Quote of the day

“I find economics increasingly satisfactory, and I think I am rather good at it.”– John Maynard Keynes

Thursday 24 January 2019

Article that identifies different attempts to help the UK's poorer regions

Clare Foges in The Times; starts on Brexit, but stick with it - some very useful material on problems with helping the regions.

Repetition is the mother of conviction. Repeat something often enough and we believe it to be unquestionably true. So it is with the narrative that Brexit is down, in large part, to a high-handed and callous establishment’s neglect of the “left behind”. Those in poor northern constituencies and bleak coastal towns were left trailing in the gold-flecked dust thrown up by the golden chariots that bore the wealthy, the Londoners, the elite onwards — throwing back their heads to laugh heartily and pour some more Bolly down their gullets while failing to give a monkey’s about those in their wake.

This theory unites Remainers and Leavers, those on the left and right, politicians and commentators. Last week Brexit was described in these pages as “a protest against an elite that had for too long ignored ordinary people”. On the same day a left-leaning paper described the vote as evidence of a split between “a rapacious elite that has plunged Britain into economic and social crisis on one hand, and a majority that suffers the consequences on the other”.

Different notes struck, but they belong to the same tune: an out-of-touch, negligent establishment is to blame. John Mann, the pro-Leave Labour MP, was playing it in the Commons last week when he roared that his “left-behind” constituents had voted to leave the EU because “we’ve not had our fair share”.

And so it goes on. We are told endlessly that Brexit was the establishment’s comeuppance for ignoring the poorest. We are told that it is a wake-up call to Westminster finally to take seriously the concerns of those in Wakefield and Wigan. Those peddling these lines may feel that they are being progressive for empathising with the grievances and anger of the “left behind”, but they are doing our fractured country no favours by inflaming grievance and amplifying anger. What is irresponsible is the blithe assertion, made over and over again, that the poorest have suffered and the deindustrialised towns have been shuttered not because of globalisation or automation but because those in government sat on their hands.

Of course there is serious poverty and inequality in our country, but over the past 20 years in particular governments have tried a thousand different policies to reduce them. There was New Labour’s plethora of social programmes, from the national minimum wage to Sure Start. These were followed by the Conservatives’ national living wage, the pupil premium for schools in deprived areas and the triple lock on pensions.

When George Osborne was the Chancellor he got more tax out of the rich than any of his predecessors, with the wealthiest 1 per cent paying 27 per cent of all income tax. Overall, the tax burden on the wealthy has trebled since the Seventies — all while the establishment has supposedly been rigging the system against the poorest.

“Left-behind” areas have been targeted by myriad regeneration schemes. Labour’s Regional Development Agencies were created to decentralise economic decision-making. The coalition government’s Regional Growth Fund granted billions to create jobs outside the southeast. There have been countless initiatives like the current Coastal Communities Fund, which gives dollops of money to struggling seaside towns. Say what you like about the northern powerhouse, but it showed serious intent to counterbalance London’s power.

Working in No 10, I saw that the desire to rebalance the economy is the obsession of policy wonks and politicians. They are not sitting in meetings glorying in the capital’s hegemony but wondering how to attract investment to the Midlands and the north.

The point is that governments of all colours have tried hard to bring economic life to the “left-behind” towns, but often they are pushing water uphill. The age of heavy industry is over. The jobs have gone overseas. The places are hollowed out. Internet shopping and out-of-town supermarkets have killed their high streets. Ambition is dead. Foreign investment is not flooding in. No sensible government wants simply to pump public money into these places to create Potemkin villages where most people are dependants on the state and no real wealth is created. They want regeneration that is real and sustainable. Achieving that is hard and sometimes, sadly, impossible.

I don’t deny that the Brexit vote may have been driven in part by resentment. When you know that you are on the lower rungs of a socio-economic ladder that reaches, at its heights, into the realm of millionaires and sports cars and Maldivian holidays, you may well feel resentful. It must be profoundly demoralising to see swathes of your countrymen and women enjoying seemingly easy success while you struggle. Yet here is the crucial point: just because people have felt cruelly neglected by the powers that be, it doesn’t mean that they actually were.

By perpetuating this narrative of a high-handed establishment, otherwise thoughtful politicians and commentators are not only stoking public anger — of the kind we have seen so hatefully displayed outside parliament — they are implying something dangerous. They are suggesting that in the right hands, and with enough political will, there would be no more left-behind people or places.

With a more benign and interventionist establishment at the helm, the taxes of rich people could be spread thickly all over the country with no fear that wealth will flee; billions could be borrowed for major infrastructure projects with no damage to our economy; the streets of Grimsby and Oldham would be paved with gold. By giving this impression, we are inviting people to vote for Jeremy Corbyn and his fantasy economics.

This column is not a suggestion to throw our hands up and admit defeat at the damaging chasm between the haves and have-nots. More should be done: mass house building, improving the road and rail network the length of the country, pumping money into famished local government coffers, renewing the drive to give every child in the country a first-class education. But let us not mistake a failure to revive left-behind areas with wilful neglect. For the most part the much-traduced “establishment” has been well-meaning and hardworking in pursuit of a fairer country — but alas, it holds no magic wands.

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