City regions aren't enough: it's time for a Council of the North

The Angel of the North, Gateshead. Image: Getty.

This time last year, IPPR North published a report which promoted the then rather unpopular idea that our smaller towns and cities were vital to the kind of economy the north needed to become.

It confronted some of the narrower conceptions of agglomeration and urban growth with emerging evidence of more complex city systems, and it made a case for a Northern Powerhouse that was far more inclusive than had hitherto been promulgated by the then chancellor. Now, with a big shove from Leave voters, thinking about “inclusive growth” is all the rage.

On Friday, IPPR North published a new report – Taking Back Control in the North – which champions another currently unpopular cause: regional governance.

There is a widely-held view that we shouldn’t talk about the structures and institutions of the so-called northern powerhouse. This view is promoted primarily by those who currently hold the reins: city leaders and chief executives, big businesses, government ministers and civil servants. But there is increasing evidence that the northern economy can only flourish when it has the institutional capacity to drive its own industrial strategy: England’s weak sub-national institutions lie at the heart of our severe regional imbalances.

The evidence is best exemplified in the work of Phil McCann, now at the University of Sheffield. To summarise the incredibly detailed analysis laid out in his most recent book, he makes three key points.

First, the UK’s weak long-term productivity is principally a result of the differential effects of globalisation on different parts of the country. There has been a very poor transition of economies outside London from their industrial pasts, while the benefits of globalisation have remained confined to London and its hinterland. For too long the former problem has been masked by the latter success.

As a result, “the UK economy is not only diverging but it is now disconnecting, decoupling and dislocating into two or possibly three quite separate economies”. London has become insulated and isolated from the wider economy, something likely to be exacerbated by the UK’s departure from the EU; while policy and practice has wrongly assumed that the success of the capital city brings aggregate benefits to the rest of the economy.

Second, explanations for poor productivity performance outside London have tended to be weak. There is little evidence of problems being associated with cities being undersized; educational differences are too small to explain the size of the productivity gap.

And if there is a brain-drain, then it is “tiny and also remarkably stable… Human capital and spatial sorting explanations provide few clues as to the UK’s interregional experiences”, as is the case with knowledge spillovers, financial and fiscal linkages too. McCann argues that most of the common diagnoses put forward concerning the North–South divide are actually the symptoms rather than causes of the problem.

Thirdly, and perhaps most crucially for the north, is the fundamental problem facing the UK economy. There are high levels of regional differentiation and inequality caused by the differential effects of global shocks; but there is insufficient regional autonomy in order to mobilise the appropriate local players, institutions, knowledge and capital in order to develop effective responses.

The core argument is that British regional policy and industrial strategy has stumbled on account of its failure to address issues of subnational governance and its poor awareness of the economic geography of the nation. This argument is all the more compelling when we consider that the two ‘economies’ of the UK which have demonstrated the greatest relative success are London and Scotland, where higher levels of subnational autonomy have enabled them to maximise their local economic advantages, in relation to financial and professional services in the City of London and as regards oil and gas in Scotland.

Brexit and a new approach to Industrial Strategy throw these issues into even sharper relief. With Nicola Sturgeon and Sadiq Khan holding regular, if contested, meetings with ministers and officials on Brexit, Northern council leaders wrote to the Prime Minister requesting similar meetings, only to be rebuffed some six months after their letter had been sent. And with devolution in the doldrums, the new industrial strategy green paper relegates any consideration of institutional capacity and leadership to pillar 10; even then, it seems preoccupied with strengthening local enterprise partnerships.

Important as they, are LEPS – even in the most promising city regions – are simply too small to punch their weight in the global economy. In another crucial insight from McCann’s data analysis, he reveals that the UK has a ‘regional’ more than an ‘urban’ problem – and that identifying the appropriate scale for tackling our economic imbalances is key for building institutional capacity.

IPPR North has long argued that the £300bn Northern economy – worth twice that of Scotland – with 15m people and 1m businesses is well-placed to compete with the most successful and similar-sized nations and states. It has a geography that can transcend the most obvious parochial and political rivalries. And, crucially, it provides a viable platform for fiscal devolution at scale. It simply needs stronger leadership and a Great North Plan.


