Look north for industrial redevelopment

There’s a lot of talk around at the moment about regional redevelopment. George Osborne is proposing a high-speed train line to link Leeds and Manchester which, as we saw in our poll last week, could be a surprisingly popular policy, considering the continuing implacable opposition to HS2. Meanwhile yesterday, Labour leader Ed Miliband proposed the creation of ‘combined authorities’ with northern cities pooling resources and allowing regional authorities to keep and reinvest business rate revenues to help them encourage new business to form and create jobs.

What’s behind this sudden interest in the regions north of Watford? Well, these are politicians speaking and we’re a year away from a General Election, in the midst of a feeling that politics is too insular and doesn’t care about anything outside the ‘Westminster bubble’. Electioneering is probably a major factor in these announcements. But that doesn’t necessarily mean that they’re bad ideas.

’Electioneering is probably a major factor in these announcements. But that doesn’t necessarily mean that they’re bad ideas

The fact is that without some regional rebalancing, the UK economy will still be precariously unbalanced towards services and banking. London (and the southeast, but particularly and increasingly London) dominates the economy, but it isn’t and never has been an industrial powerhouse. With a few exceptions, such as mining in Kent and car building in Dagenham and Luton, the prosperity of the capital and its surrounding region has come from finance and trading. Britain’s industrial muscle was always further north: the foundries and factories of the Midlands, the steelworks of Yorkshire, Lancashire’s textile mills, the shipyards of the Tyne and the mineral industries that fuelled them. And that’s without even mentioning Scotland.

Manufacturing is recovering in the UK, but it’s not outpacing services; that imbalance which was so disastrous when the banks crashed in 2008 is still there. And that historic industrial muscle, which atrophied in the 1970s and 1980s (though in truth, it had been in decline from the 1920s) still hasn’t been rebuilt. International economics and globalisation have changed the way that things are built and where they are made. We can’t expect to turn the clock back.

But it’s undoubtedly true that the industrial culture, for want of a better expression, is more strongly ingrained outside London. Call it snobbery if you like, but apprenticeships are taken more seriously in the Midlands and the North; and there’s a greater emphasis on industrial skills. It’s why companies like Bombardier choose to stay in Derby; on a recent visit there I was told ‘it’s a railway town, the skills are here and the supplier base has always been here.’ It’s why the High Value Manufacturing Catapult is based in Coventry and Sheffield.

’The industrial culture is more strongly ingrained outside London

Because of these factors, it might be said that if you want to revive manufacturing and engineering as serious money-making industries, you’d be best advised to look to the North and the Midlands — outside the Southeast at any rate — as the place to do it. And that’s going to need some positive action from central and local government to make sure that funding is available to start businesses, acquire equipment and train staff. It’s probably still to early to say whether the abolition of regional development agencies and their replacement with local enterprise partnerships (of which Labour’s plans look like an extension) has had any effect; LEPs are voluntary and have only existed since 2010.

So a realisation that we have to rebalance the country has to be welcome, and shouldn’t be dismissed as empty soundbites or an attempt to weaken other parts of the country. Investment in infrastructure, education and entrepreneurship are all needed, so that development of advanced engineering and manufacturing can develop into the establishment of businesses that build things and train and employ the people that know how to build.