TWO sharply contrasting economic trends occurred during the 1980s when the North-South divide became so pronounced. The UK manufacturing base shrank severely, but at the same time, the City of London, benefitting from deregulation and as a participant in the Single Market, expanded dramatically towards global financial leadership.
So, as steel, coal mining and textiles were in crisis in the North of England, the South boomed. Very little changed until the victory of Labour in 1997, when regional development agencies were set up in England. These statutory bodies received substantial funds and, in the North at any rate, were relatively successful.
When the Conservatives won in 2010, just after the great banking crisis, they did away with the RDAs when they should have been strengthening them. They were replaced with 39 Local Enterprise Partnerships with no statutory powers. While LEPS are better than nothing, they have little influence on regional development compared with the RDAs. I should know – I was a board member of Yorkshire Forward and am chairman of the Humber LEP.
Because of the banking crisis, the gap between the North and South has once again widened enormously, although Manchester and Leeds, with a strong financial services presence, have been relatively successful.
Now the main Northern newspapers are pressing for more proactive policies for the region, which I entirely support. Learning from the past, the first priority must be to establish structures which have democratic legitimacy.
As an opponent of referendums, I would suggest that there should be a Minister for the North – democratically chosen by all the Northern MPs.
The Minister would agree a formula for fiscal transfer to the North with the Treasury, as occurs with the Celtic nations. The economic and social strategy would be developed, supported by these funds.
Responsibilities would include investment in infrastructure and supporting foreign direct investment. The Minister would be able to raise external funding as well as controlling local taxation such as business rates.
Responsibility for education would be devolved, as would many aspects of the NHS, as is happening in Manchester.
Planning would be another responsibility as would be agriculture. Many Home Office responsibilities, including the police, would be transferred.
The big banks would be asked to develop regional structures which could make serious investment decisions and be free from the dead hand of central control.
Three regions of the North would be established – the North West, Yorkshire and the Humber and Tyne Tees – with a remit similar to existing Combined Authorities. The heads of the regions, elected by their local authorities, would form a cabinet under the Minister. In addition there would be a non-voting presence from business and the universities.
There are some key prerequisites if this structure is to succeed. First there must be clear accountability between the regional Minister’s responsibilities and those which will remain in Westminister.
The latter would still be responsible for security, foreign policy. central taxation and the national social services regimes, such as benefits and the state pension.
Next, the set-up must attract public engagement, particularly from the business community. There must be no duplication of work between central, regional and local government.
The main areas of concern would be the relationship between the regional and central government, tribalism within the regions and, of course, the quality of leadership throughout the North.
One of the reasons why the leadership of local government is patchy is that the powers delegated to them are so limited that talented people are not attracted to them. In the pre-war years where real power was delegated to the local authorities, the latter were able to recruit talented leadership. This proposal passes real power to a regional structure which, in turn, should attract the right people.
The Minister for the North is the key to success. My own feeling is that he or she should be an MP, and attend Cabinet meetings when regional issues are on the agenda. The vast majority of ministerial time would be spent in the region. The Minister would be directly accountable to the Northern MPs.
If such a regional structure, responsible for 17-18 million people, is successful, it could pave the way for devolution to other English mega-regions – an extended London, the Midlands and the South West – and put an end to the biggest institutional flaw in England: overcentralisation towards Whitehall.
Lord Haskins of Skidby is chair of the Humber LEP. He previously headed Northern Foods.