Devolution: English Cities

Lord Shipley Excerpts

Wednesday 17th July 2019 Grand Committee

[Lord Shipley (LD)]

My Lords, I pay tribute to the work of the noble Lord, Lord Heseltine, whose focus on the economic futures of cities, particularly across the north of England, has been crucial to their revitalisation. From the 1980s, they have in many cases become places with a new vibrancy, often related to the expansion of their universities and the achievement of the Urban Development Corporation. I strongly support the recommendations and conclusions reached by the noble Lord on a new department for English regions, how to replace EU structural funds, the allocation method of capital funding by the Treasury, the need for new Select Committees in both Houses to review devolution and the dispersal of the offices of Whitehall. These are all fundamental to delivering the success that we all want.

On Monday, I was asked to meet researchers from the OECD who were investigating why productivity in UK cities and their surrounding city regions is not higher. I suggested that if they simply read the reports of the noble Lord, Lord Heseltine, over the years, they could save themselves a great deal of time in writing their report.

I concur with very many of the conclusions that the noble Lord has reached. However, if I may, I want to correct a small error on page 20: my noble friend Lord Goddard of Stockport was the Liberal Democrat leader of Stockport as opposed to the Labour leader. This is clearly a typing error.

There has been other work carried out, such as that of the noble Lord, Lord Adonis, and the Institute for Government, which, with the Centre for Cities, produced a report in 2011 subtitled How Elected Mayors Can Help Drive Growth. The noble Lord, Lord Kerslake, has just produced a report of the UK2070 Commission, and there have been many reviews and reports on the northern powerhouse.

This is not a new issue. In 1962, then Prime Minister Harold Macmillan said that he was determined to,

“prevent two nations developing geographically, a poor north and a rich and overcrowded south”.

A hundred years ago, the population of the north was 35% of the UK; it is now 25%. According to the BBC, one in three new jobs created in the UK in the last decade is in the south of England. We talk of the need to rebalance the UK economy, and that certainly needs to be done.

Let me be clear: this is not about reducing the success of London, because that is where some of the tax revenues come from that are spent elsewhere in the UK. However, we need to be careful. I keep reading in the London press that London seems to want to keep more tax income, when it should be seen as UK tax income generated through London. It is not just London’s tax income.

On the publication of the industrial strategy, the Secretary of State said that:

“For centuries, British innovation and ingenuity have been firmly rooted in our regions and our nations”,


and that:

“Government is working with regions, towns and cities to help them build on their unique strengths”.


That is clearly the intention of the industrial strategy, but the UK spends only 1.7% of GDP on R&D, compared to an OECD average of 2.4%. It is between 3% and 4% in countries with a higher manufacturing base, higher skill levels, and higher productivity and wages. Low R&D spending means less investment in businesses improving their products, leading in turn to a lower manufacturing base, and then to lower R&D spending because of the smaller size of that manufacturing base. We have to reverse that trend.

It is of little surprise to me that, despite all the fine words about the north, huge plans are being developed for the Oxford-Cambridge-London golden triangle. Where are the golden triangles proposed for the Midlands and the north?

The noble Lord, Lord Heseltine, talked of the role of government as being first and foremost about leadership. I absolutely agree with that. There has to be trust of people outside London. He has talked of removing the “dead hand” of Whitehall.

--- Later in debate ---

[Lord Brougham and Vaux]

Please continue, Lord Shipley.

[Lord Shipley]

I was talking about the decentralisation of Whitehall departments. A few years ago, I called for the Department for Transport to move out of London in its entirety, other than a small head office. I want to repeat that call because there is no need for the Department for Transport to be located in London when Transport for London is here. Indeed, if Channel 4 can move out of London, so can the Department for Transport, and so might other departments.

We have to allow localities to merge budgets from Whitehall to effect savings and, as a consequence, to deliver better services. If Whitehall is not joined up—and it is not—it can be joined up only at a local level. It is very important that infrastructure funding is transformational in its allocation. It is important for the Treasury to invest its infrastructure moneys in places which may not give as fast a return as places which are already better off.

I have been in the past, and still am, a supporter of the mayoral structure. I campaigned for a mayor for the city of Newcastle during the referendum. My reasons were that the powers of the leader were altered in the period just before 2010 so that a council leader had broadly similar powers to a mayor. I felt that council leaders should derive their power from all residents and electors, not just a party group.

Finally, I support very strongly what the noble Lord, Lord Heseltine, said about the role of the private sector. I was very pleased to hear his words about the Government working with the private sector to identify companies that can expand in those places where we want greater private sector expansion.