Ryan Bourne: To help grow prosperity, let’s focus on people and not places – such as towns

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Stian Westlake describes it as the “Strange Death of Tory Economic Thinking”. Conservatives have ceased telling an economic story about why they should govern, and how. Sure, there’s still the odd infrastructure announcement, or tax change. But, since Theresa May became leader, the governing party has shirked articulating a grand economic narrative for its actions.

This is striking and problematic. From Macmillan to Thatcherism to deficit reduction, the party’s success has coincided with having clear economic agendas, gaining credibility for taking tough decisions in delivering a shared goal. But, arguably, deficit reduction masked a secular decline in interest in economics. David Cameron and George Osborne, remember, wanted to move on to social and environmental issues until the financial crisis and its aftermath slapped them in the face.

Now, with the deficit down, economics is in the back seat. Fiscal events are low key and economic advisors back room. To the extent the dismal science is discussed, it’s as a means to other ends, or a genuflect to “Karaoke Thatcherism.”

In short, I think Westlake is right: the Tories do not have an economic story and, post-Brexit, it would be desirable if they did. So we should thank both him and Sam Bowman (formerly of the Adam Smith Institute), who have attempted to fill the vacuum. In a rich and interesting new paper, the pair set out to diagnose our key economic ailments and develop a Conservative-friendly narrative and policy platform to ameliorate them, even suggesting reform of the Right’s institutions and think-tanks in pursuit of the goals.

Such an effort deserves to be taken seriously, though not everyone will agree with their starting premises. It is assumed, for example, that Conservatives believe in markets and want to maintain fiscal discipline, which bridles against recent musings from Onward or thinkers such as David Skelton.

But, again, the key economic problem they identify is incontrovertible: poor economic growth. Weak productivity improvements since the crash have been both politically and economically toxic, lowering wages, investment returns, and necessitating more austerity to get the public finances in structural order. And the nature of modern innovation, arising from clusters and intangible assets, means that growth that is experienced isn’t always broadly shared.

Their agenda’s aim then is to achieve both concurrently: maximize the potential of the economy by taking policy steps on planning, tax policy, infrastructure, and devolution, to increase investment levels, allow successful cities and towns to grow, and to connect “left behind” places to local growth spots through good infrastructure. None of their ideas are crazy. Indeed, I would support the vast majority of them.

And yet, something bothered me about their narrative. In line with the current zeitgeist, they too discuss “places” and their potential, as if towns and cities are autonomous beings. My fear is this focus – shared by those who want to regenerate “left behind” areas – creates unrealistic expectations about what policies can achieve in a way that undermines a pro-market agenda. Importantly, it warps what we should really care about: “left behind” people, not left behind places.

A people-centred narrative recognises that just as firms fail in the face of changing consumer demands and global trends, so high streets, towns, cities, and even regions will shrink too. As Tim Leunig once said, coastal
and river cities that developed and thrived in a heavy manufacturing, maritime nineteenth century world might not be best placed to flourish in a service sector era of air and rail.

A true pro-market policy agenda would admit -and that’s ok. Or at least, it should be, provided we understand that raising growth and sharing prosperity requires adaptation, not regeneration. That means removing barriers for people either to move to new opportunities or have control to adapt their situations to ever-changing circumstances. This might sound Tebbit-like (“get on your bike”), but really it’s just saying policy must work with market signals, not against them.

Today though, interventions actively work in a sort of one-two-three punch against inclusive growth and adjustment. First, we constrain the growth of flourishing cities. Tight land use planning laws around London, Oxford, and Cambridge contribute to very high rents and house prices, and prevent these places benefiting from growing to obtain thicker agglomeration effects.

This contributes to the “left behind” scandal, but not in the way people imagine. When rents and house prices are higher in London and the South East and we subsidse home ownership or council housing elsewhere, it’s low productivity workers from poor regions that find it most difficult to move given housing cost differentials. As a result, they get locked into poorer cities and towns that would otherwise shrink further. That’s why Burnley, Hull and Stoke are the most egalitarian cities in the country, whereas prosperous London, Cambridge and Oxford are the most unequal, even as inequality between regions has intensified.

