The process is quite simple and fairly obvious. Government policy is the bedrock of all economic development. Government officials will always have the most knowledge about the capital, so all policy is tailored to it. It's no surprise that they don't make policies that benefit the North given that they don't live there.
What policy would benefit the north, without (even further) subsidising it?
If we could invest £10Bn and get £20Bn back for the economy with our money back over time then not a single politician would turn that down, there's actually been a load of support over the past ~5+ years for "levelling up" (AKA investment in the north) but we've not invested much because the returns are abysmal. Meanwhile there's a whole stack of projects with good returns in london, but politically it's really difficult to "give more money to london" so we don't really do them. Bakerloo line extension and crossrail 2 for example.
The Elizabeth line, will over time pay for itself entirely with fares alone, yet has also already added ~£2.50 to the economy for every £1 spent.
This is a absolutely classic example of chicken and egg, network effects and first mover advantage. There's perhaps a case for being absolutely ruthless and just spending an obscene amount of money on Manchester/Leeds/Liverpool. What might it look like?
-No third runway for heathrow, instead BHX gets 2 more runways (or MAN 1 more) and all the funding it needs to become an international hub, including an reduction in APD for 5 years or something. Central London in ~48Mins via HS2 is already committed and being built, frankly that's not that much different to what it practically takes to get from a random heathrow terminal to central.
-HS2 to Manchester AND Leeds (via the branch just above BHX), that would connect BHX to those cities in <30 Mins or so and to London much quicker.
-Trams for Leeds, maybe a metro for Manchester.
-Liverpool>Manchester>Leeds express line (which seems committed).
-Enterprise zone covering all underdeveloped commercial areas in Leeds, Liverpool, Manchester and Birmingham. Give rates, or tax relief on businesses investing, or employing in the zone, planning exemptions, easier permitting.
Anything short of an absolutely insane bet like this, just isn't going to work. Chucking 1Bn to Leeds for them to buy some trams just isn't going to have a transformative effect, it might actually be a total waste because, in short, network effects.
The North of England frequently runs a combined fiscal deficit in the tens of billions, with all of that subsidy coming, effectively, from London and the SE.
The reason for investing in the North is pretty simple: people live there. We have three options: do something productive with he area, do nothing and continue to pay for its decline, or move all the people to London and let house prices rise accordingly. What you said about first mover advantage rings true here. We can either pick the most developed city and devote resources elusively that area, or we can accept a proportionally smaller economy spread out across the whole country.
I also fail to see how London is subsidising these areas. It seems to me that they'd be much better off if they were able to run themselves. This is a classic case of purposeful under-investment. You see it in business as well. If someone wants to kill off a given project, they'll deprive it of funding to he point it can't operate properly then use the lack of profit generated as an excuse to axe it. The issue we have is that we can't just axe the North.
There is also the issue of measuring productivity. You say investments in London are more productive because they generate more profit, but consider that an equal investment in the North might have a much greater effect on the quality of life for the people living there. Should we measure investments by how much money they return or how much they improve people's lives? I am reminded of industrial strategy in the Soviet Union. They invested only in the most "productive" (highest ROI under capitalism) things such as heavy industry and very little in consumer technologies that make people happier. The result was rapid industrialisation which probably had the best effect in the long run. The question is how long term are we thinking? At some point, you've gotta start paying to make people happy instead of just investing in the most profitable area.
Good luck with the "but people live there, thier lives can be improved who cares about a poor ROI" argument.
I mean that kind of genuinely, I see your point, but good luck trying that argument on the treasury.
It's a fact that they're subsidised. They have regional mayors, do you think a devolved solution for each northern city is really reasonable or desirable? If we think it's desirable and will stop them being subsidised then why hasn't it worked for Scotland, Wales or NI? All of which take more than they put it.
Luckily you don't need to convince the treasury, just the electorate. And they are desperate for it. As you said, Bojo's levelling up scheme was like electoral crack. Perhaps some day we will achieve the level of democracy where the government enacts policies which are universally popular. Maybe it will happen soon if Reform UK actually follows through on proportional representation. Though it's a sorry state that those racist cretins are our best shot. Though I don't know if PR alone would be enough, we'd have to do something about the media as well and they're pretty buddy-buddy with Farage.
Historically, the UK was run for the benefit of an elite and the regions they lived in, but they discovered that that ran counter to their own interests. They reversed the economic parts of that in Ireland in the 1890s ("Killing Home Rule with Kindness"), and they did so in Northern England after the Wall Street Crash. For example, for part of the 20th century, companies were banned from expanding anywhere outside of deprived regions which caused industrial havoc in the South without providing much long-term benefit to the North. The root problem isn't that government didn't try extreme measure, it's that those measures failed at massive cost, so proposed ones are now subject to much more rigorous scrutiny.
