Call for a Northern House of Lords

A study by the liberal think-tank Civitas published this morning calls for a “radical decentralisation” of power and culture away from London to help put Britain’s economy on a stable footing for the decades to come.

In addition to moving major social and political institutions out of the capital and into Northern cities, it calls for new freedoms for councils up and down the country to raise taxes and borrow money in order to invest in local infrastructure and housing.

It also backs Labour leader Ed Miliband’s call for the creation of a network of regional banks akin to the German Sparkassen, lending money to small businesses at a grassroots level.

The pamphlet, written by Leeds-born academic Patrick Diamond, a Downing Street advisor during the New Labour years, concludes that giving sweeping powers to the English regions is the only way to secure sustainable economic growth over the longer term.

“The absence of political decentralisation within England has to be addressed,” Mr Diamond writes. “Democratically-elected local leaders need the levers and powers to play a much greater role in driving economic growth.”

The coalition has repeatedly committed itself to so-called ‘localism’, offering ‘City Deal’ devolution packages to large urban areas such as the Leeds and Sheffield city regions to provide new control over local infrastructure investment and skills training.

Ministers will also make a further £2bn-a-year available to local areas to spend from 2015, following recommendations by Tory peer Lord Heseltine.

But the Civitas report goes much further, suggesting councils be allowed genuine freedom over tax-and-spend and calling for a new Whitehall department specifically to move powers and institutions out of London.

“Create an economic ‘super-ministry’ at the heart of Whitehall, combining the Department of Business, the Department of Communities and core Treasury functions, with a specific remit to decentralise and devolve economic power away from central Government,” Mr Diamond recommends.

“Key public institutions ought to be dispersed outside London: for example, the House of Lords ought to have a regional base; cultural institutions such as the Royal Opera House and the British Museum ought to be re-located in Northern cities.”

Mr Diamond accepts New Labour did not do enough to rebalance the economy during its 13 years in power, but warns the public spending debate since 2010 is still failing to address the more fundamental issues facing the British economy.

“What has been lost in the ‘stimulus-vs-austerity’ din has been the debate the country really needs about how we secure economic growth - not over the next five years, but over the next 50,” said Daniel Bentley of Civitas.

Mr Bentley said the economy has become “too reliant” on financial services and on London and the South East, adding: “Growth achieved without addressing these imbalances is unsustainable.”

And he said there was “no reason” why Civitas’s proposals should not appeal to all three main political parties.

“The decentralisation of power to local communities, greater pluralism in the economy, incentivising long-term investment, promoting small businesses... These are objectives that should be shared by policymakers across the spectrum,” he said.