by Professor Steve Fothergill – Centre for Regional Economic and Social Research (CRESR)
On 4 December the Labour Party published A New Britain: renewing our democracy and rebuilding our economy, the report of a commission chaired by former Prime Minister Gordon Brown. The report had been requested by Labour Leader Kier Starmer, who welcomed the recommendations and called for their implementation by a future Labour government.
The Brown Commission report is a dense 153-page document covering a wide range of issues – in several respects a Labour equivalent of the UK government’s 350-page White Paper on Levelling Up published earlier in the year.
The Report’s Proposals
Media coverage focussed on the proposal to replace the House of Lords by an Assembly of the Nations and Regions but there is a lot more in the report and not just on constitutional reform, though more than half the recommendations are of a constitutional nature. If the recommendations were to be implemented in full there would certainly be considerable organisational change, in particular a shift in power from the centre to local players and new arrangements for inter-institutional co-operation.
A key objective of the proposed constitutional reform is to promote national economic growth and to narrow the differences in prosperity and well-being across the UK. The report’s lofty aspirations, backed up by survey evidence about how people feel about the way they are currently governed, are hard to question. The underpinning assumption is that the highly centralised nature of governance in the UK (and in England in particular) lies at the root of the big gaps in prosperity between places.
On local and regional economic development, the most significant proposals are that:
- There should be a constitutional requirement to rebalance the UK’s economy
- Towns and cities across England should be given new powers to drive growth and champion their areas
- The UK Infrastructure Bank should be given an explicit mission to address regional economic inequality
- The British Business Bank should be given a new remit and become the British Regional Investment Bank
- There should be an economic growth or prosperity plan for every town and city, supported by local players
- 50,000 civil service jobs should be transferred out of London
- Local government should be given greater long-term financial certainty, with competitive bidding reined in
- Local government should be given more capacity to generate its own revenue with new fiscal powers
- Collaboration between neighbouring local authorities should be ‘bottom up’ rather than imposed from above, and not tied to the creation of elected Mayors
On Scotland, the report says there is a strong case for pushing power as close as possible to people and for considering new forms of local leadership such as directly elected Mayors. It stops short of similar recommendations in Wales, mindful of the constitutional review commissioned by the Welsh Government that is currently underway.
It’s difficult to take issue with the report’s goals and it’s likely that local authorities will welcome the direction of travel. But is the report a blueprint for successful local and regional economic development under a future Labour government? In truth, the proposals are probably only part of what is needed. The report leaves important gaps.
First, too much reliance is placed on devolving power. Enhanced local powers and responsibilities will be welcomed and local decision-making is likely to prove more in tune with local needs and opportunities. But would be wrong to assume that the present gaps in prosperity across the country can simply be put down to an over-centralisation of power. There have been many other factors at work – it’s impossible to attribute the vast job losses in older industries such as coal, steel, shipbuilding and textiles, for example, to the balance of power between London and local players. Redistributing power to the UK’s nations, regions and local areas may help, but it’s only part of the jigsaw.
Second, the report gives too little attention to immediate challenges and choices. Constitutional reforms, as important as they might be, are unavoidably long-term in their impact. They often require legislation and there is then usually a further delay before the reforms are fully implemented. It would be surprising to see much impact on-the-ground in the first term of a Labour government. However, Labour would be confronted by key decisions on local and regional development pretty much immediately on taking office because just about all the present-day Levelling Up funding streams finish in March 2025 at the end of the present Spending Round. Exactly what should come next? More of the same? Merged funding streams? A bigger overall pot?
Third, the report places too much emphasis on high-tech clusters. It’s fashionable to laud a handful of industries at the leading edge of technology and they are no doubt deserving of support, but they need to be kept in perspective. In most parts of the country, they are small employers at present and likely to remain so for the foreseeable future. By contrast, in most places there remains a large body of output and employment in more routine production and services. These sectors run the risk of being neglected in the pursuit of high-tech and R&D-based activities. An over-weening focus on high-tech also risks strengthening the economic advantage of London, the South and a handful of university cities at the expense of the towns and smaller communities (in former mining areas for example) where economic disadvantage is already acute.
Fourth, the report attaches too much importance to banking finance, specifically through the UK Infrastructure Bank and British Business Bank. No doubt they play a useful role, but it has never been clear that access to loans or equity is a big problem in less prosperous areas. What’s really needed are capital grants to help attract mobile investment projects, for example, and to gap-fund land and property development. The report fails even to mention the UK government’s new Subsidy Control regime which has recently abolished Assisted Area status – a cornerstone of UK regional development and business support over the last 60 years. Is this something a Labour government would restore?
Fifth, there is not enough emphasis on targeting. Raising the less prosperous parts of the UK to nearer the national average, let alone to match London and the South, is a challenge that requires resources to be targeted rather than spread evenly. Many of the reforms proposed in the report would apply to all areas – devolution, access to new funding streams, production of local growth plans, etc. This might raise national economic growth but if all areas are treated equally the gaps are unlikely to narrow. A Labour government faces hard choices – how would it allocate UK government money between local players and, if competitive bidding is not the way forward, exactly what formulas would it use?
Labour needs to supplement the report of the Brown Commission with much more detailed thinking about its policies for local and regional economic development.