing, technological and skill base – and its prosperity. The question that now urgently confronts us is: what can be done about this?

The fundamental issue is that the North, and in varying degrees every British nation and English region, is in need of structural economic transformation. This is not merely about economic growth, but about how to develop our economy in such a way that it becomes capable of delivering generalised and sustainable prosperity, with low levels of inequality.

This is unlikely to mean the return of textile mills, or of the old style metal industries, but rather of skill and knowledge-based ones associated, perhaps, with bio-technologies, new materials (such as graphene, invented at Manchester University), cutting-edge electronics, low carbon energy, new types of transport equipment etc. The question is, how did we get into the mess we’re in and who is capable of driving the re-structuring process to get us out of it?

Like so many of Britain’s problems, the origins of our current condition emerged long ago. In their book, British Imperialism, 1688-2000, Peter Cain and Tony Hopkins show that from the 18th century through to the 1960s and beyond, the fortunes of London’s economic and political elites were inextricably linked to the Empire. Coming from the same class backgrounds and private schools, they emerged as “gentlemanly capitalists” seeking the quick and easy routes to wealth afforded by the opportunities for financial and commercial speculation within the British Empire. Not for them the hard work of industrial entrepreneurship with its benefits only coming in the longer term. That was for the “strange” people from Newcastle, Leeds, Manchester or Glasgow.

Today, not much seems to have changed. London’s financial institutions (unlike those of Germany, France or Japan) remain wedded to speculative rather than productive investment and to global, rather than British, needs. Their influence over successive governments, of whatever political stripe, has ensured that national economic policy has continued to be predominantly fashioned in their own interests; in the interests, in other words, of London’s internationally- oriented elite groups who continue to thrive on financial and property-market speculation.

With London working to the rhythms of the global, not the national economy, central government has lacked the vision and political will needed to deliver economic re-structuring.

Westminster policy long ago became incompatible with building high performing, skill-intensive manufacturing and related industries – the only ones capable of delivering the high wage, sustainable and egalitarian economies that the North and the other regions need.

Britain has one of the most centralised state systems of any major country in the world. With this has come the concentration of economic, political and cultural power in a single city: London. To develop the vision and political will needed to rejuvenate the North and Britain’s other regions and nations, we cannot rely on Westminster.

We have to take political responsibility for our own back yards. As with Scotland, the English regions, Wales and Northern Ireland need maximum devolution. We need, in other words, the re-formation of the entire British state.

Economic transformation cannot be left to companies responding to market signals. Such signals are currently insufficient to entice private investment into the sorts of industries, research, education and training that will be necessary. Consequently, transformation will require a state capable of working with businesses, trade unions and communities to become a collective industrial entrepreneur. Allied with regional development banks supplying venture capital, it will need to be a state able to raise its own finance and develop the democratic legitimacy, intellectual capacity and political will to engage in strategic economic planning.

Short of a sovereign state, only a regional state that’s part of a federal system (as with the German länder or US states) is able to develop these attributes. The British people need – and deserve – such a federal state.

Jeffrey Henderson is Professor of International Development at the University of Bristol and a member of the Steering Committee of the Hannah Mitchell Foundation, He is speaking today at Leeds Metropolitan University.