So what then of the institutions that might be needed? Out proposal is for a Council of the North. Made up of the same 19 constituent members of the current Transport for the North board and with similar voting mechanisms it avoids the need for a “new layer of politicians”. It should also have a very clear and narrow remit to develop and implement a Northern industrial strategy acting as a go-between between government, combined authorities and other more functional agencies such as Transport for the North.

But any serious governance requires democratic legitimacy, particularly if it wants to have any role in relation to public finances. Again, transcending political challenges and looking to 21st century models of democratic innovation, we propose a Northern Citizens Assembly, its members chosen by lot, to hold the Council of the North to account and give it some broad direction.

The precise form either of these new institutions might take is worthy of much further debate but, unpopular as it may be, the time has come for England to face up to its governance problems. If we fail to do so all hopes for our new industrial strategy will fall flat.

Ed Cox is director of IPPR North and tweets as @edcox_ippr.

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A growing number of voters will never own their own home. Why is the government ignoring them?

A lettings agent window. Image: Getty.

The dream of a property-owning democracy continues to define British housing policy. From Right-to-Buy to Help-to-Buy, policies are framed around the model of the ‘first-time buyer’ and her quest for property acquisition. The goal of Philip Hammond’s upcoming budget – hailed as a major “intervention” in the “broken” housing market – is to ensure that “the next generation will have the same opportunities as their parents to own a home.”

These policies are designed for an alternative reality. Over the last two decades, the dream of the property-owning democracy has come completely undone. While government schemes used to churn out more home owners, today it moves in reverse.

Generation Rent’s new report, “Life in the Rental Sector”, suggests that more Britons are living longer in the private rental sector. We predict the number of ‘silver renters’ – pensioners in the private rental sector – will rise to one million by 2035, a three-fold increase from today.

These renters have drifted way beyond the dream of home ownership: only 11 per cent of renters over 65 expect to own a home. Our survey results show that these renters are twice as likely than renters in their 20s to prefer affordable rental tenure over homeownership.

Lowering stamp duty or providing mortgage relief completely miss the point. These are renters – life-long renters – and they want rental relief: guaranteed tenancies, protection from eviction, rent inflation regulation.

The assumption of a British ‘obsession’ with homeownership – which has informed so much housing policy over the years – stands on flimsy ground. Most of the time, it is based on a single survey question: Would you like to rent a home or own a home? It’s a preposterous question, of course, because, well, who wouldn’t like to own a home at a time when the chief economist of the Bank of England has made the case for homes as a ‘better bet’ for retirement than pensions?


Here we arrive at the real toxicity of the property-owning dream. It promotes a vicious cycle: support for first-time buyers increases demand for home ownership, fresh demand raises house prices, house price inflation turns housing into a profitable investment, and investment incentives stoke preferences for home ownership all over again.

The cycle is now, finally, breaking. Not without pain, Britons are waking up to the madness of a housing policy organised around home ownership. And they are demanding reforms that respect renting as a life-time tenure.

At the 1946 Conservative Party conference, Anthony Eden extolled the virtues of a property-owning democracy as a defence against socialist appeal. “The ownership of property is not a crime or a sin,” he said, “but a reward, a right and responsibility that must be shared as equitable as possible among all our citizens.”

The Tories are now sleeping in the bed they have made. Left out to dry, renters are beginning to turn against the Conservative vision. The election numbers tell the story of this left-ward drift of the rental sector: 29 per cent of private renters voted Labour in 2010, 39 in 2015, and 54 in June.

Philip Hammond’s budget – which, despite its radicalism, continues to ignore the welfare of this rental population – is unlikely to reverse this trend. Generation Rent is no longer simply a class in itself — it is becoming a class for itself, as well.

We appear, then, on the verge of a paradigm shift in housing policy. As the demographics of the housing market change, so must its politics. Wednesday’s budget signals that even the Conservatives – the “party of homeownership” – recognise the need for change. But it only goes halfway.

The gains for any political party willing to truly seize the day – to ditch the property-owning dream once and for all, to champion a property-renting one instead – are there for the taking. 

David Adler is a research association at the campaign group Generation Rent.

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