13 August 2019

Rebalancing Britain: The South needs a proper regional strategy too

By John Denham

‘Rebalancing Britain’ is a major new collaboration between CapX and the Joseph Rowntree Foundation focusing on how the next Prime Minister should tackle the longstanding imbalances in the British economy. The project will focus not only on the well-documented North/South divide, but on the way smaller towns and cities are often left behind in national policy debates.

In the latest instalment in the series, former Cabinet minister and MP John Denham writes on how southern areas of England are often left out in the debate about devolution and spreading economic opportunity.

When I stepped down as Southampton Itchen’s MP I moved about 10 miles north to Winchester. Across that short distance, life expectancy rises by as much as seven years. Recent research by the Southern Policy Centre – a think-tank I set up four years ago – not only shows poverty in urban centres akin to that in any northern city, but stark social isolation and health problems in tourist hot-spots and chocolate-box villages. There are wide variations in economic performance. Travel from urban south Hampshire to Berkshire and GVA per head nearly doubles. Local employment for those not connected with London’s economy can often pay well below the national average. In any case, when housing and transport costs are factored in, much of southern England looks a good deal less advantaged.

I don’t blame northern politicians for arguing for their region, but it can be profoundly unhelpful. The misleading  use of aggregated regional statistics gives the impression that everyone living in a mythical ‘Londonandthesoutheast’ is uniformly prosperous. More important, northern special pleading obscures the need for devolution from Whitehall to all parts of England, including those close to London. This will require a profound change in what is currently a high-handed, unpredictable and arbitrary relationship where all the power lies with central departments.

While cities like Southampton and Portsmouth have undoubted benefited from City Deals (though probably by less than under the previous Regional Development Agencies) the ‘deals’ focus on how local areas deliver central priorities. The bidding relationship is costly and disempowering. The most prized skills in local authorities and Local Enterprise Partnerships are less often the ability to identify and solve local priorities and more often the ability to write creative and imaginative responses to the latest box ticking funding application to central government. At the time of writing Portsmouth, Southampton and the new BCP council (formed from Bournemouth, Christchurch and Poole) are competing with each other for urban transport funds. None are sure of success nor it is obvious that the ultimate outcome will represent the best transport investment for central southern England.

The government has encouraged sub-national transport bodies including Transport for the South East. That’s already done good work in identifying the transport corridors that are key, for example, to Southampton’s port and in connecting the urban communities of southern Hampshire. But it is far from clear that it will ever have the power to shape the priorities of Network Rail and Highways England: ministers are holding these key decisions close to their chest.

‘Local’ Industrial Strategies are increasingly being shoe-horned into a nationally pre-determined framework. While there is sense in focusing on nationally and internationally competitive sectors, this leaves no focus on the vast parts of the regional economy, including construction, retail, distribution and hospitality  as well as health, social care and education, in which most people work. It is the success of these sectors, not high-tech innovation, that will have most chance of transforming the lives of the less well off. It’s also  where the biggest improvements in productivity need to take place. It is the power to shape skills policy, transport management and investment, housing investment, local energy strategies, flexibility in town centre planning and business rates, and the capacity to ensure that anchor public sector institutions share the same regional goals, that will be key to success.

The challenge is not just to win a fair share of investment. The most deprived parts of England will get more than southern England, but there needs to be sufficient support to tackle our real problems.  Equally important is a strategy to develop the institutional capacity and cooperation that is often undermined by the centre. Early attempts to develop a combined authority for Hampshire and the Isle of Wight were undermined by government insistence on an elected mayor that no one wanted. A subsequent proposal based on Southampton and Portsmouth was blocked because government ministers placed more weight on opposition from local MPs than on support from local authorities. Recent changes to LEP boundaries, following central government guidance, have reduced rather than reinforced their relevance to functional economic market areas.

Such arbitrary behaviour by central government does breed a certain war-weariness about the value in developing regional collaboration. It can reinforce the tendency of each local authority and LEP to argue narrowly for its own interests and geography. The business community, with its many other current priorities, can become equally sceptical about the prospects of change.

Nonetheless, the Southern Policy Centre’s current work has shown both interest and capacity to develop a coherent regional economic strategy for the central south. It would build on the strength and potential of the three waterfront cities and reach across Hampshire and Dorset, which offers both real economic strength, strong higher education and a unique natural environment. Crucially it would be built on voluntary cooperation, not imposition or reorganisation. But will Whitehall back what the region wants or what it wants to impose?

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

John Denham is the founderr of the Centre for English Identity and Politics. He was Labour MP for Southampton Itchen between 1992 and 2015 and a Cabinet minister between 2007 and 2010.