Lancashire

An Unhealthy Imbalance

Outlook for Cities

Another report, another confirmation of the economic chasm that exists between London and the rest of the country.

The Centre for Cities report ‘Cities Outlook 2014’ highlighted the growing gap between North and South, in particular planet London and the rest of us.

London accounted for a huge 80% of private sector jobs created between 2010-2012, while Britain’s nine next largest cities combined created only 10% of private sector work.

In actual terms 216,700 jobs were created in London in the two year period, compared to the next best figure which is Manchester’s 13,200.

Cities like Liverpool can partially celebrate the news that more private sector jobs have been created than in previous years, but then we have to accept the low base from which the city was starting from; and the yet to be fully felt impact of massive public sector cuts across Merseyside, and indeed the North of England generally.

Successive governments have tried, and quite clearly failed, to address what has been an unhealthy imbalance in the UK economy for far too many years, and it is now surely time for our politicians to accept that only radical, structural reform that allows genuine decentralisation of power to our great city regions and counties is not just desirable, but absolutely essential.

Poorly funded Local Enterprise Partnership’s, a scattering of city mayors and combined authorities are the existing vehicles that are in place to give the regions a better chance of competing with the London beast. As the figures show, they simply aren’t working.

The problem is that whichever colour the government, Westminster finds it incredibly difficult to give up the patronage it has held over the rest of the country for centuries.

‘How can we trust those Northerners to elect politicians who will do the right thing’; or ‘We know best’ is the long held view in the corridors of Westminster power. Crumbs off the table for the odd city deal here; the much trumpeted but ineffective Regional Growth Fund; and other poorly funded one-off initiatives are apparently all we deserve.

It is time we in the north started to demand more. Private/ public sector partnerships have thrived in Manchester, Liverpool, Leeds and Lancashire for many years now, but to maximise the potential of this collaboration we need a genuine transfer of powers AND resource.

The models of governance can be debated and discussed within the regions, and one size may not fit all, but we can’t go on like this.

For me the starting point is adopting an economic strategy that recognises the dangers and absurdity of more than 80% of the nation’s wealth being created in one city; a meaningful redistribution and decentralisation of funding for major city regions and counties, including an increase in borrowing limits and control over council tax and business rates; plus the establishment of regional investment banks.

What is going on at Elland Road?

Elland Road

From Peter Ridsdale through to Ken Bates Leeds United Football Club have endured what can most kindly be described as a rollercoaster ride in recent times. But even by its own incredible standards, this week must go down as one of the most bizarre in the clubs history.

The manager was apparently sacked on Transfer Deadline day, with the club captain going onto the Sky Sports channel to tell viewers of his own personal distress at the news. The following day, with the help of a hat-trick from the skipper, Leeds comprehensively beat Yorkshire rivals Huddersfield by five goals to one. Post match it was announced that Manager Brian McDermott had been re-instated, or perhaps never really, officially, sacked in the first place.

To put the icing on this very messy cake, a winding up petition was issued by one of the clubs sponsors on Wednesday, claiming none payment of fees.

If you are a Leeds fan all of this must be humiliating and extremely concerning. But football supporters across the country should be equally horrified and equally concerned, because it could be your club next.

The number of people who have used the phrase ‘well, it’s only…’ when talking of the decline at the hands of incompetent owners of ‘smaller’ teams like Portsmouth and Wimbledon now need to wake up and smell the coffee.

Blackburn Rovers, West Ham and Coventry City are among a growing list of great clubs who have been grossly mismanaged as the wealth and excitement of the Premier League has disguised some of the more financially questionable activity in and around the game.

It is not only ‘small’ clubs’ who can fall victim to gross mismanagement. Bigger clubs can be hit just as hard, if not harder.  Ask Liverpool, who escaped the clutches of two Yankee cowboys by the skin of their teeth. And Leeds – they don’t come much bigger than Leeds.

In the halcyon days of the 60’s and 70’s under Don Revie they conquered all before them in England, and were a whisker away from becoming the champions of Europe too.

As recently as 1992 Leeds were League champions and they won the League Cup in 1996. They were Champions League semi finalists just over a decade ago.

The attendances at Elland Road average around 30,000 even in the Championship and they are genuinely a big club – but it hasn’t stopped them from becoming a laughing stock at the hands of a series of owners who are clearly not ‘fit and proper’ people to run a football club.

It is time that the ownership of our football clubs became an issue. It is time for the Football Association to actually do something worthwhile. And it is time for our politicians to intervene.

I get that football is a business now. But it is not beyond the wit of the powers that be to come up with a set of official rules and regulations that would prevent the further abuse of football ownership in this country. Maybe it is something Greg Dyke should tackle as part of his commission on English football?

