Speech at Party Conference fringe event hosted by the North West Regional Development Agency and One Northeast
"In my job as Shadow Secretary of State for the Regions, I have been blessed with more opportunities than most to escape from the Westminster village, and in particular to focus my attention away from the Westminster village.
On the tours and visits in the North of England over the past nine months, I have been struck by two things. First, that the economic and social challenges of the North are far more complex than the hackneyed phrase "north-south divide" would have us believe.
Secondly, that there is a division between the optimists and the pessimists. Fewer and fewer are prepared to go on playing the role of victim of the South, or victim of neglect or of industrial and economic failure. An increasing number of people in the north are optimistic that they can bring success and economic success to their town, district or city, by their own perseverance and enterprise. There is no future in the old grudge politics.
For all the traditional bitterness expressed by Labour politicians, they remain the pessimists. The stated aim of the government is not for the North to catch up with the South, merely
"over the long term [to] reduce the persistent gap in growth rates between the regions".
The Northern Way Steering Group, under the chairmanship of Sir Graham Hall, is firmly in the optimist camp. Sir Graham Hall aims to "unlock the potential for faster economic growth" and for the north of England "to achieve [the] national UK average Gross Value Added per head within 25 years". The Conservatives are natural optimists, so you have our wholehearted support.
When we talk the language of economic disparities, what do we really mean? As the ODPM Select Committee recently confirmed, disparities within regions are much more significant than those between regions.
Take, for example, Liverpool Riverside, a constituency with the 8th highest level of unemployment in the UK at 9.1%, and Westmoreland and Lonsdale, which has the third lowest. Both are grouped within the same region but, obviously, have differing needs and different priorities.
First, let's be clear, the north of England is, for the most part, undergoing a process of renaissance, which central government can catalyse, but not lead. From a former reliance upon manufacturing industries, businesses in the north of England have shown their ability to adapt and move higher up the value chain. Inner city areas are undergoing regeneration projects of world renown. Take the quayside development in Newcastle started under the Tyne & Wear Development Agency and funded initially through the single-regeneration budget. The project has now expanded into the re-development of Gateshead where a new art gallery has just opened and where a new music centre will shortly open. All this is down to the dynamism and vision of people in the north of England.
The recent revolution in communications technology is creating unparalleled opportunities for growth in the north of England. These days, you can run currency derivatives trading or an engineering design consultancy, from anywhere, down a broadband connection. We are all living in a single, global economic cluster. Every successful business of the future is knowledge-based. So you can opt out of the commuter rat race in the South East, buy a house twice the size, 15 minutes from the office in one of the North's dynamic commercial centres, close to the Pennines, or the Lakes or the Scottish Borders.
However, the fact remains that economic development in the north of England still lags behind the rest of England. In terms of Gross Value Added per capita, the north of England has grown over 1% slower than England as a whole since 1998. Today, income from social security benefits is over 4% higher than for the rest of England, while productivity in relation to the United Kingdom as a whole has actually declined since 1996. As much as it may champion itself as the Party of Northern England, during a period of sustained economic growth in this country over the last seven years, Labour have failed to even begin to close the economic gap between north and south.
Government restrictions on growth
Closing the prosperity gap requires action at national and local level. National competitiveness matters. The UK has slipped from ninth to nineteenth place on the IMD World Competitiveness Scoreboard since 1997 . It is those areas which have to catch up the most, which suffer the most from national uncompetitiveness. Conversely, they have the most to gain from overall growth in the UK competitiveness. There are many things the Government could do on a national scale which would be of particular benefit to the north of England.
The British Chambers of Commerce estimate that red-tape and regulations have cost British businesses a massive £30 billion since 1997. How much of that has been lost from the north of England? How many northern businesses have been forced to close, or prevented from expanding because of this millstone hanging round their neck?
Since 1997, Labour has introduced over 66 tax rises in Britain. As numerous recent econometric studies long-term effect upon economic growth. The April 2003 Budget Report shows that net taxes and social security contributions will rise from 34.9% of GDP in 1996/7 to 38.2% in 2007/8. Unless measures are taken to cut this burden, our long-term GDP growth will suffer as a result.
At the same time, John Prescott - the greatest modern grudge politician of them all- is doggedly pursuing policies that will have a terrible impact upon the north of England. I make no apology for focussing attention on the personal track record of this man.
He created the so-called integrated transport policy - it has been scrapped. He gave a ludicrous promise to cut traffic by cancelling the roads programme, and of course, along with the economy, traffic carried on growing. He set up the Strategic Rail Authority, which will now be abolished.
Now he is inflicting possibly the worst of his disasters - on the English regions. As the south east of England becomes increasingly crowded, house prices rocket, and the quality of life there declines, people are beginning to recognise the attractiveness of life outside London and its hinterland. The north of England has a great deal to offer - not least lower property prices and a higher quality of life.
However, by forcing the construction of hundreds of thousands of new homes across southern and eastern England, alongside a demolition policy in the north, Mr Prescott will reinforce the net-migration from north to south. Dynamism and skills will be drawn south, instead of employers moving north. The declining populations of the cities in the north will continue to decline.
Moreover, the elected regional assemblies which Mr Prescott is desperate to impose upon the north of England would leave it at a permanent economic disadvantage. Whilst there has been controversy and debate over exactly what powers an assembly would have, one thing is for certain - they would mean higher taxes and an extra layer of bureaucracy and delay. They will make the north of England an economically less attractive place to live and invest in, because they represent fake devolution, stripping powers and independence from local councils and binding them into the target-led Whitehall bureaucracy.
It is interesting to note that the words "Secretary of State" appear no less than 229 times in the draft assemblies bill. This is not decentralisation for optimists. This is the pessimists seizing more central control.
If the Northern Way is to be a success, it must be driven by the genuine needs of the people and businesses of the North. It must not become another vehicle for the delivery of central government targets. The Northern Way must be exactly that, not Prescott's way; or Westminster's way. The danger is Labour's target-driven approach and restrictions they impose on local councils. Regional government, whether elected or not, is also just an outpost of Whitehall. The Northern Way will fail if it is just another Whitehall blueprint imposed from above.
The Northern Way is rightly focused upon issues that are both local, and span the north of England as a whole. Though led by the three northern RDAs, the agenda must recognise the differences between cities and their hinterlands. The agenda must respect local government, as well as transcending artificial regional boundaries.
The Northern Way is developing closer links and cooperation between local councils - of all parties - which represent identities with which people feel a real affinity. This is exactly the model we propose. Whereas regions represent the old top-down approach, our vision for local authorities to 'cluster' on a voluntary basis, to achieve the economies of scale and strategic oversight alongside real accountability to the local councils involved. This should be determined by local councils themselves - bottom-up voluntary cooperation instead of top-down dictation. Moreover, those councils should be free to determine their own affairs in such matters as planning and transport.
The Northern Way is an ambitious project, and Conservatives support it. Conservative council leaders like Andrew Carter from Leeds is involved with it, but it must have the freedom to succeed. Given that freedom, I have little doubt that under the leadership of people such as Sir Graham Hall, the steering committee will be able to ensure success."