The major debate in economic development policy is over 'how' to rebalance the economy, not 'whether to'.
When the Chancellor gets to his feet to deliver his final Autumn Statement before the election on Wednesday, it’s a safe bet that he will make reference to his efforts to ‘rebalance’ the economy over the last five years, as well as setting out a range of interventions designed to boost regional economies beyond 2015, should the Conservatives be returned to Government.
The Treasury has already briefed that major roads investment will form a big part of the statement, and further news on northern rail investment and devolution to Manchester, Sheffield and Leeds is expected too.
Regardless of the political reaction on the day, such announcements will almost certainly carry broad support across all of the major parties. There is now a consensus between the Conservatives, Lib Dems and Labour that more must be done to boost economic growth outside of the Greater South East, through additional investment and devolution.
However, as I spoke at the Regional Studies Association Conference last week I was reminded that in academic circles at least, a debate is still raging as to whether rebalancing is desirable or even possible.
This debate is often caricatured as being one of two opposing camps. On the one hand, there are those who believe the economy is poorly served by being so skewed towards London, and remain committed to diverting significant resources to narrowing the economic gap between the Capital and the rest.
On the other are the ‘New Economic Geographers’, who make the case that the shape of the UK economy is essentially driven by macro-economic forces and the returns of agglomeration in London, and that most policy interventions to counter these trends are unlikely to succeed. Instead, policy should focus on helping people improve their life chances, rather than helping places to prosper.
Perhaps unsurprisingly given the academic backgrounds and positions of those hosting and attending the Conference, much of the discussion at the Conference tended towards critiquing the position of the New Economic Geographers, and re-stating the case for a more balanced economy.
But what struck me most in engaging with academics at the Conference was the dissonance between the conversations taking place in the room, and the pace at which policy reform is now being pursued by politicians.
Although many in the room were clearly anxious of the influence that New Economy Geography may be having over policymakers, the reality is that the major debate in economic development policy right now is over “how” to rebalance the economy, not “whether to”. And the answer that has emerged across all parties is through more powerful and better funded city-regions.
In particular, the current Government’s focus on combined authorities for major city-regions, decentralisation of strategic powers and commitment to more long term funding settlements is redrawing the institutional make-up of the country, and changing the balance of power between central government and cities in the process. The Greater Manchester deal in particular has the potential to be a game changer in the move towards more devolution within England.
The Liberal Democrat policy of ‘devolution on demand’ – whereby the emphasis is shifted from cities proving their case to government to get new powers, to government needing to make the case as to why they can’t have new powers, is similarly encouraging.
And the Labour Party’s commitment to boost the scale of funding available to cities and regions to control also emphasises the broad political support for boosting regional growth.
The truth is that each of these policy proposals draw on elements of both of these academic schools of thought –a concern over the dominance of London on the one hand, and an acknowledgement of the importance of agglomeration to drive growth on the other.
Whatever the specifics of Osborne’s announcements to boost regional growth on Wednesday, a clear direction of travel has been established towards asymmetrical devolution to city-regions – one that all major parties are broadly signed up to.
It’s now time for the academic debate about regional growth to better reflect this policy landscape, and focus squarely on how to make the most of UK cities’ economic potential in the years ahead.
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One issue here is the usefulness of having Business Improvement Districts (BID) or a Community Interest Company. The latter seems to be increasingly popular amongst some Business Circles, and the local (County and District) Councils. However my own knowledge of the pros and cons of the CIC is poor but I wonder if others have experience and advice to give. I assume, as the name implies, that a CIC has to meet certain requirements including financial stability and also has, if necessary, to compete with others . Any experieinces would be most welcome?