Straight to the point

There is a vast, petrifying hollowness to the British economy. As you race around dealing with everyday life, the reassuring facade of the state is still there: the police and roads, the schools and hospitals. And yet, if you ever get a minute to stop, you are immediately struck by the eerie feeling that there’s not much left behind that facade. Like the crumbling mansion in Giuseppe Tomasi di Lampedusa’s The Leopard, Britain spends its time in just a few rooms, closing off whole wings once thriving with life, dust sheets draped over the armchairs, curtains drawn tight.

If there is one city which embodies this national decline, it is surely Liverpool, where I spent much of this week, at the Labour Party conference. During the Thirties, this was the great imperial port: a place of extraordinary wealth and grandeur, though of course no paradise lost. While Liverpool was a heaving metropolis by the sea, it was also a place of appalling squalor and exploitation; an English Belfast, where Catholics and Protestants crammed into teeming tenements sealed off from each other. Today, life is immeasurably better: the slums cleared, the sectarian divide all but gone. 

But what has been built in place of its lost industry? What does Liverpool do? These are difficult questions to answer, but they are no easier for almost every other city in Britain today apart from London. What does Birmingham do? Leeds? Newcastle?

Walk from Liverpool Lime Street down to the conference centre where Keir Starmer promised a decade of national rejuvenation, and you are presented with a scene of civic failure: not only low-level littering and dirtiness, but startling homelessness — beggars either slumped outside the latest fashionable shop to have sprung up, or lying in tents, pizza boxes slung from their roofs, with pleas for help sprawled over them. You don’t need to study the latest GDP figures to know something is wrong; that there’s a sickness in our society, a failure in our way of doing things. You need only open your eyes to see that much of the nation is quite obviously less pleasant than similarly sized places across Europe or North America. Why is this so? And why aren’t we more angry?

How you choose to answer these questions is, I think, the real political divide in Britain. For many Tories, it is a question of waste, inefficiency and spending priorities. Our local councils just need to stop frittering away money on diversity training and the like — and the Government in Westminster on things like HS2 and international development Sunak’s speech in Manchester gave a clear sense of this. After casting his expert eye over the national books, he informed us that we’re wasting too much money on infrastructure projects. For Labour, meanwhile, it is the opposite. The reason the public realm is crumbling is principally because of austerity — we are not spending enough. Liverpool would be clean and pleasant and thriving, if only we would put our hand in our pocket to maintain it properly. 

Both of these responses contain important truths, and yet they are both still wrong. To the Conservative charge, the response is simple: getting stuff done is now structurally expensive in Britain, a reality which is making us poorer and which the Government has done almost nothing to change. Cancelling HS2 doesn’t alter this. It accepts it. It is principally an admission of gross government failure. To Labour’s austerity charge, the answer is that Liverpool is now structurally poor, not just politically starved of cash. Central government spending can alleviate some of the worst symptoms — and should — but it cannot change the fact that it depends on money being transferred from other parts of the UK.

Like many other cities, the source of Liverpool’s structural woes is complex and contested, wrapped up in the decline of empire, geography, technological change and political mismanagement. Containerisation changed the docks forever before Britain made its choice to prioritise European trade. Together, this meant Liverpool not only had permanently fewer jobs but it was simply on the wrong side of the country. Dover and Felixstowe, facing Europe, are Britain’s premier ports now. But what is true for Liverpool is also true in similar ways for Belfast, Glasgow, Birmingham, Manchester, Newcastle — all the great cities of the union outside London’s orbit. 

Back in Liverpool, the main industry is now tourism: the cruise-goers stopping off at the city to spend their cash, the stag and hen parties staying in Airbnbs, the football fans going to Anfield, the weekend shoppers visiting LiverpoolOne. But while tourism into Liverpool and our other great cities should be celebrated, it is hardly the route to prosperity. The kind of jobs linked to this industry are not those of an advanced, highly paid economy such as, say, the Netherlands or California. They are often low-paid, insecure and seasonal.

