10 June 2019

The right way to rebalance Britain’s economy

By Sam Gyimah MP

The biggest problems are often the ones we ignore. For Fleet Street pundits and Westminster politicians, it can be easy to forget that there’s a world beyond London. But you don’t need to spend long outside the metropolis to realise that successive governments have neglected large parts of the country. Too many places have been deprived of public investment and constrained by rules made in London, often for London’s benefit.

Today, I’m proposing a way to fix it: a new, ambitious investment fund to back growth and opportunity across the country, and a new deal giving back control to towns and cities.

What’s the problem?

The results of the UK’s neglect of its forgotten regions show up in many ways. You can see it in our growth figures: since the financial crisis, London’s economy has recovered, but output per head in most other English regions is lower. You can see it in investment levels: the Government invests more than twice as much in R&D in London as in the North-West or the West Midlands, even though business thinks it makes more sense to do R&D in the latter. And you can see it in everyday life. Why is Leeds the biggest city in Western Europe without a mass transit system? Why does a bus ticket cost a flat £1.50 in London, and you can pay with a debit card or Oyster, but in other English towns it usually costs more – and has a confusing variable price structure – and you can’t tap to pay?

It’s time we changed this. We need to up our game when it comes to investment outside London. Our One Nation Infrastructure Fund will create jobs and prosperity in parts of the country that have had little economic good news in recent years. More importantly, it will be a source of pride. Many of the poorest parts of the UK weren’t always that way: they were global centres of industry; they made a contribution to the world and to the country’s finances. Their civic spirit and their entrepreneurial energy are still there: with investment and greater control, they deserve to be great again.

What’s more, this is an existential issue for the Conservatives. If we are to be a party for the nation as a whole, and to live up to our values as Unionists, we must govern for the whole country. In 1900, West Yorkshire had nine Conservative and Unionist MPs. Merseyside had seven. Today there are five Tory MPs in West Yorkshire and one in Merseyside. If we can deliver prosperity and opportunity for cities and towns around the country, there will be no no-go areas for the Conservatives. If we stick to our geographical comfort zone, we deserve everything we get politically.

(If you live in a part of the UK that’s prospering, you might reasonably ask what this has to do with you. The answer, I would venture, is “a lot”. One consequence of the big imbalances between thriving and struggling areas in the UK is that a lot of people want to move to where the economy is buzzing. Another is that the taxes from the places that are doing well go to fund public services in the places doing less well. That’s as it should be. If you find where you live a bit crowded, if it bothers you that it’s hard for young people to afford a house, if you’d like your taxes to be lower, it is in your self-interest for other parts of country to prosper.)

What’s the solution?

Britain’s failure to invest in many parts of the country is a long-standing problem, and it will take money, energy and patience to put it right.

That’s why I am proposing a big new investment plan to back prosperity across the country – the One Nation Infrastructure Fund. I believe we can afford to invest £120billion through the fund over the next six years, and that by doing so

About now, you might be thinking “This sounds familiar” – didn’t the Prime Minister recently launch a Stronger Towns Fund? Haven’t some of the other candidates for Conservative leader proposed investment funds?

I believe the devil is in the detail. Just calling for spending money is not enough. To do this well and prudently, the One Nation Infrastructure Fund needs three things: the right ambition, the right vision, and the right control.

Ambition

The fund needs to be strategic in its size and ambition. The Stronger Towns Fund represented £1.6billion of investment. This sounds like a large number but, in the context of years of under-investment, it is frankly small change: a patch-and-mend approach that on its own cannot tackle the magnitude of issues we face.

We need to invest significantly more – and I believe we can do so in a prudent way.

The think-tank Onward identified the scope for £190billion of additional investment without endangering the public finances, and this is money we need to use cleverly.

We must take advantage of the good shape of our public finances and invest in those parts of the country that need it most, but we must be smart about finding funding in addition to those public finances. Look overseas and you will find impressive examples of a model that works, and that we as Conservatives should be embracing.

In countries such as Hong Kong and Japan, which have some of the best rail infrastructure in the world, the builders of rail lines co-fund their projects by building and selling housing along the line. It’s a remarkably simple and sensible idea – as well as bringing in additional money, the housing is inevitably close to modern transport links.

I would work to make major projects such as Crossrail 2 self-financing, freeing up billions of pounds to stimulate the parts of the country that badly need more investment in infrastructure to get moving again. That way, our capital gets the modern infrastructure it needs, without starving the rest of the country in the process.

Vision

The second thing we need to get right is the vision for the fund.

Investing in struggling towns in isolation is unlikely to work. The fund must invest in towns, cities and surrounding areas together, taking an integrated approach. Towns thrive when they are well connected to cities, giving people more access to jobs and businesses more access to workers. This often means investing in everyday local transport rather than flashy big-ticket projects. This approach helps cities too. A recent study showed that Birmingham could be 50 per cent richer if its public transport was faster; the same is true of other towns and cities. But to do this, we need to get away from spending dabs of investment here and there, or spreading it across the country like jam, and take a strategic approach.

The fund also needs to focus on the kind of investments that make a modern economy tick. When I was Science and Innovation Minister, I saw the powerful role technology and enterprise can play in driving prosperity. Today’s economy is based not just on bricks and mortar, but on investments you can’t touch or feel – such as research and development, software, new products, and skills. The fund should invest not just in transport infrastructure, but in world-class vocational education, high-speed broadband, and R&D.

Control

The final ingredient is control. Too many government funds are administered from Whitehall by civil servants who see the world from a Londoner’s perspective. Towns and cities have to second-guess what they want to see.

This is not a Conservative way of looking at the world. I believe that local people know better than central governments how their economies work, and where the opportunities are.

We know that, when we give back control to people, we get smarter decisions. Look at the work Andy Street is leading on the West Midlands’ ambitious industrial strategy. Or the determination with which the Northern Powerhouse Partnership has attacked the question of the economic future of the North.

I’d ensure that the allocation of the One Nation Infrastructure Fund is decided not in Westminster, but by empowered cities and towns and by metro mayors, putting control in the hands of the people who have most at stake.

It’s high time we invested more in the UK as a whole. By setting the right ambition and vision, and putting local people in control, the One Nation Investment Fund has huge potential to transform the country – the entire country – for the better.

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Sam Gyimah is the Conservative Member of Parliament for East Surrey.