WHO WE ARE

  1.  Our group arose out of meetings organised in the later years of the Major government for the purpose of self-education about alternative approaches to economic policy and sustainable development in a context where all the main political parties were gravitating towards the "globalisation" agenda of big business. We had an affinity with the New Economics Foundation and formalised as a group in 1994.

  2.  The initial consultations of the Labour government saw our role evolve considerably. In an era where focus groups have come to play a central role in policy making we became a focus group of the committed. With a membership drawn from liberal, social democratic and green traditions, we knew that ideas that achieved acceptance from people from all these backgrounds did have an important validity and strength and should be put in the public arena with appropriate confidence. Part of the merit of your select committees is that they also try to find consensus in political diversity.

  3.  After responding to such initial consultations and many others by regional and local government, we have since been involved with the emerging regional governance in the West Midlands, and in the interests of brevity we will detail this in responding to the specific issues that you are examining—otherwise our website provides some further details

GROWTH RATES ARE NOT THE RIGHT TARGET—THEIR IMPORTANCE TO REGIONAL DISPARITIES

  4.  Regional disparities in prosperity within England are one of the most serious problems the UK faces. Government should be addressing them. However the government's policy/target places a misguided emphasis on the economic "growth" rates. We do not believe these regional growth rates are the appropriate focus for regional policy.

  5.  We would support policies aimed at addressing disparities in employment, employment opportunities, and employment growth. We would further emphasize as policy concerns the disparities of poverty, and the different migratory pressures that bedevil most regions. We would also like to see more concern about the disparities in public spending and public investment in the English regions. However, what the government calls "growth" would not be the focus of the kind of government policy we would like to see.

  6.  In calculating GDP growth, the cost of housing is entirely excluded. This fatally flaws year-on-year comparisons of GDP for anything other than the planning of taxation and public expenditure. It cannot serve as any kind of measure of economic progress or welfare as it relates to people or communities.

  7.  In the years since Margaret Thatcher's second government, we are often told that the UK has been the beneficiary of many years of "impressive" GDP growth. The generation setting up home in the 1990s are allegedly living in more prosperous times than their parental generation setting up home in the 1960s and 1970s. In our West Midlands region however, to achieve comparable forms of housing tenure, the norm now is for households to need the income of two adult earners where previously one adult earner (or one earner and a bit) could support a household in that comparable tenure in the 1960s and 1970s.

  8.  The falling real price of cars, computers and foreign holidays can, for some of the time, distract people from the basic fact that the household has to devote more of their lives to paid work to fulfil the most basic need of keeping a roof over one's head. On this basis real wages in our part of the UK have fallen by maybe as much as a half since the mid 1970s. We suspect that people in London and the south-east could make a similar or more dramatic calculation. Much of the country could claim that we are now on average poorer than we were in the mid 1970s, and that is without bringing the unpredictability of tomorrow's pensions into the equation. GDP growth figures just seem to contradict what most families know in their bones.

  9.  Because we cannot see GDP, GDP per capita, and GDP per capita growth as meaningful economic indicators for peoples welfare, we find it seriously inappropriate that such indicators are the government's benchmark in assessing its regional policies and initiatives. When in 2000-01, we were involved in the drafting of the economic sections of the pending West Midlands Regional Planning Guidance, even the business representatives who were involved in working groups with us would record their concern about what has been called "jobless growth" in our region. It was the government agencies that would bring up the GDP issue because they were acting under instructions from Whitehall.

  10.  Advantage West Midlands (AWM) have put forward a GDP growth figure in their Agenda for Action of 2001. The target for 2010 is 93.5. (93.5% of the national average) That is a smidgen more than the index figure actually was in 1994 (93). This is hardly inspiring as an aspiration for the region. However, AWM explains that 93.5 would itself require "a trend rate of growth above EU average"

A TARGET TO BE DROPPED

  11.  In being so unenthusiastic for the GDP target, we would also emphasize how it would require a growth rate in the West Midlands above what has been achieved in the "boom" years of the 1990s.

  12.  In AWM's Agenda for Action they suggest that this growth would be fostered by their transport/movement improvements and their preparation of sites for new investment. In the year since this agenda was published it has become clear that many of the government's hopes on the transport front have had to be discarded. At the Examination in Public of our draft Regional Planning Guidance, we and other participants persuaded the Deputy Prime Minister's panel that undue and unrealistic emphasis was being given by AWM to sites for large inward investors. So we feel sure that the growth target will also have to be quietly dropped, because we see nothing in the current policies of our regional arms of government to suggest that any sort of step change here is likely to happen. We believe that it is not very different in most of the other regions.

  13.  We recognise that government does need to use some sort of targets for judging the interrelationship of what they are doing in the regions. However, GDP per capita is not appropriate.

CURRENT REGIONAL STRATEGIES ARE SOMEWHAT SPURIOUS

  14.  Our West Midlands region has been suffering increasing economic stress since 1996. This is mainly because we are still the UK's main manufacturing centre. Our manufactured goods compete with those produced in other such locations around the world. It would not be appropriate to here detail the rise in the real exchange-rate since mid 1996 and its impact on our region. The definitive crisis at BMW Rover will be well known to your committee.

