Northern England: Opportunity and Productivity

Lord Wallace of Saltaire Excerpts

Thursday 12th January 2017 Lords Chamber

[Lord Wallace of Saltaire (LD)]

My Lords, this is obviously a debate for praising the noble Lord, Lord Prescott; I thought he said it all. Brexit transfers power from Brussels to London. England is the most centralised area in the whole European Union. The devolution to Scotland, Wales and Northern Ireland has to some extent modified the centralisation of power within the UK, but the regions of England have continued to lose out. Cuts to local authority spending now are making that go further. It is a cultural imbalance as much as an economic one. I agree strongly with the right reverend Prelate the Bishop of Leeds that people in London sometimes talk about Yorkshire as if it is part of Africa. When I first came into this House, I remember a Conservative Peeress saying to me, “I have just been to Yorkshire, and parts of it were quite nice”. The media, as we all know, are also heavily concentrated in north or east London and report things that happen in Islington or Tower Hamlets in ways they would never think of reporting if they happened in north Leeds or east Bradford. That is all part of the problem with which we have to deal.

It is therefore an increasing disadvantage that the north, as a whole, lacks an effective political voice within the UK system of government. Scotland has an effective voice on the Barnett formula, the geographical distribution of public funding, and in negotiating with London on the terms of international trade. Wales and Northern Ireland also have good institutionalised positions. But the north lacks anything comparable—certainly not comparable with London government itself. That matters in particular when we have a Conservative Government drawn largely from the Home Counties, with only a handful of Ministers who have any feel for, or sympathy for, the northern counties. Now that George Osborne and William Hague have gone, Greg Clark is the only one among the senior members of the Cabinet who appears to have sympathy and understanding for the industrial towns and cities that contributed so much to Britain’s prosperity over the past 200 years, but which have been left behind since the balance of Britain’s economy shifted, under Margaret Thatcher, from manufacturing to finance. There is a real danger that the north will be squeezed further between London and the devolved national governments as the Conservatives negotiate Brexit.

The State of the North report notes that the English regions, as a number of noble Lords have said, are significantly more dependent on trade with Europe than London itself. Yorkshire trades with the continent. Hull and the other Humber ports depend on handling trade with the continent. Two-thirds of Yorkshire’s food exports go to the European continent, eased by the rules of the single market and protected by the registration of regional denominations by the EU. Some of our producers are just beginning to wake up to the fear that they might lose that. The idea that food can be traded freely without international regulation is absurd. Food goes off, and dirty processes on food spread disease, so there has to be international regulation, and European regulation is some of the best. European regional funding flows into the economically weaker parts of Yorkshire, redistributing funds that a southern-dominated Conservative Government in London might be reluctant to redistribute to the north within a purely national framework.

Previous State of the North reports have detailed the low levels of investment in infrastructure in the north, in transport in particular, as noble Lords have said. I have been using the trains across the Pennines since I first taught in Manchester in 1967, and some of the rolling stock has not changed since then. The speed has hardly improved, either. The previous Labour Government, amazingly, neglected the north’s infrastructure, even cancelling tram networks in Liverpool and Leeds when plans were well advanced. It is not clear from recent announcements whether the east-west rail corridor from Oxford to Cambridge will now carry a higher priority for the Government than northern Crossrail, which is vital to realising the concept of a northern powerhouse.

The concept of a northern powerhouse, as the previous year’s report from IPPR North said, is itself difficult. The 2015 report said:

“The government has excelled in being largely unspecific as to what exactly the northern powerhouse is”.

That represents a lot of the cynicism in the north as to whether the northern powerhouse concept is merely rhetoric or is actually going to lead to money being redistributed. When George Osborne appeared with a number of Chinese investors alongside him, to suggest that perhaps the Chinese could pay for the northern powerhouse rather than the British taxpayer, our cynicism increased.

The north of England has been left behind by successive Governments. The rhetoric of a northern powerhouse was a welcome sign that things might change, but we have not seen the money yet. Canvassing for the referendum in June, I was painfully aware that in the former council estates of West Yorkshire, people planned to vote against London as much as against Brussels, and against politicians as much as against bankers. Head teachers tell me that school budgets are being squeezed. Two head teachers in Bradford told me that they fear they might go bankrupt in the next two or three years, as flat funding comes up against increasing salaries for their teachers.

Councillors tell me that local services are in danger of disappearing as cuts get deeper. Companies recruit directly from eastern Europe because, they say, they cannot find local workers with the skills or the motivation that they are looking for. Extra rounds of spending cuts and the likely downturn that will accompany a hard Brexit will worsen the situation across the north, so I strongly support the message of this IPPR document, which says that we need a more effective voice for the north to rebalance the British economy and rebalance the political system of the UK.

I stress the fiscal redistribution dimension of this because we have not talked much in British politics about the imbalance of funding for local authorities across the UK as a whole. The Scots, Welsh and Northern Irish now bargain with the Government about the balance of income and expenditure. The rest of us do not have a chance to do so. It is extremely important that we now begin to bring into the open the argument about how far rebalancing the economy allows us also to shift funds from the richer areas of the country to the north. The noble Lord, Lord Mawson, talked about a dependency culture, but in the estates of north Bradford, which I know that he knows well, the sense of hopelessness is partly because the local authority cannot do anything for you either. Children’s services, social services and so forth have been cut, so people do not see their local authority and they feel alienated from the entire political system.

Education is also a tremendous problem. I have seen figures that suggest that by the time children enter reception class at school in large parts of Bradford and Leeds they are already a long way behind their counterparts in London. I am conscious that FE colleges in the north are also being cut. As a Latvian cheerfully said to me when I canvassed him during the referendum, “The one good thing about Brexit will be that you will have to go on depending on people like me because you aren’t going to find people to build houses within Britain”. The supply is not there. There are not enough places. Building companies in Yorkshire, I was told some weeks ago, want to carry on recruiting directly from eastern Europe because they do not have the confidence to set up the sort of training schemes to train people who are less well motivated. In Bradford, the one training scheme that I am aware of was oversupplied in terms of applicants for its building apprenticeships by 100% or more.

I have one final comment. Depending entirely on FDI is not the answer for the region. We need local economic leadership, which means encouraging local entrepreneurs and local companies. Allowing those local companies as they grow to be taken over by foreign multinationals does not provide us with local incentives and local leadership—everything that we need. Banks, centralised in London as they are, also need to put money into the region. We need an institutionalised presence for the north in the process of Brexit, but we also need a stronger voice for the north in the British political system as a whole.