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You can find the current article at its original source at https://www.theguardian.com/commentisfree/2016/nov/24/philip-hammond-britain-regional-imbalance-risky-autumn-statement
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| Hammond knows Britain’s regional imbalance is risky. Why didn’t he fix it? | Hammond knows Britain’s regional imbalance is risky. Why didn’t he fix it? |
| (about 13 hours later) | |
| The chancellor, Philip Hammond, is Theresa May’s chauffeur. It must be a ghastly job. He has to drive the economy towards Brexit, with no instructions, no map and no clear road ahead. Meanwhile, he has three blind mice in the back seat: David Davis, minister for I-haven’t-a-clue, Liam Fox, minister for what-on-earth-is-happening, and Boris Johnson, minister for Oh-Christ! | The chancellor, Philip Hammond, is Theresa May’s chauffeur. It must be a ghastly job. He has to drive the economy towards Brexit, with no instructions, no map and no clear road ahead. Meanwhile, he has three blind mice in the back seat: David Davis, minister for I-haven’t-a-clue, Liam Fox, minister for what-on-earth-is-happening, and Boris Johnson, minister for Oh-Christ! |
| All Hammond’s polished autumn statement could do yesterday was toy with the one buzz-phrase in May’s vocabulary of spin. It was caring for the “just about managing” – a perfect description of the chancellor. His time in office seems doomed to depend on Brexit and uncertainty. May’s government looks ever more like a caretaker administration, holding the fort until the coming of a new dawn, yet with no idea of what or when that dawn might be. | All Hammond’s polished autumn statement could do yesterday was toy with the one buzz-phrase in May’s vocabulary of spin. It was caring for the “just about managing” – a perfect description of the chancellor. His time in office seems doomed to depend on Brexit and uncertainty. May’s government looks ever more like a caretaker administration, holding the fort until the coming of a new dawn, yet with no idea of what or when that dawn might be. |
| The prime minister’s decision to put her three Brexiteers into key negotiating posts in the cabinet seemed tactically cunning. As strategy, it looks increasingly dumb. All the signs emanating from London and Brussels suggest the only sensible way forward, for Britain and the EU, is for the softest possible interpretation of Brexit, followed by another referendum on its terms. The government must give a route map of this path, however much it enrages the fundamentalists. | The prime minister’s decision to put her three Brexiteers into key negotiating posts in the cabinet seemed tactically cunning. As strategy, it looks increasingly dumb. All the signs emanating from London and Brussels suggest the only sensible way forward, for Britain and the EU, is for the softest possible interpretation of Brexit, followed by another referendum on its terms. The government must give a route map of this path, however much it enrages the fundamentalists. |
| Meanwhile, May and Hammond badly need to find a non-Brexit theme to their regime. The chancellor yesterday tinkered with welfare cuts, housing supply and infrastructure, all in the cause of the “just about managings”. This took the form of slowing welfare reforms and meddling at the margins of tax bands and minimum wages. | Meanwhile, May and Hammond badly need to find a non-Brexit theme to their regime. The chancellor yesterday tinkered with welfare cuts, housing supply and infrastructure, all in the cause of the “just about managings”. This took the form of slowing welfare reforms and meddling at the margins of tax bands and minimum wages. |
| As for housing, Whitehall policies remain dictated by the all-powerful builders’ lobby, craving state subsidies to increase demand and push up prices in the south-east. Hammond pledged £1.4bn for 40,000 “affordable” homes, which appears to be just £35,000 each. This is despite overwhelming evidence that Britain’s key housing resource is buried in the inefficient distribution of what is already built. The need is for smarter regulation of the existing housing stock, not more subsidy. On that, the modest new controls on rental fees are at least welcome. | As for housing, Whitehall policies remain dictated by the all-powerful builders’ lobby, craving state subsidies to increase demand and push up prices in the south-east. Hammond pledged £1.4bn for 40,000 “affordable” homes, which appears to be just £35,000 each. This is despite overwhelming evidence that Britain’s key housing resource is buried in the inefficient distribution of what is already built. The need is for smarter regulation of the existing housing stock, not more subsidy. On that, the modest new controls on rental fees are at least welcome. |
| Hammond had sadly inherited his predecessor’s infatuation with the great god, infrastructure. To George Osborne it was nothing short of Stalin’s “electrification of the Soviet Union”. This is despite the fact that most infrastructure is code for investment demanded by the private sector from the public sector. It is a welfare state for capitalist fast-learners. | |
| To any chancellor, infrastructure is a gift. It is headlines today, and postpones payment until tomorrow – if not the day after. A Centre for Policy Studies report excoriates the wildness of this spending. It points out that half of China’s boom in infrastructure is now reckoned to harm growth. In Britain state capital spending is virtually uncontrolled, because it is buried in future debt. Hospital PFIs have saddled the nation with a staggering £200bn in debt. The McKinsey consultancy estimates rail projects on average go 44% over budget, and exaggerate their benefits by 50%. | To any chancellor, infrastructure is a gift. It is headlines today, and postpones payment until tomorrow – if not the day after. A Centre for Policy Studies report excoriates the wildness of this spending. It points out that half of China’s boom in infrastructure is now reckoned to harm growth. In Britain state capital spending is virtually uncontrolled, because it is buried in future debt. Hospital PFIs have saddled the nation with a staggering £200bn in debt. The McKinsey consultancy estimates rail projects on average go 44% over budget, and exaggerate their benefits by 50%. |
