At last: The beginnings of a regional economic policy

IN terms of the political big picture, Chancellor George Osborne’s autumn statement on Wednesday this week may well come to be seen as a pivotal moment in the next general election battle.

Whether the so-called mini budget will win or lose that contest for his party, however, is currently a difficult one to call.

On the one hand, the Chancellor was, against the expectations of most pundits and economists, able to reveal that the deficit is continuing to fall, and that government borrowing would therefore not need to increase after all.

On the other, he was forced to admit that the years of austerity would continue at least until 2018, that growth would continue to be sluggish, and that his original target of reducing debt as a proportion of GDP by 2015 would be delayed by at least a year.

Too much has been made of the fact that Shadow Chancellor Ed Balls, thrown by the unexpected news on borrowing, made an uncharacteristic hash of his set-piece reply to Mr Osborne’s Commons statement.

The truth is that only political anoraks get worked up about that sort of thing.  What will linger more in the public’s mind is the fact that Chancellor’s harsh medicine is still no nearer to bringing about a lasting economic recovery.

Of potentially much greater significance than Mr Balls’ incoherent ramblings is the risk that Mr Osborne’s failure to meet the debt reduction target will mean Britain losing its AAA credit rating.

Much of what Mr Osborne has done over the past two and a half years has been designed to stave off this very threat, and if the rating is indeed downgraded, it will surely be time for David Cameron to find a new Chancellor.

What, though, does it all mean for the North-East?  Well – and how many times have I had to write this line over the past 15 years? – there will be no dualling of the A1 north of Newcastle for starters.

Other proposals which failed to win the Chancellor’s stamp of approval included a £25m upgrade for the Tyne and Wear Metro, and a package of support for the region’s offshore wind industry.

Furthermore the proposed welfare cutbacks, with benefit rises for the next three years capped at a below-inflation 1pc, will also disproportionately hit those regions with higher rates of unemployment such as this one.

But amid all this, there are continuing signs that this government – more so than its recent predecessors – is starting to take the idea of regional policy seriously.

The most obvious indication of this came a few weeks when Lord Heseltine, the arch-interventionist of Tory politics in an era where the free marketeers held sway, published his ‘No Stone Unturned’ report.

The Chancellor has explicitly backed its call for a single funding pot covering housing, skills, transport and job creation as well new powers and funding for local enterprise partnerships.

Significantly, the government is to give each LEP the chance to nominate a single major infrastructure project which will then be eligible for a new concessionary public works loan rate, up to a value of £1.5bn.

In addition Whitehall will provide a further £350m towards the Regional Growth Fund, to provide support for jobs and growth across the English regions until 2015.

While the impact of those changes remains to be seen, a more immediate boost to the region came with the announcement that  - 54 years on from the opening of the Preston by-pass - Newcastle will finally join the motorway network, with all stretches of the A1 south of the city to be upgraded to motorway standard.

And the spectre of regional pay, which could have led to teachers and nurses in the North being paid less than their Southern counterparts, has also receded in what was a notable victory for both the unions and the Lib Dems.

It was surely coincidence that, on the day the Tories were pushed into fourth place by UKIP in the Middlesbrough by-election last week, Mr Osborne appointed a new adviser in Neil O’Brien who has previously warned that the party risks ‘pariah status’ in the North.

If the autumn statement is anything to go by, maybe he is already making his voice heard.

The hard choice facing Justin Welby

The reaction of the North-East media to the recent appointment of Dr Justin Welby as Archbishop of Canterbury says much about the unusually high regard in which he has come to be held in the region since becoming Bishop of Durham last year.


An editorial in The Journal described his appointment to Canterbury as a significant loss to the North-East and, with due respect to other church leaders in the region, few of them would merit such an accolade.

I have to confess I am a little biased where Dr Welby is concerned as we went to the same London church in the 1980s before he received the call to ordination, although I doubt he would have much cause to remember me.

There are many reasons why he will make a first-class archbishop, but in an age when many young people go straight from university into church leadership without the intervention of a career in the real world, the best thing about him is the grounding he gained from 11 years in the oil industry.

But if Dr Welby’s appointment was greeted by a general chorus of media approval, the universal disapproval that greeted this week’s decision by the church’s general synod to say no to women bishops highlights the extent of the challenge facing him.

It must be a moot point as to whether he or the new director general of the BBC, Tony Hall, has been handed the more poisoned chalice.

Whatever the rights and wrongs of the issue itself – and the beliefs are passionately held on both sides of the debate – it seems beyond doubt that the vote will make it harder for the church to get its message across.

The national and broadcast media has given the church a fearful kicking over the issue in recent days, and it didn’t take long for the politicians, from Prime Minister David Cameron downwards, to start joining in.

The broad thrust of their criticisms is that the church has shown itself to be out of touch with modern values and, as the former Labour Home Secretary Jacqui Smith put it, no longer reflects society as it is.

However it is by no means axiomatic that any faith community should be required to conform to the prevailing culture. Indeed, its belief system may at times require it to be vigorously counter-cultural.

