Straight to the point

This election has been a missed opportunity to face a grim but manageable reality: beyond London and Edinburgh, the regional economies around Britain have accumulated deep structural problems. Household incomes are far lower than in south-east England because there are fewer high-productivity firms, and correspondingly fewer workers with high-value skills.

I reveal why this wasteful and brutal regional divide came about in my new book, Left Behind. Much of the damage was done fast in the early years of Thatcherism, but renewing broken regions will take time. How can it be healed? Learning from experience elsewhere, it will take large investment programmes in new infrastructure and skills sustained for a generation. It is a mighty task.

As the regional divide widened due to a remote and disdainful Whitehall, distressed communities despaired. The Brexit referendum gave them the chance to mutiny: every English region beyond London voted for it. In the subsequent political turmoil, a new Tory government led by the maverick showman Boris Johnson promised to “Level Up”: I was appointed (unpaid) to advise Michael Gove on how it might be done. That promise, however, turned into a cynical deception.

The mounting damage from Brexit is staggering, but it is dwarfed by the economic and human costs of what triggered it: our broken regional economies. Rectifying that failure should have been at the heart of this election. The Tories should have begun their campaign with an apology made credible by proposals for the taxes needed to fund renewal. Instead, we got bragging and the folly of tax cuts. As Sunak self-destructed, Labour watched incredulous. Presented with a landslide-for-free, they had no need to lay out how, or even whether, the regional divide might be addressed.

Nevertheless, Keir Starmer has done enough to be given the benefit of the doubt. Like the leading figures in his shadow cabinet, Starmer is tough, focused and a team player. He is not a prima donna wanting to be “world king” (like Johnson), or an over-confident technocrat (like Sunak).

But hard choices will have to be faced once Labour is in power. Rachel Reeves brings to the Treasury a politician whose authority is underpinned by technical competence, while Angela Rayner and Andy Burnham can communicate the lived experience of distressed regions. In combination, these capacities may be enough.

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The regional divide was created by the Treasury’s ideology of trusting market forces; and it was then compounded by its obsessive micromanagement of public spending. If Reeves uses her authority to force through profound change, such as shifting the power of scrutiny from HMT to locally based institutions ultimately accountable to elected representatives, then Rayner and Burnham can complement her skills with their own to offer credible hope of improving the lives of regional voters. Their job will not be easy: they must admit that it will take two or three terms of Labour government to achieve, but honest realism will find an audience among those in despair.

The situation inherited by Labour will, however, be even worse than I have so far described. Not only has the Treasury been locked into a failed ideology of market-worship and habits of micromanagement, but it also refuses to think beyond the immediate. Public policy is sure to fail while budgets for projects and objectives are not set beyond the year-end, as has been its practice. We can see this in the HS2 fiasco, which was supposed to link the regions to the standards of fast rail connectivity normal in much of Europe and Japan for decades. As each year passed and bits of the project were axed to cut costs, it has shrivelled to around £50 billion for an unwanted line between Royal Oak and Birmingham, which would worsen the already inadequate services further north. Hopefully, Labour will cancel it, but that will merely return us to the pre-HS2 status quo of failed transport policy.

The refusal to budget for serious objectives hits home most sharply in respect of training our workforce. Training needs to extend far beyond the abilities taught at British universities, as it already does in much of Europe. Most of our workers have not been to university, and around half of our teenagers will not do so. Yet as old skills in declining sectors and trades have lost their value, these people find themselves without pathways to vocations that would enable them to earn a decent wage. For our teenagers, the result is anxiety and despair.

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That divide between the minority who are fortunate and the anxious majority is greatly aggravated by divides of class and gender. Working with the Institute for Fiscal Studies, Left Behind contains disturbing new evidence of the gross inequalities in life-chances that besmirch our society. We measure social mobility, an issue that no Labour government can afford to relegate, and which even Tories such as Theresa May called “burning injustices”. They still burn brightly in Britain, but some of the most egregious have gone unnoticed.

Which returns us to this election and the great silence surrounding these issues. Once in power, the temptation for Starmer may be to rely on continuing the mass distraction — on postponing the hard choices — and to rely on civil war among the Tories to retain a vast parliamentary majority. But within two or three years, the crunch will come, when Labour will face an acid-test which cannot be fudged. We will then know whether that benefit-of-the-doubt was justified.

If that choice goes the wrong way and the social and economic divides in our country are left to fester, the path to inclusive prosperity will be steeper for whichever future government finally faces it. Meanwhile, the siren voices of Nigel and Jeremy with their charlatan remedies are waiting in the wings.

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