Go north of the Watford Gap: that’s where the interesting ideas are

Eat your heart out Westminster. Most of the interesting politicians today with interesting ideas – and more importantly those who have ideas which are translating into serious change – are those working north and west of the Watford Gap. Whether we like it or not, it’s still the dividing line between the South and All Things North despite it being thousands of years after the Romans made it their gateway to the Midlands and beyond.  

It so happens that two of the most talented leaders are called Andy, both are Mayors of two of the UK’s most industrious and populated areas outside of London, and both work hard to improve the prosperity of their regions with refreshing, innovative schemes for regeneration. And both are onto their second term as Mayor with increased majorities. Voters seem to like them. 

Put another way, both have been levelling up and across their regions well before the slogan became a thing. One is Conservative, Andy Street, the Mayor of the West Midlands Combined Authority, who looks after three million citizens with a budget of £900 million or thereabouts. The other is Labour’s Andy Burnham, Mayor of Greater Manchester, which takes in 2.7 million people, with a budget of around £700 million. 

While they belong to different political tribes, there is not much to choose between them when it comes to how they want to grow and expand their regions. Both are vocal in how this should be achieved, and have been particularly critical of the way the government handed out the recent £2.1 billion second tranche from its so-called Levelling Up fund.  

So far, the West Midlands Mayor has been the most outspoken, claiming that “Whitehall’s bidding and begging bowl culture is broken and that the sooner powers can decentralise and move to proper fiscal devolution the better.” Street went on: “The centralised system of London civil servants making local decisions is flawed, and I cannot understand why the levelling up funding money was not devolved for local decision makers to decide on what’s best for their areas.”

Take that, Whitehall.

A day or so later Burnham, in a newspaper article ahead of the Convention of the North held in Manchester on Wednesday and attended by 1,000 local politicians and business people, outlined why he opts for a Barnett type formula for the North. Burnham also pointed to the German federal approach – and the reunification of the east – as an example of what can be done with the right reforms.  

They may use different examples but you couldn’t put a cigarette paper between what they hope to achieve. Both want to see local authorities given more funds raised locally – on top of their council taxes – and for local politicians to decide best what the money goes on where, rather than holding out the begging bowl for money from the Treasury. 

As Street tells me, the system is opaque and unfair. “It’s completely upside down. Why should local authorities ask for single pots of money? Little pots here and there don’t work when you are creating business strategies for the long-term over ten to 15 years. These big structural changes take time.” 

Plus there is a boost to local democracy if councils were made more accountable: “There is a flip-side to this which is that if we have more money, voters can hold us to account. If we don’t use the money wisely, they can vote us out.” As he says, how can London civil servants, who barely leave their offices, judge local decisions better than his councillors over whether Walsall or Dudley need more funds to improve the high street or a new metro extension? 

As anyone from the North and the Midlands will tell you, transport is a necessity, and one of the keys to regenerating areas. It’s been pivotal to what Street has been doing in transforming some of the poorest areas of the West Midlands by opening up old railway stations and introducing new transport links which have brought new life to run-down old industrial areas.  

As Reaction’s David Waywell writes so movingly, transport is not about just getting to work but for social events too. It’s one of the key links in bringing prosperity to any area, helping people find work either locally or further afield, bringing people together for cultural events, uniting communities and bringing about well-being. Health is still the biggest divide of all, with life expectancy – and the period of economic inactivity – in the north at least ten years shorter than in the south. 

What’s most worrying is that despite all sorts of efforts over the last 30 years, the UK still has one the most regionally unbalanced economies in the Western world and the divide is getting worse rather than better in spite of government fiddling around the edges. New research published this week by the IPPR State of the North report claims the UK still has one the most regionally unbalanced economies in the Western world, receiving less investment than most OECD countries. Only Greece sees less public and private investment than the north and the UK ranks 35 among the 38 OECD countries in receiving the least investment. Slovakia, Poland and Hungary all enjoy more investment than the UK. It also suggests governments should look at cities which have been transformed by giving local authorities great control over budgets like Leipzig in Germany, Bilbao in Spain and Ibaraki in Japan.  

There is hope that things might be changing here too. In Michael Gove’s white paper on Levelling Up published last February, he said regional devolution would be a top priority, indicating that the West Midlands and Greater Manchester would be trailblazers for looking at new forms of devolution. It seems that Jeremy Hunt, the Chancellor, and Gove, have been listening to Street and Burnham and have been persuaded that some sort of fiscal devolution will now go-ahead. 

Street is optimistic they will find a solution. Negotiations are ongoing as to the details of how local authorities might retain some of the taxes that are levied locally. He gives the recent increases in business rates – which can now be collected by the local authority – as an example of how councils can be incentivised to increase rateable values by making areas more attractive. “There are all sorts of taxes raised where we can see exactly how much is raised locally. For example, VAT, stamp duty or airport taxes. All of these could be raised locally.”

Yet perhaps most importantly of that change only comes when big characters – and fighters – like Street and Burnham shout about the need to change perceptions of place, and prosperity. One of the biggest boosts to his region, says Street, was hosting the Commonwealth Games in Birmingham last summer. Apart from the fabulousness of the celebrations, of the great sport and the tourism involved, was how the Games revived interest in the area both nationally – reminding us of the Black country’s great industrial legacy – and internationally. 

Interest from overseas companies wanting to invest in the area is three times higher than a year ago. Several new exciting projects are in the pipeline including a big new onshoring project and a car company wanting to tap into the region’s highly skilled R&D work for EV cars. 

As we saw this week, UK car production is down sharply yet the supply of talented R&D workers in the sector has never been higher. India’s JLR is one of the country’s biggest car manufacturers is based in the West Midlands, acting like a magnet, and a pull to other start-ups and manufacturers. Norton Motorcycles, started more than a 100 years ago in Birmingham, and rescued by the Indian company, TVS Motors, is now based in Solihull and has plans to expand. You can see why Street – and Burnham who has similar success stories – should be given the powers to grow and expand too. 

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