‘Lancashire, the cotton district and the West Riding of Yorkshire, must govern England,’ Rochdale mill-owner John Bright told a meeting of the Anti-Corn Law League in 1846.
They must, and yet they didn’t. Even in their industrial heyday, the mill towns struggled to dictate the political agenda. The shoe has remained on the other foot ever since. Conservative and Labour governments alike have put aside rhetorical commitments about reversing the North’s economic decline to pursue policies that keep London and the South riding high. The City of London takes precedence over domestic manufacturing, deflation is preferred to regional stimulus, and meaningful measures to divert economic activity away from the capital are eschewed.
The upshot is a dramatic widening of the regional gap. According to Frank Geary and Tom Stark’s estimates, after the First World War, the South East (including London) and the North of England accounted for 35 and 30 percent of British GDP respectively. By the end of the twentieth century, the South East’s share had risen to 40 percent while the North’s had dropped to 21 percent. From a position of relative parity, the economy of one region had become so engorged that it was twice the size of the other.
The United Kingdom has the worst regional inequality, measured by variation in GDP per capita, of any major OECD economy except the United States — where the Rust Belt broke ranks to hand Trump the White House — and Canada, whose statistics are skewed by resource extraction in the sparsely populated Northwest Territories.
Given the geography of Tory electoral support, their contribution to Britain’s extraordinary lopsidedness should come as no surprise. It is Labour’s conduct that needs to be accounted for. In 1964, Harold Wilson’s government introduced a National Plan and regional planning machinery to encourage faster and more evenly distributed industrial growth. Within three years these measures had been abandoned in favour of appeasing the financial markets. ‘As a government, we were ready to sacrifice a great deal in political terms to put sterling on a sound foundation, honoured and respected,’ Wilson said in 1970, surveying the wreckage. What he sacrificed was the North.
These problems have followed us into the present century. Globalisation of commodity production, championed by New Labour, doomed whatever manufacturing capacity had survived Thatcher’s shutdowns. Entire regions came to depend on increases in public spending for job creation. When the tap was turned off after the 2008 crisis, only casualisation prevented a bigger rise in unemployment. A coalition white paper complacently announced that ‘places are unique and have different potential for growth.’ In other words, the North could lag all it liked. Through boom and bust, London increased its share of national output by another 4 percentage points between 1997 and 2015.
With outsized London obscuring the rest of England from view, attention shifted north of the border. ‘Scotland holds the fate of British finance in its hands,’ panicked the Financial Times as the independence referendum loomed. Scottish withdrawal from the Union, it feared, ‘could trigger Brexit and disaster for the City.’ Such concern was misplaced. Scotland is the UK’s most dynamic centre of devolved power and has the highest household income per head after southern and eastern England. It was bound to think twice before upsetting the applecart.
Once the Scottish ‘No’ vote was safely in, David Cameron’s old Oxford tutor, Vernon Bogdanor, popped up to dismiss talk of devolution to the English regions as a salve for the promised transfer of additional powers to Holyrood. ‘In England, there is little regional feeling,’ he assured the New York Times. ‘The regions are ghosts.’
The voters scorned by Bogdanor delivered the coup de main in the June 2016 Brexit vote. Those for whom economic disaster was already a reality had no time for scaremongering about Brexigeddon. Wigan Today readers summed up the general mood: ‘leaving the EU can’t be any worse than staying in it.’ And Wigan, to quote Orwell, isn’t especially badly off as northern towns go. The failed Stronger In campaign was orchestrated from Cannon Street by what Politico lauded as ‘an all-star line-up of Westminster insiders’ — enough in itself to invite defeat.
The outcome of the vote brought the North–South divide to the fore once again. ‘It was a revolt of the regions — northern industrial towns hit by wave after wave of crushing global change — that pushed the Brexit vote over the edge,’ lamented Gordon Brown with splendid gall in the Guardian.
Since then, Remainers have been queuing up to warn Leave voters that their communities would be worst affected by Britain’s departure from the European Union. But the City of London also has plenty at stake. Divisions within the financial sector freed up Downing Street — under pressure from all quarters — to prioritise goods over services in July’s white paper. When push comes to shove, however, May and Hammond will staunchly defend London’s international status as ‘capital’s capital’. And while Whitehall austerity grinds on, the Tory shires can expect more preferential treatment over Labour municipalities.
