Re-balancing Britain, from Bard to worse

Scottish money Image copyright PA
Image caption The latest figures showed Scotland's share of public spending increasing slightly

"Now am I in Arden, the more fool I; when I was at home, I was in a better place, but travellers must be content."

I'm playing or at least quoting the fool, Touchstone, in the heart of England, writing on the second of four trains required to get from Stratford-upon-Avon to Bedford, and on track to miss the next connection.

Local boy William Shakespeare failed to find words that adequately describe today's weather in this bit of Warwickshire, which would be easily recognised by Macbeth. This morning, it was drookit, and now it's merely dreich.

Via Birmingham and Leicester, this journey should take roughly the same time as going through London, but it costs £35, while the London option would be £60.

The complex route-finding to cross the country from one point to the north-west of London to another point north of the capital speaks of a nation that seems ever more focussed and concentrated on the metropolis.

Boris Island

And this week brought more evidence of what a problem that creates for the English economy and, to a lesser extent, for the UK one.

The renewed debate and internal Tory tensions around London's airports highlight the over-dependence and over-heated nature of the south-east.

The "Boris Island" answer to Heathrow's congestion is an interesting one, if only because it fails to recognise the importance of connecting London to the rest of Britain.

As with the Olympics going into east London, heading still further east into the Thames estuary would surely do nothing to push the economic impact of aviation out into London's north and west hinterland, where it's needed and where there's more space to expand.

Expanding Heathrow runs up against voters in marginal west London constituencies who are fed up with noise, just as driving a high-speed rail line to Birmingham spoils the view for some people with expensive homes and loud voices.

There's talk of expanding aviation capacity at Stansted, Birmingham or Cardiff, but these options are seen as being too far away from London. That's as much about mindset as it is about rail services little changed since the Victorian era when they were built.

Spreading the growth

Also mid-week, Lord Michael Heseltine, the former Tory deputy prime minister, published his report on boosting Britain's growth rate, with a strong emphasis on spreading the growth around, and with some poorly-concealed criticism of the coalition government's efforts so far.

His big idea, a giant pot of money for which local enterprise partnerships could bid, working with local government and local chambers of commerce, looked doomed as soon as it was published.

That's because it would require ministers to concede a lot of spending power, as well as the need for an industrial policy to promote growth. And they'd have to admit how much damage they did by winding up the Regional Development Agencies (RDAs).

Image caption Lord Heseltine has published his report on boosting Britain's growth rate

Heseltine's big idea, unhelpfully for ministers, exposes the tensions within the coalition government between the free marketeers and the interveners, and between the centralisers and the localists, when the Conservatives probably have enough fault lines being exposed already.

Even if the Treasury wanted to hand over spending power, it's doubtful that the private sector-led replacements for RDAs are up to the job of handling all that cash, or of strategic regeneration decisions.

As I've noted before, winding up the RDAs might have made sense viewed from Whitehall, where London's economic dynamo has its own momentum for the south-east, needing less government intervention.

But the lack of an RDA puts north-east England, as the starkest example, at a substantial disadvantage, and not least against its northern neighbour.

At Scottish Enterprise, which already had several advantages in its track record, its in-house expertise and a government tuned in to backing its inward investment efforts, they couldn't believe their luck.

As I also noted last month, the view from Newcastle ranges from puzzlement to resentment that Scotland gets more and better public spending than Scotland. Yet the latest figures raise more questions about why England's resources are so unevenly distributed.

Will Power

Before looking at them, the view from Stratford-upon-Avon is also worth a look, to see what regional policy can do. The Royal Shakespeare Company is, of course, located in the Bard's birthplace.

The local economy owes much to the injection of so much arts subsidy, stimulating domestic and international tourism.

But how many such national institutions are located outside London, and spread around England? There are universities, some museums, football clubs, and, very recently, the BBC in Salford. But that's about it.

The way England's economy now works, much of it depends on jobs spinning out as London grows and overheats.

Spending spreads

So last week, we got the latest, annual update of spending allocations around the UK, covering 2011-12. They show Scotland's share of public spending increasing slightly.

Per head, for every £100 spent on the average UK citizen, the average Scot was getting £115. Last year, it was £114.

This figure matters to the current debate on Scotland's position in or out of the UK, as it makes Scotland look increasingly subsidised, or dependent.

But that needs to be seen in the context of another set of government figures that suggest Scots contribute more, when you include a geographical share of North Sea oil and gas revenue.

It's also useful to see it in the context of spending elsewhere.

In Northern Ireland, spend per head was £121 for every £100 across the UK, and Wales was on £111.

Then, let's look at the regions of England. The south-east (excluding London) received 87% of the UK figure per head, and the north-east was on 107%. But it was Londoners who got most, on £110 per £100 throughout the UK, down from £112 the year before.

The spend per head on health was 10% above the UK figure in Scotland. But that's also true of London and north-east England.

The Scottish spend was below the UK figure in public order and defence, as it has been in most recent years.

London's dependency?

And while education is reckoned to be a strength in Scotland, it's not reflected in the spending figure. For every £100 spent across the UK, £101 is spent in Scotland, £92 in the south-east and £114 in London.

Scotland looks relatively generously treated on transport. For the UK figure of £100, Scotland got £164 last year. But within England, the East Midlands (where I'm travelling today) received £61, the north-east got £71, and London got £204.

The most significant difference, in Scotland's favour, is a category called "enterprise and economic development". For every UK £100, the Scottish spend was £288.

That may be because different items are included. But within England, where you'd expect consistency in the way this is counted, the average person in the north-east got £111 while in east England, it was only £47.

Scottish, Welsh and Northern Irish spending varies little in relation to England, because of the 34-year old Barnett Formula. But within England, the variations are far greater.

As England suffers spending cuts and considers the future of its place in Europe as much as Scotland's place in the UK, it's strange that its own regional differences remain so subdued.

  • The Scottish National Party's Stewart Hosie has taken issue with the UK Government's means of calculating the share-out of public spending. He points to the use of actual 2011 census data for England and Wales, alongside estimates of Scotland's population as it's developed since 2001. To be clear, these estimates are from the Registrar General of Scotland, and were used because the 2011 Scottish census figures are not yet published. The estimates suggest the Scottish population grew by 3% or 160,000 between 2001 and 2011. The English population was found to have grown significantly more than estimated - up by more than 7%. This was not due to a widespread failure to estimate accurately, but problems particularly with under-estimates of London's growth. It's possible the actual outcome of the 2011 Scottish outcome may prove the estimates wrong. But for now, they're the best estimates available from the Scottish government's own indepedent experts. And while there could be a small change to some of the above numbers, it's hard to see why any of the points I've made would be significantly changed. We'll find out with publication of the census data, due next month.

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