Britain is not alone in having depressed regions, but nowhere else is the problem so big and the desire to fix it so small
Youth unemployment in Bradford is double the UK average. The city is the third most affordable place in Britain to buy a home. Incomes per head in inner London are the highest in the European Union; those in Bradford are lower than the average of the UK and the EU, which includes the still extremely poor nations of the old communist bloc.
There has been much speculation about the reasons for George Galloway's spectacular victory in the Bradford West byelection. It was a one-off, some posited. It was a protest by the seat's big Muslim population against the war in Afghanistan. It was unhappiness with Ed Miliband's leadership and Labour's austerity-lite approach to the economy.
No doubt all these factors played a part, but something seems to be missing from the list of causes: namely that Bradford West, like many other towns and cities in Britain's regions, is deep in recession and suffering from a jobs crisis. This is not really about the failed war against the Taliban; it is about the failed war against poverty.
Britain is not the only country that has depressed regions. America has the rust belt of the midwest. Germany has the old Länder of the east. Italy has the mezzogiorno of the south. Yet in no other country is the scale of the problem so acute, the commitment in government to do anything about the problem so weak, the outlook so desperate. In Michigan, there have at least been signs of a renaissance in the car industry. In Brandenburg, there is at least the sense that policy makers will continue to make resources available for long-term development. In Italy, the poor south is matched by the rich north. In Britain, only two regions – London and the rest of the south-east – are richer than the national average.
The decline of the once thriving industrial heartlands has had four distinct phases. In the 19th century, the north was where the action was in the UK economy; the mills and the mines were the source of Britain's prosperity. But as the structure of the economy changed in the first half of the 20th century, the new chemical and light engineering industries tended to be based, not in places such as Bradford and Blackburn, but along the arterial roads of the south-east. The north remained dependent on the staples of cotton, coal and shipbuilding.
In the 1980s, the pace of decline accelerated. The deep recession in Margaret Thatcher's first term was heavily concentrated in manufacturing, and there are parts of the West Midlands, Yorkshire, Wales, the north-west, the north-east and Scotland that have never recovered. A tourist to Manchester or Leeds might assume from the spruced up city centres that the glory days of the 19th century were coming back, but the makeover is skin deep.
The rotting away of the regions entered a third phase during the deep recession of 2008-09, a downturn that despite originating in the financial sector disproportionately affected manufacturing. Output for the UK as a whole dropped by 7% in the recession; for the industrial regions it was probably closer to a 10% drop. Similarly, while the economy as a whole has been flatlining since the autumn of 2010, London and the south-east have been growing sluggishly while the other regions of the UK endured a double-dip recession.
A fourth phase now looms because up until 2008-09, regional policy – such as it was – involved redistributing tax revenues from the south into higher public spending in the north. As work by Karel Williams and Sukhdev Johal for the Centre for Research on Socio-Cultural Change at Manchester University has shown, the state compensated for the retreat of the private sector. London accounted for almost half the full-time job creation while Labour was in power between 1997 and 2010.
Deepening recession
Despite the budget transfers, income and output in the northern and western regions was falling behind London even during the pre-recession period. Williams and Johal say that the continuous increases in state expenditure were "clearly unsustainable" before the crash, and that the dependency of the regions on the public sector will be brutally exposed by the job cuts now being demanded by George Osborne to balance the books.
The chancellor seems to have a touching faith in the ability of market forces to unlock the potential of the regions. Reducing the public sector headcount will, it is assumed, create space for the private sector to flourish. Lower pay rates for public sector workers in the regions will lubricate this process.
This is pure moonshine. If there was going to be a spontaneous renaissance in the regions, it would have happened at some time in the past 100 years. The likely impact of government policy will be to suck demand out of the regional economies, deepening the recession. The drift of economic activity from north to south will be accelerated by the liberalisation of planning laws, which will enable more development to take place around London and along the M11 and M40 corridors. The sums invested in infrastructure in the regions are dwarfed by those lavished on London and the south-east. Plenty of crocodile tears are shed about the need to regenerate the north, but the brutal fact is that politicians care far more about whether the big investment banks of the City decide to up sticks and leave Canary Wharf for Frankfurt or Zurich. Hence Crossrail. Hence the talk of building a new London airport.
It is not easy to see how, when or why this state of affairs will change. It is in London and in the satellite towns that surround it that elections are won and lost. The Conservatives can win elections without winning seats in the north; cleaning up in the north is not enough to secure a majority for Labour.
The coalition's policy for the regions is some enterprise zones, High Speed Rail 2 and some rebalancing triggered by a cheaper pound. This won't do the trick. A more aggressive approach would be to pump demand into the regions, through public procurement, job subsidies and a lot more infrastructure spending. This probably won't do the trick either, and not just because there is a shortage of ready cash.
The real problem is that Britain is the most centralised country in the western world. London is the nation's economic, political and cultural centre of gravity. This concentration of power has become more and more pronounced. Break that stranglehold and there is a chance that real local democracy could deliver innovative solutions: regional currencies, green new deals, the use of pension funds to build houses, for example. There is, though, precious little sign of that happening. As a result, the poverty will get deeper and the howls of protest ever louder.