Labour needs a growth plan for the north

Good afternoon. I’m Jennifer Williams, the FT’s Northern England correspondent, based in Manchester. Peter returns next week. Today I’m going to look at how Labour’s growth plan is being received in the north of the country.

“There are different theories of economic growth,” said Sir Keir Starmer 18 months before entering Downing Street, at a speech in Leeds. 

“One theory says you can grow more in London and the south east and then redistribute to the rest of the UK. I profoundly disagree with that theory of growth.”

Now more than six months into his first term, the logical next step in that thought process feels a little missing in action. What is the theory? 

Big bets

The optics of the chancellor’s own growth speech in Oxfordshire last month — with its big bets on Oxford, Cambridge and Heathrow — felt somewhat jarring in the light of Starmer’s previous remarks.

That sentiment didn’t just circulate among regional growth obsessives or chippy northern politicians. When I switched on BBC 5 Live that morning, listeners were ringing in to make the same general point.

Nevertheless if you look carefully at Rachel Reeves’ speech, it does contain a smorgasbord of suggested growth stimuli outside of our most prosperous region. Regional airports, for example, seemed to be something of a theme. 

Reeves mentioned “support” for Doncaster airport in South Yorkshire, later describing it in interviews as a “new” airport.

(It isn’t a new airport, but the recipient of a potential £100mn local authority loan fund intended to reopen a commercially failed one, following a blazing local political row. Fans of this dynamic might also want to look up Teesside airport.)

East Midlands airport’s appointment of its development partner Prologis, part of a long-term plan for a major logistics park, was also mentioned. 

So does Labour’s theory of regional growth involve airports, or was this an attempt to avoid it all being about Heathrow?

If it does, then another part of her speech stood out too. Reeves claimed there had been no new full-length runway built in the UK since the 1940s, a point she later reasserted in interviews. In fact Manchester airport — an existing growth engine for much of the North — actually opened one in 2001. 

Former Treasury official Mike Emmerich, who went on to help spearhead Manchester’s growth journey of recent years, found it telling.

“This wasn’t a casual error as much as a Freudian slip,” he says, “which tells us that those around the chancellor still put growth and what we used to call ‘levelling up’ in different categories. The south east now; elsewhere later, if at all.”

The government would doubtless view this as unfair. Yet Labour’s story of growth beyond the country’s hottest areas often remains poorly articulated or contradictory.

Prior to the talk of airports, Reeves said in December that green jobs represented one of the government’s “big bets” outside of the south east. 

To date, the only announcement on that score has been support for a carbon capture project in Teesside, with several more across the north and Scotland still awaiting approval. Yet as we reported last week, the Treasury could now be going cold on the premise. 

There may be sound public finance reasons for that: but a retreat would nonetheless leave a notable hole in Labour’s growth pitch to many areas. 

Similarly, the strength of the narrative around planning reform and deregulation obscures the other necessary ingredients for growth elsewhere.

“The point to make about the recent announcements is that the south needs deregulation and looser planning,” says Lord Charles Aldington, the former Deutsche Bank financier and vocal proponent of regional growth, “while it is the north that needs the money.”

That might be a broad brushstroke characterisation; developers and regeneration officials here do also bang their heads against the wall of regulatory decisions. But it hints at why Labour’s economic growth story feels particularly unclear from this end of the country, when there is so little sense of the chancellor’s investment priorities ahead of June’s spending review. 

What’s the story?

In the meantime, those in search of a narrative are pinning their hopes on state rewiring and a slew of yet-to-be-published plans.

They include the Industrial Strategy (the draft of which does emphasise underperforming cities as a major opportunity); another rewrite of the Treasury’s Green Book (intended to improve the scoring metrics for proposals outside of the south east); the 10-year national infrastructure strategy (due to surface alongside June’s spending review); mayoral growth plans (currently being drawn up locally); and the National Wealth Fund (whose role includes the “big bet” energy projects referred to by Reeves in December).  

While they wait, many Labour MPs are looking over their shoulders at Reform, fretting about what economic story they can tell to an embittered electorate before Nigel Farage gets in first. 

Meanwhile the Social Mobility Commission, itself an arm’s-length body of government, is currently setting up a new panel of experts to make “pithy” policy recommendations around so-called “left behind” post-industrial places in the north and the south west. 