To take a different example, there is a widely-held view in society that the accumulation of wealth and possessions is a good thing, and that our political and economic systems should be so arranged as to promote and encourage this.

Christianity, however, takes a different view, arguing not only that you can’t take it with you, but that, in the eternal scheme of things, the abundance of possessions may actually be more of a hindrance than a help.

So for politicians to suggest that a church should necessarily buy in to politically fashionable causes without reference to its teachings and traditions is too lazy an assumption.

No, the real difficulty arises here because of the particular nature of the Church of England as the established church and the role of its all-male bishops in the legislature as members of the House of Lords.

In this regard, it is surely significant that, while MPs mutter dark threats about subjecting the Church of England to equalities legislation over its failure to ordain women bishops, no-one is suggesting doing the same to the Roman Catholic Church over its refusal to allow women priests.

Indeed, if anyone were to suggest that the government should start regulating churches in this way, I suspect the resulting uproar would make the row over whether it should regulate the press look like a vicarage tea party.

Of course, a move to a democratically elected House of Lords, minus the bishops, would remove part of the problem at a stroke.

But Tory MPs foolishly voted down that option as part of their petty feud with the Liberal Democrats, and it is unlikely to come back onto the table before the next election.

The upshot is that unless Dr Welby and his colleagues can find some way of revisiting the women bishops issue, preferably before another five years of argument and bloodletting have passed, the church may be forced to make a hard choice.

Either accept the increasing and unwelcome intervention of politicians in its affairs – or take the nuclear option of disestablishment.

A welcome report - but why is Heseltine having to reinvent the wheel?

OF all leading Conservative politicians of the past half century, the former Deputy Prime Minister Michael Heseltine is perhaps the one who has enjoyed the most complex relationship with his own party.

To some, he will be remembered as a spellbinding orator and party conference crowd-pleaser par excellence – or as the late former MP Julian Critchley memorably put it, the man who “always knew where the find the clitoris of the Tory Party.”

To others, he will forever be the dark villain at the centre of what they would see as the most shameful episode in the party’s recent history – the defenestration of Margaret Thatcher after 11 years as Prime Minister in 1990.

Perhaps his most lasting legacy to the party, though, will be to have kept the flag flying for what became some distinctly unfashionable causes in Conservative circles – Europe, state intervention, and above all, regionalism.

Lord Heseltine’s long advocacy of regional policy as a way of promoting both economic growth and social cohesion dates back to his time as the ‘Minister for Merseyside’ in the wake of the Toxteth riots in the early 1980s.

But is a concept that fell so far out of favour among his colleagues that practically the first thing the Tory-led Coalition did on coming to power in 2010 was to abolish the regional development agencies.

In the light of this, perhaps the most surprising thing about Lord Heseltine’s report on industrial strategy published this week under the title ‘No Stone Unturned’ is that he was asked to write it at all.

Is it a sign of a new open-mindedness on the part of Prime Minister David Cameron and his Chancellor George Osborne - or merely a sign of desperation in the face of the country’s continuing economic plight?

Either way, it was inevitable that Labour would seize on Lord Heseltine’s headline statement that the UK currently “does not have a strategy for growth and wealth creation.”

This is, after all, exactly what Shadow Chancellor Ed Balls has been saying all along – that the government needs an economic ‘Plan B’ that puts more emphasis on generating growth and slightly less on cutting the deficit.

Labour leader Ed Miliband is also understandably keen to appropriate the ideas of a One Nation Tory like Heseltine in order to bolster his own attempts to seize the ‘One Nation’ mantle from the Conservatives.

Indeed, it is a measure of how far politics has shifted on its axis since the early 1980s that talk of measures to promote economic growth and wealth creation is now regarded in some circles as “left-wing.”

Some of Lord Heseltine’s proposals have a familiar ring to them.  Since the early 1990s he has viewed elected mayors as a general panacea for everything wrong with local government, and it was no surprise to see him giving this another airing.

The idea of conurbation-wide or even region-wide mayors have also been batted around before, and has some attractions as a halfway house between an elected regional assembly which might be too big to care and local authorities which are too small to cope.

A Mayor of Tyneside, for instance, would have the requisite critical mass of political and financial clout to make a difference while still retaining an element of local accountability.

As I have noted before in this column, it isn’t regional government as we once knew it, but it may be the best, or indeed only, form of regional government that’s ever likely to be on offer.

Lord Heseltine has also advocated handing over responsibility for billions of pounds of central government expenditure to the Local Enterprise Partnerships set up last year following the demise of the RDAs.

But this nothing terribly new either.   Moving power and budgets out of Whitehall was exactly the idea behind the creation of the Government Offices for the Regions in 1994 by the Major administration in which Lord Heseltine served, and also New Labour’s establishment of the RDAs in 1999.

The GORs were wound up by the Coalition in March 2011, exactly a year before the RDAs closed for business, but now Lord Heseltine proposes to turn the LEPs into something that looks suspiciously like a recreation of the two.

While it will be welcomed by those who bemoaned the loss of this institutions, it surely also begs the question why it has been necessary for him to reinvent the wheel.