The truth is, you don’t have to venture far from the centre of Liverpool to see the limits of this approach. On Monday, I met the former Liverpool FC footballer Jamie Carragher in his home suburb of Bootle, just north of the city. It is a land of obvious, endemic poverty. Outside the Brunswick Club where we met, there was a giant mural to Carragher on the gable end of a terraced house. Perhaps it was this that made me immediately think of Belfast, as well as the general sense of economic decay only partially masked by the “redevelopment” cash ploughed into the centre. 

“Poverty”, however, is not the whole point here. Liverpool is not Bootle, just as it is not its city centre. Liverpool is also the middle-class suburbia of its south. If you are a teacher, a doctor, or a nurse, you have a better standard of living in Liverpool than in London. And yet, this does not mean all is fine. Such an economy ultimately depends on money generated elsewhere. And the fact is, too much of the country is in this same boat — reliant on too little of the country.

In Starmer’s speech to conference, he seemed to understand the scale of the challenge facing him, should he win the next election. “If you think our job in 1997 was to rebuild a crumbling public realm,” he said, warming to his task, “that in 1964 it was to modernise an economy left behind by the pace of technology; in 1945 to build a new Britain out of the trauma of collective sacrifice. Then in 2024 it will have to be all three.” For Starmer, such aspirations are surely right. Few can plausibly deny that our public services are in a bad way; that the economy is in desperate need of reform; or that the pandemic has left behind a complicated legacy of mixed emotions about our response.

When it comes to a remedy, though, Starmer’s solutions are inadequate. On public services, he offered what Duncan Robinson has rightly identified as the “Reform Fairy” — the idea that, simply by reforming our public services, we can avoid the more difficult redistributive choices forced upon us by our ageing society. On the pandemic, Starmer’s solution to that collective trauma seems to amount to restoring the good chaps to government and replacing a few bad eggs. This, again, will certainly help, but it also avoids the more difficult questions that our politicians need to address, from the vulnerability of our care homes to our dependence on China, not to mention the extraordinary extent to which we shut down our society based on little evidence and middling results. Are we willing to confront these issues? It seems not.

At one point in his speech, Starmer spoke of the need to modernise the economy by invoking Harold Wilson in 1964. Of course, he did not acknowledge that Wilson’s grand plan utterly failed, forcing him to devalue the pound, withdraw from the East of Suez and eventually apply to join the European Community (and be rejected) before losing power in 1970. Today, Starmer’s main economic offering is to double down on Net Zero as a way to re-industrialise the economy and shore up the union with Scotland, while also loosening planning laws to accelerate house-building and construction. One problem with these policy proscriptions is that, as Helen Thompson has pointed out, there is little evidence that Net Zero will bring back significant numbers of heavy manufacturing jobs to Britain. Another is that the main beneficiary of reformed planning laws will be the South-East, where houses are needed most.

As any housing expert will tell you, Britain does not have the same housing crisis across the whole country but acute housing crises in particular areas — principally in and around London or Cambridge. In Bootle, for instance, you can find an end-of-terrace three-bedroom family home for around £150,000. In Cambridge, a similar property will set you back at least three times that. 

Ultimately, then, Net Zero and planning reform will not make Liverpool, Belfast, Glasgow or Birmingham rich again. For that, far more difficult decisions will need to be taken that will almost certainly involve trade-offs with the South-East: decisions about infrastructure and education, taxation and general British competitiveness, some of which might even come into conflict with the aspiration to hit Net Zero by 2050. As one senior figure in Downing Street told me this week: “Everyone knows what’s needed. Everyone knows we need a far more active industrial policy paid for with higher taxes. But this government cannot do it for ideological reasons and Starmer’s Labour can’t do it for political reasons. And so we’re stuck.” And this is before we consider our future relationship with Europe: whether to diverge and compete or align and even potentially rejoin.

When I put this to a leading figure on the centre-right of British politics, he told me that the only game-changing option for the British economy involved a form of targeted, state-directed investment to create a new mega-city of 15 million people in the arc between Oxford and Cambridge. Will a future Conservative opposition grasp this nettle? Or finally back an alternative version of this in the North? It seems unlikely. Right now, we seem to have reached the stage where we are quietly acknowledging the scale of our problems, but are only prepared to offer the most timid of solutions. If there’s a gaping hollowness in the British economy, it is matched by the emptiness of our political rhetoric as well.

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