Having restricted people’s mobility through bad housing policy, we then impose one-size-fits-all solutions and subsidies which dampen market signals further. National minimum wages, fiscal transfers, national pay bargaining, and more, might be designed to alleviate hardship, but they deter poorer regions from attracting new businesses and industries by trading on their market cost advantages. Then, to top that off, we compound the problem further by centralising tax and spending powers, preventing localities from prioritising their spending and revenue streams to their own economic needs.

Now, as it happens, Bowman and Westlake’s policy agenda is perfectly compatible with assisting  “people” rather than “places,” precisely because it’s market-based. They advocate planning liberalisation, a flexible right to buy, and stamp duty, all of which would improve labour mobility. They prioritise infrastructure spending based on benefit-cost ratios, making investments more profitable with sensible tax changes, and devolving more transport power to regions and localities. All, again, will help facilitate areas adapting to changed economic conditions, rather than reviving Labour’s failed top-down regeneration attempts.

But pitching this as a city and town agenda still risks creating the false impression that the net gains from “creative destruction” nevertheless can be achieved without the destruction, and that all places can thrive in the right policy environment.

One can understand why they framed it in this way. Their aim is to persuade the party and its MPs of their platform. Anti-market commentators would call them fatalistic and “abandoning” places if they acknowledged the downside, as if facilitating more free choice amounts to design.

Successful past Tory economic narratives, though, willingly acknowledged hard truths. Deficit reduction entailed tough choices to curb spending. Thatcherism entailed making the case for letting inefficient industries fail. If a new Tory vision is serious about raising productivity growth and spreading opportunity for people, it will have to confront the inevitable market-based adaptation for some places.

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Greg Taylor: The PM must be bold and deliver real fiscal autonomy

Greg Taylor is a political consultant and was formerly public affairs manager at the Local Government Association and in the Mayor of London’s office.

During Boris Johnson’s overall successful eight years at City Hall, perhaps no campaign spoke more to his big-picture ambitions for the capital than his quest for serious, long-term financial devolution.

After his first term in office, Johnson realised that much of his ambition for his second term would be curtailed by the limited fiscal powers granted to the Mayor of London. Yes, a Mayor can add to the precept latched on to Londoners’ council tax bills, and revenue is brought in from London’s wildly expensive public transport system. But the vast majority of the Mayor’s budget is bestowed with begrudging munificence by Her Majesty’s Treasury through Government grant, leaving big spending decisions intertwined with the political whims and personal priorities of Whitehall ministers, rather than in the gift of the leader with the largest individual electoral mandate in the UK.

Frustrated by glacial negotiations with Osborne’s Treasury, which had little truck with London’s demands after a splurge of Olympic cash, and guided by his new Chief of Staff Sir Edward Lister, immediately after his re-election in 2012 Johnson commissioned created the London Finance Commission.

Chaired by LSE’s local government finance expert Professor Tony Travers, and bringing in cross-party commissioners like Jules Pipe (then Mayor of Hackney, now Sadiq Khan’s Deputy Mayor for Planning) and Nick Raynsford, then the Labour MP for Greenwich and Woolwich, former minister, and fiscal boffin), the Commission’s remit was broad. How could London do better, invest more strategically, deliver the best outcomes for its population and businesses?

A year later, the Commission reported, with some dismaying findings. London was keeping a piddling seven per cent of its total tax take for reinvestment in citywide infrastructure. When compared with New York, which keeps around 50 per cent, and Tokyo which keeps around 70 per cent, the powers of central government were shown to the all-pervasive. The capital was deemed to be “an extreme outlier” in comparison to its international competitors, with England “far too centralised” to see the services people urgently needed effectively delivered. The Commission’s recommendations were pragmatic but potentially game-changing: devolving property taxes, including stamp duty and business rates, to London’s government.

