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.

 
 
 
 

17 things the proposed “Tulip” skyscraper that London mayor Sadiq Khan just scrapped definitely resembled

Artist's impression. See if you can guess which one The Tulip is. Image: Foster + Partners.

Sadiq Khan has scrapped plans to build a massive glass thing in the City of London, on the grounds it would knacker London’s skyline. The “Tulip” would have been a narrow, 300m skyscraper, designed by Norman Foster’s Foster & Partners, with a viewing platform at the top. Following the mayor’s intervention, it now won’t be anything of the sort.

This may be no bad thing. For one thing, a lot of very important and clever people have been noisily unconvinced by the design. Take this statement from Duncan Wilson, the chief executive of Historic England, from earlier this year: “This building, a lift shaft with a bulge on top, would damage the very thing its developers claim they will deliver – tourism and views of London’s extraordinary heritage.”

More to the point, the design was just bloody silly. Here are some other things that, if it had been built, the Tulip would definitely have looked like.

1. A matchstick.

2. A drumstick.

3. A cotton ear bud.

4. A mystical staff, of the sort that might be wielded by Gandalf the Grey.

5. A giant spring onion.

6. A can of deodorant, from one of the brands whose cans are seemingly deliberately designed in such a way so as to remind male shoppers of the fact that they have a penis.

7. A device for unblocking a drain.

8. One of those lights that’s meant to resemble a candle.

9. A swab stick, of the sort sometimes used at sexual health clinics, in close proximity to somebody’s penis.

10.  A nearly finished lollipop.

11. Something a child would make from a pipe cleaner in art class, which you then have to pretend to be impressed by and keep on show for the next six months.

12. An arcology, of the sort seen in classic video game SimCity 2000.

13. Something you would order online and then pray will arrive in unmarked packaging.

14. The part of the male anatomy that the thing you are ordering online is meant to be a more impressive replica of.

15. A building that appears on the London skyline in the Star Trek franchise, in an attempt to communicate that we are looking at the FUTURE.


14a. Sorry, the one before last was a bit vague. What I actually meant was: a penis.

16. A long thin tube with a confusing bulbous bit on the end.

17. A stamen. Which, for avoidance of doubt, is a plant’s penis.

One thing it definitely does not resemble:

A sodding tulip.

Anyway, it’s bad, and it’s good the mayor has blocked it.

That’s it, that’s the take.

(Thanks to Anoosh Chakelian, Jasper Jackson, Patrick Maguire for helping me get to 17.)

Jonn Elledge is editor of CityMetric and the assistant editor of the New Statesman. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

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