Deputy chair Rob Wilson insists this work was in train anyway, thanks to the “shout at you, scream at you in the face” conclusions of its previous research into “what’s going wrong”: a lack of competitiveness, entrepreneurship and innovation. 

“The private sector in some of these areas has gone missing,” he adds. Wilson, himself formerly a Tory MP in the south east, similarly notes that the big government announcements of late had tended to be in the vicinity of London.    

Elsewhere, economists and regional leaders are trying to sell ministers the opportunity that exists in places with good quality research universities, existing growth and fewer physical constraints than Cambridgeshire. 

Professor Ian Wray, an honorary fellow at Liverpool university’s Heseltine Institute, believes the government needs a counter narrative to the Ox-Camb Arc. 

“There is another part of England, well-endowed with economic potential, and on a much larger scale: south Manchester, south Liverpool and north Cheshire,” he argued in a recent essay, dubbing it the “Northern Arc”. 

The area has cheaper housing for young people priced out of the south east, more brownfield land, a water surplus and public transport assets, albeit in need of significant upgrade, as well as a port and Manchester airport.

Wray and colleagues also point to a lack of any overarching plan for rail in the north west, not just between cities but between towns. That could apply to any region.

Many in this space have already concluded that a menu of less traditional financing models — involving public banking consortiums or private finance — will be needed to get major regional rail projects past the Treasury, even under any new Green Book rules. Others believe that the government needs to think about its investments outside the south east differently. 

“If they want growth in places where it’s currently not happening,” says one regional leader, “they’re going to need a new approach to risk — directly, and through some of their funding bodies.”

I will end in Manchester. Just as there is a long-standing “growth can’t all be about London” tension within UK economic policymaking, a mirror image has been developing here for some time. 

Manchester, in its brash and visible way, is an obvious success story. It often irritates other places — particularly in the north east, where people don’t even really consider it to be in the north — and their mainly Labour mayors. One government figure hints at a political nervousness.

“The question is how you do a place-based strategy that doesn’t spread the jam too thin,” they say, “without going so hard on Manchester that you make it the northern equivalent of London.” 

The answer doesn’t have to be either. But politics is about making choices, ideally underpinned by a coherent idea.

“Every business around the world, every organisation, has a strategy,” Starmer himself told an audience in Manchester as he launched his growth mission, two months after his Leeds speech. “And nations need one too. A plan, a framework, a compass — to act as a guide for everything we do.”

Are you enjoying The State of Britain newsletter? Sign up here to get it delivered straight to your inbox every Thursday. Do tell us what you think; we love hearing from you: stateofbritain@ft.com

Britain in numbers

Whether it’s Heathrow, the Ox-Camb Arc or plans to regenerate the area around Old Trafford, it’s safe to say growth is often a long-term proposition. 

In that vein, a new paper by the LSE’s Centre for Economic Performance makes interesting reading. Its authors have looked at the impact of the BBC’s move north to Salford nearly 15 years ago, and what economic benefits it actually had. 

The paper considers the multiplier effects of the BBC’s relocation against a synthesised version of what Salford’s economy would have looked like without it.  

There was criticism at the time that the BBC’s move was simply tokenistic; that it would lead to little economic benefit, or simply displacement. 

Notably, the paper didn’t find much effect on employment outside of the creative sector. But in the words of co-author Max Nathan, the CEP concluded that there’s “a very clear” multiplier effect where jobs in other creative industries are concerned, as you can see on the graph above. 

By the end of 2017, every two BBC jobs were creating another one elsewhere in the sector. 

They found no evidence of displacement from other parts of Greater Manchester, or from London. 

The paper also notes that the BBC’s move — unlike many other “public sector” relocations — shifted not just back-office staff, but high-profile roles and high-value processes, meaning it had a much bigger multiplier effect than moving a directorate of a Whitehall ministry. 

Nevertheless it’s also worth pointing out that the 6,000 or so extra jobs created as part of the move still falls short of the 15,000 promised over the “medium to long term” by Salford council at the time. Although as a cynical journalist, I have long since learned to ignore such projections anyway.

The State of Britain is edited by Gordon Smith. Premium subscribers can sign up here to have it delivered straight to their inbox every Thursday afternoon. Or you can take out a Premium subscription here. Read earlier editions of the newsletter here.