| Hammond this week boasted he would spend £1.1bn on roads, a genuinely pressing need. But it is ludicrously paltry, at one fiftieth of what he is about to spend on a single, upmarket railway line, the glamorous HS2. There are a dozen more worthwhile rail projects languishing. How can Hammond possibly tell health carers or the poor he is penniless? Infrastructure is political eye candy. | Hammond this week boasted he would spend £1.1bn on roads, a genuinely pressing need. But it is ludicrously paltry, at one fiftieth of what he is about to spend on a single, upmarket railway line, the glamorous HS2. There are a dozen more worthwhile rail projects languishing. How can Hammond possibly tell health carers or the poor he is penniless? Infrastructure is political eye candy. |
| In his speech the chancellor rightly drew attention to the “damaging imbalance in economic growth across the whole country”. He went further, adding that “no developed economy has such a gap between its capital city and its second and third cities”. So what does he mean to do about it? | In his speech the chancellor rightly drew attention to the “damaging imbalance in economic growth across the whole country”. He went further, adding that “no developed economy has such a gap between its capital city and its second and third cities”. So what does he mean to do about it? |
| The latest Legatum prosperity index puts Britain near the top at creating prosperity, but not so good at sharing it. This is despite a not ungenerous welfare state. The reason is that sharing is not just about fiscal transfers. It reflects a deep imbalance of the country’s economic geography. | The latest Legatum prosperity index puts Britain near the top at creating prosperity, but not so good at sharing it. This is despite a not ungenerous welfare state. The reason is that sharing is not just about fiscal transfers. It reflects a deep imbalance of the country’s economic geography. |
| Nothing the government does is relieving this imbalance. Cities in the north of England are among the most poverty-stricken in western Europe. Their jobs flee to the south-east, followed by their young. Their local government is as indigent as their population. Media hysteria about housing and health is in reality about housing and health in the capital. | Nothing the government does is relieving this imbalance. Cities in the north of England are among the most poverty-stricken in western Europe. Their jobs flee to the south-east, followed by their young. Their local government is as indigent as their population. Media hysteria about housing and health is in reality about housing and health in the capital. |
| If the northern economy is depressed, London’s must be the most overheated in Europe. Yet Hammond heats it even more. He tips housing subsidies into the south-east. He spends ever more on transport in the south-east. He does nothing to decentralise public sector employment to the north. Subsidies for universities, charities and the arts are concentrated on London. | If the northern economy is depressed, London’s must be the most overheated in Europe. Yet Hammond heats it even more. He tips housing subsidies into the south-east. He spends ever more on transport in the south-east. He does nothing to decentralise public sector employment to the north. Subsidies for universities, charities and the arts are concentrated on London. |
| The government’s four megaprojects – Heathrow, HS2, the Oxford-Cambridge expressway and the forthcoming Crossrail 2 – are massive, and all in the south-east. They hurl public money at the wealthiest parts of the country. This merely piles pressure on housing, schools and welfare in the south-east. As for HS2, every study of high-speed rail indicates that it benefits the richer end of the corridor. | |
| Britain’s greatest historical investment in housing and welfare is in the towns and cities of the north of England, Wales and Scotland. Houses lie empty, schools unused. Unless the government intends this to go to waste, rotting into a dependency culture and dragging down the rest of the economy, it must find ways to revive it. | |
| Making it easier for Birmingham to get to London is not a national priority, getting fast from Manchester to Leeds is. Crossrail is not a priority, cross-Pennines is. Boosting London’s outbound tourism with more runways is not a priority, boosting northern tourism is. London does not need more bridges, the north’s ports most certainly do. | |
| Hammond should tax London more heavily and the north more lightly. He should move London’s universities and research institutes to the provinces. He should beautify northern cities. This has nothing to do with Brexit, except that rebalancing the economy is an essential response to Brexit’s challenge. Relying on London as the nation’s workhorse is fair neither on London nor on the provinces. It is certainly not sensible. | Hammond should tax London more heavily and the north more lightly. He should move London’s universities and research institutes to the provinces. He should beautify northern cities. This has nothing to do with Brexit, except that rebalancing the economy is an essential response to Brexit’s challenge. Relying on London as the nation’s workhorse is fair neither on London nor on the provinces. It is certainly not sensible. |