If it takes a pair of veteran London MPs, catapulted to the surprise of everyone into the leadership of the Labour Party, to come to the aid of the UK’s forgotten regions, history will cope with the irony. John McDonnell was born in the Liverpool slums. ‘We lived in what sociological studies have described as some of the worst housing conditions that exist within this country,’ he recalled at 2016’s party conference, ‘we just called it home.’
In his first conference speech as shadow chancellor, McDonnell invoked the efficiency-raising mantra of Harold Wilson, himself once a Merseyside MP: ‘We need to prove to the British people we can run the economy better than the rich elite that runs it now.’ But economic growth, McDonnell promised, ‘will reach all sections, all regions and all nations of our country.’
Anxious to keep its powder dry, an opposition party is always something of an unknown quantity. But McDonnell has made bold commitments. In 2017, he told a Regional Economic Conference in Liverpool that ‘Labour in government will oversee the greatest transfer of power to the North of England since the Industrial Revolution’ and shift the balance of wealth ‘away from a few gilded places in the South East.’
But do Labour’s policy promises stack up? Concretely, we know that a Corbyn government would roll back regionally inflected Conservative austerity, funded through modest redistributive taxation falling on the London elite: higher income tax on the wealthiest 5 percent, a levy on City financial transactions, and a reversal of Osborne’s giveaways to cash-rich corporations.
On the constitutional front, during his stint as Labour’s 2017 general-election coordinator, Jon Trickett, a former leader of Leeds City Council, promised fiscal devolution from Whitehall and ‘a mighty Council of the North’ composed of MPs and local-authority delegates, while Corbyn has expressed support for an elected second chamber ‘representative of all regions and nations of the United Kingdom.’ Last year’s manifesto, however, went no further than promising a Constitutional Convention to look into such matters.
The party’s election platform was more forthcoming about plans for investment: a £250 billion National Transformation Fund ‘fairly shared around every region,’ with money for a northern Crossrail. Labour also pledged to bolt a National Investment Bank and network of Landesbanken onto the UK financial system, lending another £250 billion to small businesses and high-value local projects over ten years. ‘Nothing wrong with that,’ conceded the Economist.
Last December, McDonnell extended a cautious welcome to a consultants’ report recommending Birmingham as host city for this National Investment Bank. Some Bank of England functions may also move to the West Midlands — subject to governor Mark Carney’s say-so. State-owned RBS could be broken up, but the rest of the City can sleep easy. McDonnell adopts an emollient tone towards a powerful financial sector he knows could cause him no end of trouble. ‘When we go into government, we will go into government together,’ he told an audience of bankers at Bloomberg’s HQ.
Such mésalliances rarely last. The obvious danger is that if McDonnell refrains from extending his public-utility banking model into the heart of the City, where it would really count, the National Investment Bank will share the fate of Wilson’s modernisation efforts — not just the National Plan but also the Department of Economic Affairs, the National Enterprise Board, and the Industrial Reorganisation Corporation: so many ineffectual social-democratic adornments to a fundamentally unaltered economic framework.
Tom Nairn’s The Enchanted Glass warned against ‘futile re-treads of Westminster-inspired modernisation’ on the grounds that the North–South divide can’t be resolved within the existing State, because it is the existing State: a geographical expression of the dominance of the Old Regime. Culturally no less than economically, the well-to-do in London and the Home Counties ought to be taken down a peg or two. Labour could do worse than academise the public schools, put UCAS in charge of Oxbridge admission decisions, and use the planned closure of an increasingly seedy Palace of Westminster to rearrange the country’s political furniture. Parliament hasn’t convened north of Leicester since the fourteenth century, so an indefinite posting to some remote outpost is surely due.
There would be no need for a Brasília, Canberra, or Washington: purpose-built capitals designed to keep popular protest at bay. Plenty of existing towns and cities in the North would have their economic prospects transformed by the arrival of two legislative chambers, a couple of dozen ministries, scores of quangos, and trainloads of hangers-on. It would certainly be a surprise for John Bright, whose statue stands on a steep incline in Rochdale’s Broadfield Park, to find himself looking down on the new seat of British government.