Still nowhere near to granting London Tokyo’s level of financial autonomy, but a good start.

Unsurprisingly, Johnson accepted and ran with the recommendations with characteristic gusto. They were the top agenda item in his regular meetings with Cabinet ministers, from Communities to Transport and Treasury. And they underpinned all his major speeches. In a stroke of political savvy, he gathered the leaders of the UK’s most powerful cities – from Manchester to Bristol – and persuaded them to jump on board, forming the joint City Centred campaign which aimed to prove this wasn’t a London-only (nor a Conservative-only) roadshow.

Assailed from all corners of the UK, with influential leaders like Manchester’s Sir Richard Leese and Bristol’s independent Mayor George Ferguson getting stuck in, the Government couldn’t ignore the clamour. In 2015 George Osborne announced the full devolution of business rates by 2020, a huge coup for the then-Mayor’s campaign, but a small step on the road to real fiscal autonomy.

Fast forward four years, and the London Finance Commission’s report, and Johnson’s campaigning, remain the benchmark for devolution discussions, even if progress has stalled. At a recent Devolution APPG meeting, longstanding HCLG Committee chair (and Sheffield MP) Clive Betts MP pointed out that the work remains unsurpassed, though the questions that the Commission’s report throws up remain unanswered. Questions around redistribution and ensuring economic sustainability outside major urban areas. Questions that, with the full weight of the No 10 Policy Unit and the Treasury behind him, Johnson can prepare to answer.

Thus far, those who campaigned alongside the then-Mayor could be forgiven for being disappointed by his moves in Number 10. In his July speech in Manchester, one of his first as PM, Johnson pledged £3.6bn to support 100 of the UK’s more ramshackle towns, while last week he promised to expand the £1bn Future High Streets Fund. While this smacks of the Whitehall-centric, hand-out mentality that the Prime Minister so vigorously denigrated only 3 years ago, the pre-election, short-termist motives are clear. It would take years to put the recommendations of the London Finance Commission into effect, but the Prime Minister seems likely to need votes very soon indeed.

But he must be bold in setting out his vision for the longer term, and soon. We have never had a Prime Minister with such depth of experience in municipal government, nor understanding of what levers and funds our cities, and regions, need to thrive.

Nor such a natural connection with the ambitions and worries of regional dwellers beyond the M25. It is, of course, right that Mr Johnson is unshackling his reputation from the capital city with which he is so intrinsically associated, but his time as Mayor showed him that Liverpool, Leeds, Newcastle and others will benefit from fiscal devolution every bit as much as London, with all the domino gains across their wider regions.

Future election success depending, it may well be within this Prime Minister’s gift to fundamentally change how our regions invest in their own futures. The London Finance Commission, despite its name, provides a blueprint for how to build an economy that truly gives power to “turbo-boosted” regions through devolved taxes. In the short term, devolution might require building up the powers of Andy Burnham, Sadiq Khan and the like, as well as Andy Street. But in the longer term, a serious devolution agenda would cement this Prime Minister, and the Conservative Party, as the champions of lasting local autonomy and freedom from the suffocating tendrils of risk-averse Whitehall mandarins. And there are votes in that, too.

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Andrew Laird: The Prime Minister’s devolution drive will protect public services from Brexit chaos

Andrew Laird is a founder and Director of Mutual Ventures.

A couple of weeks ago, Boris Johnson’s first full policy speech as Prime Minister focused on English devolution. Manchester was a significant choice of venue as it is the area in England (outside of London) which has enjoyed the most devolution of powers.

As the former mayor of London, the new Prime Minister is clearly a big fan of devolving powers to cities and local areas. This is very good news indeed for local public services.

