Here’s how Britain can radically decentralise its economy

Can we just blame this lot? The Bank of England. Image: Getty.

A “rigged” system, the “left behind” and the need to “level” the prospects of UK regions are not phrases you typical hear in the Tory lexicon – but the Conservative Party leadership contest has finally forced the candidates to think about tackling Britain’s economic divide. However, neither has found a way to tackle economy’s structural flaws.

The financial crisis and era of austerity may have magnified these structural problems, but the problems predate both. The UK’s economic performance, measured in terms of labour productivity, has been diverging from international peers and between UK regions for decades. The average British worker is now almost a fifth less productive than the average worker from the G7 group of advanced economies. UK workers also reside in a country that is the most regionally unequal in Europe.

Vague calls for billions to be spent on infrastructure by some candidates at least recognise this fact, but this policy addresses only one part of the UK’s economic muddle. Other issues, such as the UK’s low levels of R&D spending, weak diffusion of best practice across firms, pervasive skills mismatch, shackled local government, credit constrained SMEs, and myopic corporate governance are still as relevant today as they were at the time of the last leadership contest.

These issues cannot be addressed by one ‘silver bullet’ policy. However, there is a unifying theme: a concentration of political and economic decision-making in only a few regions, firms and institutions.

Framed in this way, the solution is simple: a coordinated effort to decentralise Britain.

Plans to decentralise have been proposed before: just ask Michael Heseltine, a previous failed challenger for the Tory mantle. However, these decentralisation plans have been limited in scale and ambition.

Decentralisation must be broader than a policy proposal. It has to become a governing philosophy that guides all policy making. That is the essence of my team’s joint-winning entry for this year’s IPPR Economics Prize.

Applying this philosophy to local government would mean policies that decentralise economic activity and political governance, empowering local people and reducing local business costs. A policy such as mobility funding, which helps households and businesses relocate to new regions, is one such policy within this framework that can encourage a rebalancing of growth.


A reversal of the UK’s regional inequalities will also improve social cohesion, re-legitimise capitalism, and guard against extreme alternatives that are destructive in the long-term.

Decentralisation can also be applied to the private sector. The wide disparity in productivity between the UK’s firms can be addressed by reforming intellectual property law, adopting a system of compulsory patent licensing and incentivising collaboration between firms. Decentralising firm-level decision-making can also reverse the culture of short-term profit extraction by ensuring that the views of employees and local communities are considered in corporate boardrooms.

The financial sector in particular will serve the economy better if it is more local and community-minded. For example, we propose establishing a network of community banks that will be more responsive to the needs of credit-constrained firms and less vulnerable to global financial shocks.

All of these policies and the many more proposed in our winning report should combine as part of a ‘big push’ that can truly achieve inclusive prosperity.

Crucially, a blueprint for decentralisation will only transform the UK economy if it is adopted wholesale. This requires clear strategic leadership from Westminster, especially since implementation will be a long-term project that may straddle more than one parliament. In short, the next Prime Minister must resist the piecemeal efforts of the past and seize the opportunity to build a country that is more prosperous, less economically divided and less disconnected from decisions over its future.

Farooq Sabri was joint winner of the IPPR Economics Prize. The opinions expressed in this article are those of the author only.

 
 
 
 

There isn’t a war on the motorist. We should start one

These bloody people. Image: Getty.

When should you use the horn on a car? It’s not, and anyone who has been on a road in the UK in living memory will be surprised to hear this, when you are inconvenienced by traffic flow. Nor is it when you are annoyed that you have been very slightly inconvenienced by another driver refusing to break the law in a manner that is objectively dangerous, but which you perceive to be to your advantage.

According to the Highway Code:

“A horn should only be used when warning someone of any danger due to another vehicle or any other kind of danger.”

Let’s be frank: neither you nor I nor anyone we have ever met has ever heard a horn used in such a manner. Even those of us who live in or near places where horns perpetually ring out due to the entitled sociopathy of most drivers. Especially those of us who live in or near such places.

Several roads I frequently find myself pushing a pram up and down in north London are two way traffic, but allow parking on both sides. This being London that means that, in practice, they’re single track road which cars can enter from both ends.

And this being London that means, in practice, that on multiple occasions every day, men – it is literally always men – glower at each other from behind the steering wheels of needlessly big cars, banging their horns in fury that circumstances have, usually through the fault of neither of them, meant they are facing each other on a de facto single track road and now one of them is going to have to reverse for a metre or so.

This, of course, is an unacceptable surrender as far as the drivers’ ego is concerned, and a stalemate seemingly as protracted as the cold war and certainly nosier usually emerges. Occasionally someone will climb out of their beloved vehicle and shout and their opponent in person, which at least has the advantages of being quieter.

I mentioned all this to a friend recently, who suggested that maybe use of car horns should be formally restricted in certain circumstances.

Ha ha ha. Hah.

The Highway Code goes on to say -

“It is illegal to use a horn on a moving vehicle on a restricted road, a road that has street lights and a 30 mph limit, between the times of 11:30 p.m. and 07:00 a.m.”

Is there any UK legal provision more absolutely and comprehensively ignored by those to whom it applies? It might as well not be there. And you can bet that every single person who flouts it considers themselves law abiding. Rather than the perpetual criminal that they in point of fact are.


In the 25 years since I learned to drive I have used a car horn exactly no times, despite having lived in London for more than 20 of them. This is because I have never had occasion to use it appropriately. Neither has anyone else, of course, they’ve just used it inappropriately. Repeatedly.

So here’s my proposal for massively improving all UK  suburban and urban environments at a stroke: ban horns in all new cars and introduce massive, punitive, crippling, life-destroying fines for people caught using them on their old one.

There has never been a war on motorists, despite the persecution fantasies of the kind of middle aged man who thinks owning a book by Jeremy Clarkson is a substitute for a personality. There should be. Let’s start one. Now.

Phase 2 will be mandatory life sentences for people who don’t understand that a green traffic light doesn’t automatically mean you have right of way just because you’re in a car.

Do write in with your suggestions for Phase 3.