  15.  Our region shares an exchange-rate with one of the world's major financial centres—London, and we also share an interest rate with that same world centre which is one of the world's great generators of inflation. This means that our interest rates will tend to be higher than the welfare of a region like ours would require.

  16.  There is very little that any regional strategy can do for historic employment in the face of such international developments when so much of our employment (manufacturing and agricultural) is internationally exposed, other than to foster diversification into less internationally exposed employment. We always bring this matter up in any consultation to which we respond.

REGIONAL DEVELOPMENT AGENCIES HAVE BEEN DISAPPOINTING

  17.  Given what we have said about how little can be done for the internationally exposed sectors of employment at regional level, we are concerned that the RDAs have come to exaggerate what they can do for such industries. This is of particular concern in a region where so much of our employment is so exposed. While resources are put into such spurious and political efforts, many potentially better and sustainable lines of development stand neglected.

  18.  In the West Midlands, AWM have sought to give particular attention to the politically sensitive automotive, brewing and pottery industries as part of what they call their management and development of industrial "clusters". However, such clusters of industrial employment were exactly what is/was wrong with our region. More is done for the families who are traditionally employed in such declining industries by bringing in new types of employment to their areas than spurious efforts by RDAs in the realm of their international competitive situation.

  19.  For us this issue came to a head when it was proposed that these flawed "cluster" policies be written into the regional planning guidance. The "Examination in Public" last summer gave us a unique opportunity to challenge the logic of this before a panel independent of the current official establishment of the region. The Deputy Prime Minister's panel explicitly adopted our critique and deleted AWM's "clusters" policy from the draft RPG. (See Regional Planning Guidance. . . . Panel Report. October 2002 P.72-73) Had they been able to delete sections of AWM's Regional Economic Strategy, we are sure we could have convinced the panel that these cluster policies in their totality were just as counter-productive as the land-use planning components that they just enthusiastically deleted.

  20.  We believe that RDAs could really help local economies but not while they are still run by people that only look to Whitehall and those in the "RDA business" for direction. Nearly all have adopted the same vacuous almost identical vision statement about being a leading World/European region. Given that they cannot all be "leading" regions this is totally incoherent. Each RDA needs to look to its own region for more locally specific and meaningful objectives.

REGIONAL ASSEMBLIES COULD MAKE ALL THE DIFFERENCE

  21.  Those objectives would come most appropriately and effectively from an elected assembly. Such assemblies will have the mandate to define properly relevant targets and objectives for the economic strategies of their regions. As long as regional government is un-elected it will be unable to present national government with alternatives to the sort of one-size-fits-all objectives and strategy that we have always seen emanate from a national government.

  22.  We have been active in the West Midlands Constitutional Convention, and support the establishment of elected regional assemblies. However, we do not think the package of powers and responsibilities currently on offer, as set out in "Your Region, Your Choice . . . (Cm 5511)" will convince the people of our region that they should vote for such an assembly.

  23.  Furthermore, we do not think the case for regional government will stand or fall on the issue of what is officially seen as the regional economic performance. We have been involved in Birmingham NHS Concern, and from our recognition of what happened regarding the NHS in Kidderminster in the last Parliament, we believe that scrutiny is the only basis for building a popular interest in government.

  24.  Ministerial Decisions that can often have a huge impact on localities are normally made on the basis of advice and reports from anonymous regional/local bureaucrats. Ministers have to take responsibility for much of this, while the bureaucrats who are often culpable never face scrutiny. Hence the same old mistakes occur over and over again.

  25.  We believe that the best way forward for regional assemblies would be for them to have a general scrutiny role across the whole spectrum of government work in their region. Making the regional directors of the NHS, or the Government Offices face questioning here in the region (and in public) about the specifics of government would do more to improve our regions and the country as a whole than much of what passes for scrutiny in Westminster at present. Should the committee wish to pursue this, particularly in anticipation of the bill that would detail the role of the future elected assemblies, we would be happy to outline our views further. Late last year we wrote to Mr. Nick Raynsford M.P. at the Office of the Deputy Prime Minister about this.

HOW A COHERENT NATIONAL POLICY CAN BE ACHIEVED.

  26.  The only way that a coherent national policy can be achieved is by the government organising a national dialogue around the economic needs of the different regions and then brokering the drafting of a national strategy to address those needs.

  27.  In our view the needs that will be voiced will prove quite coherent. They will cohere around the objective of moving economic activity northwards in England. A clear consensus is emergent on this. Almost all of the regions other than London and South East England are finding people and resources are being drawn away from them to London and the south-east. However, much of the political leadership of the south east are aware that this situation has been fostering a range of disastrous inflations in the counties immediately around London. They are seeing a house-price inflation that is feeding a wage-inflation that is undermining public services in their counties. The conservative leaders of the shire counties of the south-east are aware that what is happening threatens to transform their communities and localities beyond recognition.

  28.  The various regional economic strategies could now be brought together around a movement northwards of the type of economic activity that government has leverage over. Most regions would have to prepare to host increased activity, and London and the south-east would benefit from the relief of the inflationary pressures we have described and assist in the relocation. We believe that most of the country would find this preferable to the fostering of new conurbations in the south-east.