While ministers and Parliament focus on delivering Brexit, local services (e.g. adult social care, children’s services and even the NHS), are looking increasingly like unintended victims. These services need constant care and attention, both through legislative updates and serious policy research and discussion at a national level. But they haven’t been getting any of this.

Over the last couple of years there has been an increasing number of central government actions and decisions being delayed, which has made life more difficult for those delivering local services. This is largely due to ministers and MPs focusing on Brexit and thousands of civil servants being taken away from their normal jobs of supporting public services to work on exit planning.

Regardless of your view on Brexit, this was always going to be an inevitable consequence. The Brexit process has taken up policy-making and decision-making headspace usually spent on other things – things which are essential to smooth running of public services.

As an example, one of the biggest challenges facing the Government is the funding crisis in adult social care. Alongside devolution and infrastructure investment, Johnson has also identified social care as a key priority. The green paper on social care needs to set out a serious long term financial answer – but it has been continually delayed.

There are three Brexit-related issues causing this delay.

The first is creating the time for ministers and the Cabinet to agree to the plan – there hasn’t been much non-Brexit bandwidth at the top of government. This extends way back before the leadership election which itself caused additional ministerial stasis.

The second is that the planned cross-government spending review can’t really take place until our path through Brexit is confirmed. It’s impossible to set out a long term solution to social care without knowing the funding available.

The third is that any serious social care solution will involve tough decisions which will require media space to explain it to the public. Again, there isn’t much non-Brexit media time at the minute. So social care services have been left to struggle on without any long-term funding certainty.

This is already having a much wider impact across public services. Without setting out a long-term funding solution for social care, NHS reforms will struggle to take hold. The NHS and social care are inextricably linked, with service users often bouncing between the two in an unplanned way. So Johnson’s decision to focus on resolving the adult social care crisis is to be welcomed.

Turning back to devolution, distributing funding and decision making to cities and local areas is a big part of the immediate answer to challenges like social care – and also a mechanism to prevent the build-up of issues in the future.

Across the political spectrum, the Prime Minister is largely preaching to the choir on devolution. West Midlands Mayor Andy Street is already showing what can be achieved for a region with devolved authority and has set out his asks from the new Johnson administration on this site. We also have the beginnings of the “Northern Powerhouse”, based around the 11 northern Local Enterprise Partnerships.

Inspired by this, a recent report commissioned by Bristol, Cardiff, and Newport City Councils (‘A Powerhouse for the West‘) is calling for a similar arrangement along the M4 corridor, from Swindon across to Cardiff and Swansea, and from Gloucester and Cheltenham to Bath and Bristol. Grand partnership strategies like this, combined with more localised devolution to cities, councils, and combined authorities, are what is needed.

The drive for devolution has been knocked down the priority list. This was once a really positive agenda item for central government. Giving local areas additional powers was a big step towards empowering local communities, elected mayors, and councillors, and had the added benefit of insulating local services from the process of delivering Brexit.

Johnson has recognised this, and he should move quickly to encourage and support a new wave of devolution deals.

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Long read | It’s the English, stupid! Brexit is an expression of English nationalism

It’s the English, stupid! Hudson Meadwell (McGill University) writes that the national structure of the UK and Britain, and the political organisation and expression of that structure, are keys to understanding Brexit.

Brexit is an English-centric phenomenon in which Northern Ireland, Scotland and Wales appear as complications or afterthoughts. The sole constitutional voices in the Brexit process are English-dominated, first in the referendum itself, which aggregated the vote across national jurisdictions and in Parliament. Neither Northern Ireland, nor Scotland nor Wales are constitutionally empowered to express a voice on the matter of EU membership.