Power in the UK is highly centralised in London, but that's not necessarily bad for regional economic development, e.g. the office ban mentioned above would not have been agreed to by southern devolved regions and the redevelopment of the former East Germany was driven by Bonn (former West Germany's capital city). Competition in government also isn't necessarily good for regional development and the corn laws and free trade that the author credits to Northern England's influence caused another famine in Ireland in 1879. It's also worth noting the North East England referendum of 2004, when London's project of devolving power to the English regions was blocked because Northern English voters overwhelmingly didn't want it.
British manufacturing suffered an unusually steep collapse relative to other western countries in the late 20th century that hit Northern England particularly hard, while the benefits of the slightly later financial services boom were inevitably focused on the country's financial centre in the South. The manufacturing collapse was partially driven by government policies, but not in the way generally thought - for decades, pre-Thatcher governments had been taking fairly regular extreme measures in response to various crises (balance of payments deficits, unbalanced regional development, oil shortages, strikes, etc.), that made life much harder for businesses. But the collapse was mainly driven by the fact that Britain in the second half of the 20th century was mind-bogglingly bad at manufacturing. I suspect that the failure of that entire section of the British economy would be a better starting point for an analysis of what went wrong in Northern England.
There's already a literature analyzing this. For instance William Lazonick's 1983 Business History Review article, "Industrial Organization and Technological Change: The Decline of the British Cotton Industry," and his subsequent book "The Decline of the British Economy: An Institutional Perspective" (1987)
Part of the issue with the UK being bad at manufacturing was (ok it’s a cliche but I’ll say it anyway) that Thatcherism in not wanting to deal with the unions and the social powers they represent, defeated socialism by destroying the work and replacing industry with nothing. There’s no reason the UK couldn’t manufacture ships or precision engineering or steel - it was set up for exactly that. But doing so involves negotiating with unionised power, who vote Labour, and it was a quicker solution to merely destroy and keep destroying social cohesion and the unions around it – “there’s no such thing as society” – by destroying and defunding the work. The London-based finance powers also lost interest in funding industrial production and its workers alongside when moving money around and corruption can be done from the office in London without having to negotiate with union bosses and their insistence for a bigger piece of the pie (that they’re baking).
If you look at somewhere like South Korea, who 60 years ago had no major engineering or shipbuilding, the UK could be leagues ahead of them. The difference is that the South Koreans had the appetite and impetus to do it, whereas in the UK the government and finance planners had the exact opposite impetus.
Interesting. If we look at the idea of subsides between region, and we accept that this the right way of thinking about it and assume it's factual and that simple. Then I think one of the questions worth asking is effectively do we want to try reduce that inequality or do we want to perpetuate it. Neither is obviously right or wrong, but I think that's the core question. If we are believe to the idea in the article then we can see a reasonable case that the disparity between the regions has been, if not deliberate, than an obvious outcome of previous policy. Which makes the argument that we shouldn't invest in the regions requiring subsidy circular.
There are investments beyond transport that we could make. Not all investments generate or should be judged against short-term returns. That a 1B tram system in Leeds may be less than effective does not mean we shouldn't invest at all. I don't see why we need an insane bet rather than a programme of improvement across the board.
I think most people would agree that some imbalance is natural, perhaps even good but the current level is bad.
Bad, that the only net positive part of the entire UK comes from London and it's dependent, the SE.
It's clearly caused societal issues and apart from everything else means we're putting all our eggs in one basket. Transporting goods, energy and people into London from all over the UK is clearly worse than if we spread it around a bit.
I'm not even sure it's that great for Londoners. What's the point of a six figure salary if it gets swallowed up buying a tiny terraced house or a flat too small for a family.
If we're talking about fantasy airport extensions, it might be good to have at least one decent international airport in Yorkshire rather than expanding MAN and/or BHX. Failing that, you would need to significantly improve the transport infrastructure around those airports to make other parts of the North easier to reach. Fast, reliable (!) train services for example. Car hire services suited to business people not just holidaymakers, i.e. reception desks in the same building as the terminal and cars you can drive away from just outside - not waiting an hour for a half an hour bus to where the car hire places are in a different village.
Having spent my teen years in backwater Sacramento, I can confirm that it did not feel much like the center of anything.
Adding a few more examples to your list, neither Olympia (WA), Salem (OR), nor Carson City (NV) are economic or social centers of their respective states.
This may stumble on a solution to the problem. London combines government and financial centers. Axe parliament and 10 Downing Street and rebuild government infrastructure from scratch in some inland port where it can drag influence north.
Sacramento may not be exciting, but it is self-sustaining with fairly high property costs and a huge commuter population. I think one of the things that makes California successful is the government is in a boring city with few distractions.
Agree, chuck parliament and number 10 in a office building in Leeds or something. It really would be transformational, but will it happen? Not a hope in hell.
Germany is the only Western European country with an Eastern European capital. As a result, Berlin was poorer than the rest of the country, but this is no longer the case. Since reunification, Berlin has had the fastest growing economy in Germany and is now close to Hesse in terms of GDP per capita.
Berlin is odd... for several factors. Just looking at the last 100 years, I fail to see any capital (that was not directly a war zone) be: not capital, capital, divided, part of 2 countries, an exclave...