  29.  The problems in England are now so severe that the northern regions can be persuaded to co-operate with each other in the redistribution of economic activity. Should any significant relief of the inflationary pressures in the London/South-East be achieved, they would all benefit. There would be no upward pressure on interest rates in the UK without the particular inflationary pressures that the over-heating of the south-east has stoked. Public spending would have been more evenly distributed without the over-heating of London and the south-east.

  30.  We have become aware of a very significant potential for consensus in England, between people of all political traditions—around economic development—should we have a government with the political sensitivity to recognise this. In late 1999 we became aware that the conservative leaders of the south-eastern shires were making public statements about what they called a "One Nation" politics that would divert economic activity northwards. We made contact with Councillor David Shakespeare who lead those councils, and in early 2000 devoted some efforts to fostering discussion on this in Birmingham and the West Midlands region. Councillor Shakespeare responded to the efforts we made with the press, and although we provoked some useful discussion with regional decision-makers, isolated intermittent efforts such as we can currently produce are not enough to open up a public debate of such importance when government seems determinedly unresponsive.

  31.  We believe a committee of the House would be far more effective in this, even in the face of an un-responsive government.

MOVE THE ACTIVITIES OF GOVERNMENT AND PUBLIC AGENCIES

  32.  From much of what we have already said it will be clear that we view the movement of government functions out of London and the South-East as one of the most important levers that national government has got to tackle the regional divide in the UK. Indeed we have regularly brought up this issue in various consultations and inquiries since 1996.

  33.  However, since what is now referred to as 9.11, we believe this issue has taken on a new relevance. We hear of contingency planning for possible terrorist attacks on London. We are reminded how much of the drive behind previous dispersals of government work from London and the south-east has come from the need to make our national systems less vulnerable when we faced the threat of strategic weapons of mass destruction. We recall that Sir Henry Hardman who presided over what was called the "Hardman dispersal" of 1973 had been a former head of the Ministry of Defence.

  34.  With the increased use of Information and Communications Technology (ICT), it should be recognised that there is no necessity for many civil and public servants to be based in London unless they are involved in ceremonial roles or day-to-day personal contact with ministers or parliamentarians. The technological developments of the 1990s allow whole swathes of public employees to be geographically re-deployed in ways that could not even be imagined in the 1980s.

  35.  Should higher echelons of public service and regulation be moved, echelons of business and other organisations would have less convincing need to remain based in London and the south-east. The dynamics for change that such re-location could unleash are potentially substantial, and would probably eliminate any arguable need to interfere in any substantial way in the decisions of businesses and other organisations that have always argued that crucial commercial considerations must remain the primary criteria in making their locational decisions.

  36.  In the past, the two great waves of governmental relocation were initiated by conservative governments in 1963 and 1973, and implemented by Labour governments. In the late 1980s both main parties were again looking at this lever for addressing the polarisation of our country. Both Michael Heseltine and the Labour Party Policy Review under Bryan Gould had positive things to say about it. However, the first great post-war south-east depression, following upon our entry into the Exchange-rate Mechanism of the European Monetary System, swept the issue off the political agenda—pretty much until today. The episode is remembered for its disastrous consequences for the Conservative Party but it has also had negative consequences for the balance between England's regions.

  37.  We would suggest that Federal Germany offers many lessons on re-distributing the functions of capital cities around the country. These lessons are both positive and negative ones, and are worth examination by your committee.

  38.  However, there needs to be a more rational discussion of such issues in this country than has recently been the case. The West Midlands put a great deal of effort into chasing the relocation of the "Wembley Stadium" to the West Midlands. However, we were sceptical of what this would really contribute to the benefit of the West Midlands. It became clear to us that it would probably transfer much traffic, rather than significant economic opportunity. We felt that many supported the bid after only superficial consideration and got drawn into the collective effort of a tussle with those that were justifiably and long felt to have long undervalued our region. We do not believe that this is the way functions should come to be re-distributed around the UK. We believe that a more sustained discussion of these issues led by new voices—in a new vehicle of leadership that elected assemblies offer—could foster a more rational and inclusive discussion within and between the regions.

ADDITIONAL FUNDING IN THE POOREST REGIONS IS NOT THE ISSUE

  39.  From our arguments above, we hope the committee will see solutions in the re-distribution of roles and activities rather than demanding a sustained real increase in state expenditure. We would caution against early and symbolic injections of government spending in poor regions because it would create the wrong sort of expectations, and probably set back the process of fostering the right sort of dialogue that is needed within and between the regions.

  40.  We think the government has been pretty mean with funding the existing (appointed) regional assemblies and believe they could have done far more by now to have improved the quality of the debate in the English regions had these assemblies been able to build themselves a more prominent public presence. It would not be unfair to say that in the early years of the "West Midland Regional Chamber" our small pressure group was more prominent on such concerns through regular letters in the Birmingham Post, our most serious regional daily newspaper.

  41.  We hope the select committee will urge better funding for the fostering of life around the regional assemblies before considering any more radical steps. Otherwise the committee would just be continuing in the centralist tradition of the past.