However, English political dominance is not something which can be directly acknowledged in political discourse. The language used by Donald Cameron and Theresa May in their letters, eighteenth months apart, to the President of the European Council, Donald Tusk, shows some of the political equivocations that result. Cameron’s letter opens under the heading, “A New Settlement for the United Kingdom” and then twice refers to the ‘British people’. May opens her letter with reference to the ‘people of the United Kingdom’ and then presents the referendum as a ‘vote to restore, as we see it, our national self-determination’. These brief quotations should show just how slippery these signifiers are. The United Kingdom includes Northern Ireland but Northern Ireland is not British. Indeed, the notion of the ‘United Kingdom’ was repurposed in the 1920s in order to recognize the reality of Irish partition. May never refers to the British people but she does invoke national self-determination. Later, she again makes reference to the ‘people of the United Kingdom’ But to which nation is she referring; whose self-determination is she signifying? Is this just loose, sloppy language?

These kinds of ambiguities and equivocations in expression, in important documents written both to your negotiating adversary as well for a larger political audience, are revealing and call out for some diagnosis. Perhaps the political unconscious is slipping out. Or are we looking at strategically ambiguous political rhetoric embedded in plans, the elements of which are not self-evident in these documents? These are hard questions, in any case, particularly so here, when there is relatively little material, primary or secondary, to work with.

So, how to proceed? I’ll advance a conjecture related to nationalism. If anything can be taken for granted and thus draw some of its force from its unarticulated everydayness and be articulated and enacted in a political plan, it’s nationalism. Nationalism, as some of its theorists suggest, can be both banal and a self-conscious political project. That’s not a contradiction, it is a measure of the sources of nationalism’s social and political force.[1]

Hence the conjecture: Brexit is an expression of nationalism. Between Cameron and May in their letters, the latter is much more explicit, as she tried to invoke the legitimating power of national self-determination. But which nationalism? Who is more likely going to slip into the mentality that confuses their nation with ‘Britain’ or the United Kingdom?

This is a nationalist conceit but whose? It’s not the Scots, nor is it the Irish, or the Welsh. It’s the English.[2]That’s fully compatible with the recurring theme of English exceptionalism in British history, which takes English dominance (if not superiority) as a natural birthright.[3] After all, who incorporated who?

That birthright has been challenged at different historical points, and each challenge marks an important political crisis. English identity has proven fairly resilient but each crisis has left its mark. English dominance is not as natural a birthright as it used to be.

Irish resistance and eventually revolution still casts a long shadow in the form of Irish partition, even if England retained its dominant position in what is now known as the United Kingdom. In hindsight, partition perhaps bought England some (considerable) time but it looks now like that particular colonial legacy has come home to roost. Northern Ireland, drawing indirect and direct support from the EU and Ireland, and despite the support the Democratic Unionist Party has provided the Conservatives in Westminster, is now limiting England’s political degrees of freedom, much to the chagrin of Brexiteers.

Scotland is no longer particularly tractable and successfully induced the English to concede an elected assembly and, not long after, a first referendum on independence. This may be more a running problem than a crisis, if you prefer your crises to be episodic; nonetheless, the Scottish question will be part of the calculations of the Conservative government in their negotiations, up to and after the run-up to October 31, of a Labour government in the event of an electoral defeat of the Conservatives, at some point, whether post-Conservative transition or post-withdrawal and, naturally, of the SNP. There is no resolution of the Scottish question in sight.

Then there are the cumulative long-run effects of the rise of American power culminating in its post-1945 hegemony, the loss of blue-sea colonies, and more recently, the incremental deepening and enlargement of the EEC/EU after British entry. All of this changed the international standing of Britain and the UK and their imperial core – England.

English dominance thus is vulnerable: There are standing internal challenges to the borders of the political shells it maintains, and membership in the EU threatens its ability to control these interior spaces through the British parliament. These challenges can work in tandem as well as separately. ‘Scotland in Europe’ captures dramatically the instrumental relationship between Scotland’s national aspirations and EU institutions. Both the EU and Ireland have tangible stakes in Northern Ireland.

England has seen off various challenges to its dominance but its day of reckoning does seem to be drawing closer. It’s now much harder to separate challenges and deal with them as one-offs.

