Tackling Regional Inequality

For decades, Britain's economic growth has been trapped in London at the expense of the rest of the country - Labour's regional manifestos demonstrate how that cycle could be broken.

It’s not rare to open up the paper and find news like this: 1,000 jobs cut in Wales by Tata Steel, Ford’s closure in Bridgend cutting a further 1,700, Honda’s Swindon plant set to close in 2022, sacking 3,500, and plastics giant Ineos looking to close a plant at Teesside, laying off hundreds. And that’s just a selection from this year.

Every region in the UK outside London — beset by its own problems of high costs of living and low-quality jobs for so many — is hurting in its own way. Add in a decade of crushing austerity and public underinvestment and it’s clear the UK economy doesn’t need tinkering at the edges but radical transformation.

The problem is that transformative change can sound very abstract. Labour’s response has been to draft a set of regional manifestos, each one a set of detailed promises on industry, jobs, public services, council homes and wages targeted specifically at a region of England. These “mini-festos” play a key role in translating big, transformational policy proposals into something concrete. They are both a policy response to inequality and a political tool to instill confidence that big changes can work.

Economic Development for the Few

The need for a set of regional manifestos—for a plan that takes into account the staggering inequalities and unequal needs across the UK—is self-evident for anyone who has spent any time outside the London bubble.

The UK has higher levels of regional inequality than almost any other wealthy country. Incomes, and employment prospects vary wildly between London and its surroundings and the north of the country. Mortality rates also vary more regionally than in most other wealthy countries: cities like Manchester and Blackpool have mortality rates akin to those found in much poorer Poland or Turkey. 

The UK’s current model of economic development, focused on finance and concentrated investment in London, not only isn’t working for working people, it isn’t working for entire geographic areas of the country. What’s so exciting about Labour’s regional manifestos is that they make the alternative model very concrete. They translate the big numbers that anyone finds daunting into something meaningful and tangible.

Of course, there are those who say that there is no alternative to today’s financialised, unequal development model. They would have us believe that Britain has always been a free market paradise, that nothing can be made to change. But that isn’t true – as the rise of the Industrial Revolution in the very same places now being cast aside demonstrates.

To confront our intertwined challenges of economic inequality and a climate emergency head on, we need to fundamentally reorient and transform our economy. Shutting down mines and manufacturing in the North while expanding derivatives-trading and Deliveroo in London is not the answer. A new development model has to include good, green jobs in Walsall and Blackpool, in the Welsh vales and Truro. It needs to devolve power and resources not just to regions, but to working people themselves.

Green Industrial Revolution

Labour has proposed some big tools for the job. A new Green Transformation Fund will supply £250 billion of investment over 10 years to start a just transition to a net-zero-carbon economy. Money will go to a mix of direct public spending on public projects, joint ventures with the private sector and low-cost lending to enterprises.

A new National Investment Bank will make available another £250 billion over 10 years in targeted lending. This new state bank will actually be a constellation of 12 regional investment banks, each accountable to regional stakeholders and governed by a regional board. It’s an idea that already works in many places, notably Germany. Even mainstream economics is starting to recognise that rather than “crowding out” private investment, public investment instead “crowds in” and encourages further investment by laying the foundation.

These new pools of publicly-governed investment will also creates space for an expansion of more democratic governance at the enterprise level, an opening for Labour’s “alternative models of ownership”. Imagine a shuttering plant—like Honda’s Swindon factory mentioned at the outset—taken over by its workers or the local council with the help of the Green Transformation Fund and retooled for green production.

These investment tools are more than necessary, yet they remain very abstract for most people. A total £500 billion in investment over a decade is not a common reference point. The regional manifestos bring the necessary, large-scale economic transformation promised by Labour down to size—to meaningful local numbers of jobs, plants, homes, wages and services.

Developing Confidence

Take just one example. In the West Midlands, an area hard hit by deindustrialisation and austerity, Labour’s investment plans foresee the creation of an electric vehicle manufacturing hub. This includes a “gigafactory” in Stoke that produces batteries, electric vehicle manufacturing, electric charging station expansion, and a plant to reprocess metals used in electric batteries. Together this would create thousands of new jobs and protect and improve tens of thousands of others. It is a coordinated plan for industrial transformation.

Beyond industry, the regional manifesto for the West Midlands also specifies funding changes for key public services like the NHS and schools, outlines a plan to build 11,000 council and social homes in the region in four years and enumerates people affected by policies from a higher minimum wage to free preschool. Together, this brief document starts to paint a more coherent picture of what Labour’s economic policies will look like on the ground.

People have a right to be sceptical of economic development plans. The Tories have long promised prosperity for all but delivered crushing austerity and stagnation for most instead. A blind faith in markets, in things simply working themselves out, also permeated New Labour. For decades, economic development has prioritised finance, real estate, low-wage services and privatisation, and even then bypassed large swathes of the UK.

The answer to scepticism is a vision that is both exciting and credible, one that gives working people a stake and is backed by a tangible plan. Labour’s election manifestos in 2017 and 2019 provided that grand vision and gave people that stake. The nine regional manifestos released this year bring that vision down to specifics.

Labour’s regional manifestos not only add context to the party’s figures, they increase working people’s confidence in the capacity to carry out a transformative agenda. They bring a vision for change.