My Lords, I am pleased to introduce this debate as a proud Lancastrian and therefore a northerner. I am someone who also cares about deep divisions, any sort of division, in our society.
The so-called northern powerhouse must not just be a catchy label. Northern regions can be powerful only if they have real power, economically, politically and in their public services. I am not talking about devolution; I am talking about decentralisation. The Institute for Public Policy Research North, whose report we are discussing today, suggests ways of contributing to this power and to releasing the energy of the north. I welcome it strongly.
I am delighted to see colleagues with such a wealth of experience and expertise taking part today. I look forward to their contributions. I am only sorry that time will be so limited. I note that some will talk of great expertise of cuts to local authorities, so I shall leave that to them. They will also discuss many other issues.
I shall explore part of the current story on the state of the north, then look at some possible ways forward. I shall look first at social mobility, a component of power and potential. When I was growing up in the north many years ago, social mobility was a term unheard of. You got on—hopefully, but not always—if you passed the 11-plus. In the working classes, where I came from, if you ended up not going to mills or the mines, then you had succeeded—at least partially. That situation is now much more complex. I hope to examine some of that complexity today. The situation is much more multidimensional, going beyond mills, mines and steel, which are of course mainly gone. A productive and ambitious northern economy needs to have its own potential for social mobility and high productivity. The potential is there; many dynamic things are happening, but times are a-changing.
The IPPR’s report begins by stating that its previous year’s annual report was full of confident projection of northern powerhouse potential, in relation to the economy, jobs growth, attractiveness for foreign investment and educational improvements, but there is a warning that the decision to leave the EU will affect the northern economy in terms of trade, access to skilled labour and EU funding. One worry is that devolution appears to have stalled and that the focus on rebalancing has been overtaken by an initiative to develop the industrial strategy.
We may all speculate on why so much discontent and anger were expressed in the northern regions during the European referendum and, of course, in the result. The areas most at risk from leaving the EU, but which could also benefit from new trade arrangements, voted to leave. Only Manchester, Liverpool, Stockport and Trafford voted to remain. People in the north were dismayed at neglect and disregard, at the perception that decisions were made in the south and that power and money resided in the south. The northern regions are more than three times as dependent on EU trade as London. The director of the IPPR has argued that Brexit negotiations should focus on the needs of the areas that voted strongly to leave. He has a point.
Brexit must not be bad for the north; we must be vigilant. In relation to productivity, the northern regions are growing faster than other regions. The weakening pound may be playing to northern manufacturing strengths, but disruption of trade with Europe is still to be feared.
A recent CBI report states that the most productive area of the UK is now almost three times more productive than the least and that wide geographic differences are the root of much inequality in the UK today. Parts of the north suffer disproportionately.
The State of the North report on social mobility states that many regions, and not just the north, have fallen behind London and the south. For example, more than half the adults in Wales, the north-east, Yorkshire and Humber, the West Midlands and Northern Ireland have less than £100 in savings. Young people who want to get on are moving away from many communities—again, not just in the north. Home ownership among the under-44s has fallen by 17% in the last decade; the gap between housing is accentuating the wealth divide. The average weekly pay of workers in Blackpool of £333 is half of that in Southwark—£639—and several, but not all, of the lowest hourly pay averages in the country are in the north.
I add to these figures concerns for transport, education and the issue of poverty and health. Wherever there is poverty and concerns for health, which occur frequently in the north as reports on equality have shown, a whole population may be damaged from before birth onwards. An OECD report last year pointed out that the UK has the worst performance of intergenerational earnings mobility among OECD countries. The Social Mobility Commission, chaired by Alan Milburn with the noble Baroness, Lady Shephard, as vice-chair, identified four fundamental barriers that are holding back a whole tranche of low and middle-income families in communities in England—again, not just in the north. These factors are: an unfair education system; a two-tier labour market; an imbalanced economy; and an unaffordable housing market. Our education system seems intractable, with more emphasis on passing exams rather than the soft skills, such as communication skills and teamwork, which are required by industry. Not enough emphasis is placed on the early years, although that is improving, and sport and the arts are being neglected. We need to look again at what we are doing to our children.
My noble friend Lady Corston chaired a committee last year which produced a challenging report, Overlooked and Left Behind. It pointed out the inequalities between academic and vocational routes to work for young people and the importance of advice in making transitions and choices. Speaking of young people, I am delighted to learn that the Children’s Commissioner for England is developing a new project to look at childhood in the north of England and the opportunities for children provided by devolution and regeneration. This project will seek to understand the regional differences in children’s experiences and how these impact on outcomes. This will surely be a project to follow. The report of the Commission for Housing in the North, published by the Northern Housing Consortium, points out that a response to housing in the north is local flexibility and the use of public investment, developing new partnerships and revitalising places.
I am highlighting just a few points; I know that other noble Lords will elaborate more. Let me now discuss the possibility for development. The CBI report on regional growth, which I mentioned earlier, identifies four main drivers of regional productivity: ensuring a strong school performance and results at GCSE and—recognising that school is not enough—work training and development; transport links that widen access to labour, also examined by Transport for the North; better management practices; and a higher proportion of firms that export and innovate.
These concerns link with the views of IPPR North. In 2015, it set out four tests for the northern powerhouse: to generate a better type of economic growth that combines rising productivity with more jobs and better wages for all; to liberate the potential of people through improvements to the development of skills, starting with the youngest, including pre-schoolers; to invest in future success, particularly in terms of innovation and building infrastructure for the future; and to rejuvenate local democracy by giving people a genuine involvement in the way that the north of England is run. These tests are still important—I have touched on some of them already—but times and contexts move on. In the 2016 report, IPPR North praises the progress being made in relation to transport, infrastructure, finance, trade and investment, and the schools strategy. But there is a caveat—clouds on the horizon. Wider events, with Brexit a large influence, mean that business confidence is threatened and the prospect of inclusive growth in the north looks distant.
The IPPR makes three recommendations. The first is the formation of a northern Brexit negotiating committee, to enable the north to be heard and to build trade relationships with regions and nations within and beyond the EU. This recognises that the Government’s industrial strategy is an opportunity to take a more proactive approach to structural challenges. The second recommendation calls on the Government to adopt a place-based approach to industrial strategy with the core principles of regional differentiation, co-ordinated investment and devolution. Local economic resilience needs to be fostered and developed. Thirdly, local enterprise partnerships should conduct resilience audits that set out the post-Brexit threats to their economies and develop strategic responses. Government should be asked to back this strategy as part of a new round of devolution deals with each local enterprise area.
As the report also states:
“The North has distinct economic assets and interests that present both opportunities and threats as the UK prepares to leave the European Union”.
It warns that the patchy development of combined authorities, metro mayors and devolution deals in the north affect the formulation of a coherent response to Brexit.
I have attempted to give a flavour of this exciting report and touch on some of the issues facing the north in relation to its economy and underlying structures, such as health, education, housing and transport. Much is positive; much shows forward thinking. The importance of local enterprise partnerships and the encouragement of local democracy are at the core of progress in the north. Will the Government heed the warning signs of the IPPR report and consider its recommendations? I beg to move.