However, imperial cores don’t often reform themselves in the aftermath of empire. The current imbroglio does not look like the expression of a politically-healthy ruling class. There is no appetite for reform in the English ruling class. It’s a little like watching for regime change in autocratic contexts, looking for signs of a crack in the regime and the emergence of challengers to its hardliners. But there is not much sign of this in the party system, at least not yet.

The Conservative Party appears now all in for withdrawal, although it has been debating different scenarios. However, some of these scenarios are contrived. The Conservative party does not hold many cards, now that an agreement has been negotiated and ratified by one of the two parties in the negotiation.

On the other side of the House, the main political alternative – Labour – has been, at best, ambivalent about EU membership in the run-up to Brexit and afterwards. We can’t really say that Brexit has polarized the two major parties until relatively recently, as its leader pledged to support Remain in the event of a new referendum. Yet this was a rather half-hearted, rather than fully-voiced position. It likely will be overwhelmed by internal party division.

Labour is led by a longtime MP and activist who came to political maturity in pre-Thatcher Britain in a period in which (‘old’) Labour had not fully cast off its dream of ‘socialism in one country’. Membership in the EEC/EU, and the long march of English and British political history may not have put fully paid to that dream (even a weaker version of it) in Labour. Hence, withdrawal could be seen as an opportunity to return to roads not taken. That is also quite consistent with the general argument on the left that the EU is a neo-liberal dead end. So, the narrow national vision that underpins the Conservative position is not completely alien to Labour. If something like this is the choice on offer – if these are the two little Englands on offer – unification for the Irish and separation for Scotland may look more attractive.

This brings me back to where I started: the language of the letters written to Donald Tusk by Cameron and May. Perhaps, then, it is the political unconscious speaking in those letters even if the most recent challenge to English political dominance that continued EU membership represented has provoked a nationalism that is anything but banal.

No doubt, like his predecessors, the new Prime Minister will take the opportunity to write, whether to the President of the European Council or the President of the European Commission. Whatever is being said privately between the two negotiating parties, we can expect such a letter to be written partially for a domestic audience and hence to be made public.

How will he put it? In such a letter, will Johnson repeat in different words, his first public communication after being named Conservative leader, and invoke ‘the awesome foursome that are incarnated in that red white and blue flag who together are so much more than the sum of their parts’?

Part of this is generic, boilerplate nationalism, ‘rally around the flag’ rhetoric. Yet most of it is distinctively English nationalism – the denial of challenges to English dominance which an acknowledgement of national disunity would represent, coupled with an appeal to the unbroken coherence of the United Kingdom (the ‘awesome foursome’), all of which studiously skirts political reality.

This post represents the views of the author and not those of the Brexit blog, nor the LSE.

Hudson Meadwell is Associate Professor of Political Science at McGill University. Image © Copyright Richard Croft and licensed for reuse under this Creative Commons Licence.

[1] Michael Billig, Banal Nationalism (Thousand Oaks, CA.: Sage, 1995); Michael Skey and Marco Antonisch (eds.), Everyday Nationhood. Theorizing Culture, Identity and Belonging After Banal Nationalism (London: Palgrave Macmillian, 2017), Political Geography. Special Issue, Banal Nationalism 20 Years On. 54 (September, 2016).

[2] Krishan Kumar, The Making of English National Identity. Englishness and Britishness in Comparative and Historical Perspectives (Cambridge: Cambridge University Press, 2003) and Michael Skey, National Belonging and Everyday Life (Palgrave Macmillan: Basingstoke, 2011).

[3] Tom Nairn, The Enchanted Glass. Britain and Its Monarchy (London: Verso, 2011, rev. ed), Leah Greenfeld, Nationalism. Five Roads to Modernity, (Cambridge, MASS.: Harvard University Press, 1992), chapter 1, Linda Colley, Britons: Forging the Nation, 1707-1837 (New Haven, CT.: Yale University, 2009, rev. ed.)

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