Rebalancing the UK economy: results and prospects

John Tomaney Bartlett School of Planning University College London, Based on research being conducted jointly with Andy Pike and Anja McCarthy at Centre for Urban and Regional Development Studies, Newcastle University

Outline

• The nature of the problem • Rebalancing: diagnosis and proposals • Policy and politics: regionalism to localism • Results and prospects

“…we both want to build a new economy from the rubble of the old. We will support sustainable growth and enterprise, balanced across all regions and all industries” (David Cameron, Prime Minister, and Nick Clegg, Deputy Prime Minister, Foreword, in Cabinet Office (2010: 7) The Coalition: Our Programme for Government, Cabinet Office: London).

Rhetorical use of “rebalancing”

• Services to Manufacturing • Consumption to exports • Public to private • South to North

Regional GDP per capita levels, England Standard Statistical Regions, 1871 –2007 Source: Crafts (2005a) and BIS calculations of ONS Regional Accounts

Notes: 1. Estimates of regional GVA are on a workplace basis, where the income of commuters is allocated to their place of work. 2. Following Crafts (2005a) London and the Rest of the South East were combined into one observation for the purposes of calculating the coefficient of variance. 3. The Coefficient of Variation is a measure of dispersion calculated as: Standard Deviation/Mean.

Source: Pike and Tomaney (2010)

Expenditure on Regional Industrial Assistance, 1960-2002

Employment Premiums

2.5

2

Automatic Investment Support Discretionary Assistance

1.5

1 0.5

0 1960 1965 1970 1975 1980 1985 1990 1995 2000

Source: Wren, C. (2005) “Regional grants: Are they worth it?”, Fiscal Studies, 26, 2, 245-75. (Figures are for actual grant payments at constant prices for Great Britain).

Public versus private sector jobs growth 1998-2006 by region

S. Pringle, G. White, R. Pates, J. Cook, V. Seth, R. Beaven, J. Tomaney, P. Marques, and A. Green (2011)

Rebalancing the economy sectorally and spatially: An evidence review Volume 1 – Main report

. London: UK Commission for Employment and Skills

Regional GVA per head

S. Pringle, G. White, R. Pates, J. Cook, V. Seth, R. Beaven, J. Tomaney, P. Marques, and A. Green (2011)

Rebalancing the economy sectorally and spatially: An evidence review Volume 1 – Main report

. London: UK Commission for Employment and Skills

Source: HM Treasury (2010: 13) Spending Review 2010, Cm 7942, HM Treasury: London.

Source: Authors’ elaboration of data in Hooghe, L., G. Marks et al. (2008). “Patterns of Regional Authority”, Regional and Federal Studies, 18, 2-3, 167-181.

“If you want to rebuild a fragile national economy you don’t strangle business with red tape and let bloated regional quangos make all the decisions. Urgent action is needed to rebuild and rebalance local economies…

The solution needs to be local

…By giving up central control we will put democratic accountability back into the local economy making it responsive to the needs of local business and local people” (Eric Pickles quoted in BIS Press Notice, 29 June 2010, BIS: London, emphasis added).

From RDAs to LEPs, 2011 (March) Source: Department for Communities and Local Government

City Mayors

“Elected mayors can provide the strong, visible leadership to help our cities to prosper, attracting investment and jobs from home and abroad. Our greatest cities can benefit from the prestige and international standing a mayor can bring, helping them to achieve their full potential. For Britain to be successful our cities need to be successful.

An elected mayor with a strong voice can seize the opportunities for their city to compete on the world stage

” Source: Greg Clark, Cities Minister, “Mayoral election date confirmed”, Press Release, 9 February 2012, Department for Communities and Local Government, emphasis added

City Deals

“The battle for economic growth - for Britain's future, will be won or lost in our cities…The key to unlocking that potential is a new deal for cities.

Giving cities the powers, control over resources, and funding they need to fire on all cylinders and attract the private sector investment needed to rebalance the economy.

But this revival will depend on all of Britain's cities, not just the few…I am inviting more cities to consider the vision they have for their community and the deal they need to make it happen. We are turning the established order on its head and cities must come to Whitehall not as supplicants, as in the past, but as equal participants in an open and constructive deal making process” Source: Greg Clark, Cities Minister, “’City deals’ to be widened across England”, Press Release, 23 January 2012, Department for Communities and Local Government, emphasis added

Mayoral referendums, May 3

rd

2012

City Birmingham Bradford Bristol Coventry Doncaster * Leeds Manchester Newcastle upon Tyne Nottingham Sheffield Wakefield Result NO NO YES NO YES NO NO NO NO NO NO Yes % 42.0

44.9

53.3

36.4

62.0

36.7

46.8

38.1

42.5

35.0

37.8

No % 58.0

55.1

46.7

63.6

38.0

63.3

53.2

61.9

57.5

65.0

62.2

* Referendum to decide on whether to retain or abolish existing directly-elected mayor.

Source: author’s research

Dorling, D. and Hennig, B. D. (2010). In Focus: General Election 2010.

Political Insight

1 (2): 72.

Results and prospects

• Accumulated and entrenched regional disparities • Long history of interventions – but no long-term strategies • (Contradictory) rhetoric of “rebalancing” • Comparatively weak local and regional institutions characterised by cycles of instability • Disputes about appropriate scale • Worrying trends