Meanwhile poor old Leeds, once the scourge of English football, and hated by supporters up and down the land, await for the next instalment of what is turning out to be a never ending nightmare for a once mighty club. And the rest of us replace that hatred of Leeds with a far more insulting emotion –pity!

Labour’s 50% Gamble

Labour

Depending on your politics and point of view a 50% tax rate for those earning more than £150,000 per year may seem fair.

However, there is absolutely no economic sense in taxing the highest earners at this level as it leads to a fall rather than an increase in the tax take for the exchequer.

How can this be so? Well, at 45p in the pound a successful business owner or entrepreneur may wince a little, but psychologically they will live with it.

Once you tell someone you want half of their income, it is of little surprise that they start to aggressively investigate the many loopholes that exist to stop HMRC getting their mitts on their hard earned cash.

The other problem with the 50p rate though is that is does cap aspiration and ambition; it signals a culture of envy rather than enterprise; and most worryingly it prevents business owners from investing in growing their companies. What is the point of adding £500K to your bottom line if the return you get is likely to be less than 10% of that? It is a risk that is not worth taking.

That is why I think that Ed Balls announcement that a Labour government would re-introduce the 50p rate is wrong, and more ‘gesture politics’ than economically savvy.

Labour believes that the majority of us who can only dream of a salary of 150K support the measure and will vote accordingly.

I think it will enable the Tories to paint Labour as anti ambition, anti business and as the party of taxation. It was a road tried and tested by Neil Kinnock and John Smith in 1992, much to John Major’s delight.

It didn’t work for Labour then, and although scandals with banks and our big financial institutions means we are in a different place today, I doubt if it will work in eighteen months time when the country goes to the polls again.

Nonetheless, the battle lines have been drawn and it will be interesting to see if Cameron and Osborne take a gamble of their own by announcing a further cut in top rate tax to 40p; and how shadow business secretary Chuka Umunna convinces business leaders that Labour support his ‘British Dream’.

The British Dream

British Dream

I attended an event this week where Labour’s Shadow Business Minister Chuka Umunna talked about ‘the British Dream’.

He was describing how his view of entrepreneurs was of those people who wanted to work hard, get on and be their own boss. The British Dream exists but, in his opinion, unlike Americans, we are too reserved to talk about it too much.

True though this undoubtedly is, there are other differences between the UK and the States that we need to learn from if we are to create the enterprise culture or the ‘new generation’ of entrepreneurs that Chuka and other leading politicians from all party’s talk of.

Business failure is almost a necessity for someone who wants to go on to achieve success and is accepted as part of the entrepreneurial journey in America and is obviously an approach that we need to adopt and embrace.

The work that they have done in the States to encourage and support women to set up their own businesses is effective and innovative.

And the other big thing that America does so much better than us is celebrate success. And when they find a hero, the Yanks admire them; do what they can to support them; promote them; and on occasion ignore, or at least forgive, any behaviour that is not in keeping with their iconic status. Can you imagine a British Prime Minister enjoying the rehabilitation that Bill Clinton has enjoyed post Monica Lewinski for example?

There is much for us to learn from the American culture if the ‘British Dream’ is to translate into reality for more than the relatively few individuals in the North of England, who see starting a business, making a difference, making money and becoming an entrepreneur as a genuine route for them.

What would Scottish Independence mean for the North?

Scot Independence

2014 could see Scotland separate from the rest of the UK. The Independence referendum takes place in September, and having been way behind in early polling, the Scottish Nationalists appear to have gained some momentum in recent months with an effective charm offensive from its leader Alex Salmond, combined with a lacklustre approach from the ‘NO’ campaign which is being led by former Labour Chancellor Alistair Darling.

The resurgence of support for Independence reminds us once again of the importance of charisma and personality in modern politics. Salmond has both in abundance, and whilst Darling has a huge intellect he is hardly likely to match Scotland’s First Minister when it comes to rallying the troops.

In the end my gut instinct tells me that, despite Salmond’s best efforts, the Scots are too cautious to take a leap of faith into the unknown, and that the lack of economic clarity offered by the Nationalists, coupled with doubts over what Scotland’s relationship with the EU would be if they were to opt out of the union will see the status quo maintained.

Nonetheless, the discussion and debate in the run up to the autumn poll will be fascinating, and will continue to highlight the fact that, even without total independence, the Scots have enjoyed significant devolved powers through its own parliament for over a decade now. How long will it be before the regions of England begin to demand similar devolution that would enable the charismatic and big personality politicians to take on the Alex Salmond or Boris Johnson role in areas like the North West and Yorkshire?

That the North is still suffocated by London’s financial and political power is irrefutable. It is no good us moaning about London though. We have to take advantage of the fact that one of the most successful global cities is on our doorstep and demand the political tools that will help us do it.

Metro mayors, regional parliaments and county commissioners have all been debated and discussed. Perhaps it’s time for us to turn one or more of these ideas into reality?