ECONOMIC GROWTH

Levelling Up German style?

Britain should listen carefully to Federal German Minister Carsten Schneider’s message that equalising living standards calls for cross party agreement alongside serious long term policy and investment, says Ben Lucas.

The Convention of the North is now a major event in the political calendar.

This year's Manchester gathering of Northern mayors, leaders, businesses and civic society organisations was the biggest so far. 

All a reflection of the growing maturity of devolution and the strength and capacity of the institutions that cover the region, including the N8 University Group, the People's Powerhouse, NP11, Transport for the North, the Northern Health and Science Alliance and the Northern Powerhouse Partnership. Most of all it highlights that 75% of the North's population will now be covered by Mayoral Combined Authorities.

Like the Confederation of British Industry Annual Conference, the Convention is now a gathering that politicians have to court, so both Michael Gove, and his shadow Lisa Nandy delivered major speeches. The event is a self-confident expression of the convening power of the North, and the unity of purpose of its mayors, civic and business leaders. The tone was set by the opening address from Carsten Schneider, the Federal German Minister with the characteristically literal title of minister for regions and equalisation.  Germany has been the model and the inspiration for much of levelling up, ever since George Osborne first spoke of the Northern Powerhouse in 2014.

Schneider's message is something that should be listened to carefully in the context of a British political economy that is stuck in a cycle of permacrisis and empty policy signalling. Structural rebalancing to ‘equalise living standards' requires serious long term policy, substantial multi-decade investment, and cross party consensus. These commitments are reflected in the Federal Constitution and are therefore what Governments are required to deliver. The German Minister also added three ‘takeaways' about the approaches to German rebalancing that are most successful. Decarbonisation should be seized as an economic growth opportunity, in regions that have major energy generating capacity. Regions and local areas should be empowered to design and implement their own programmes, to drive levelling up. Place shaping, quality of life, culture and improved skills and education are the critical pull factors that will drive much needed population growth.

These themes resonated well with a Convention that had been designed to consider how the North can shape its own destiny and help power Britain's future economy. The Convention's agenda was set out in the report  Convening the North: Powering Britain's Future. Delegates were asked to vote on their top priorities for ‘doing it ourselves' policy collaboration, underpinned by a series of investable propositions. Devolving more power over transport including buses and rail, came top. Second, was utilising the North's renewable energy generating capacity, to drive a net zero industrial and skills strategy.  Third was using place and culture to promote the North as a place in which to grow up, live, visit and work.

The North has the potential to drive economic prosperity through nurturing high value clusters of net zero, advanced manufacturing, digital and life science businesses. But that needs substantial long term investment, not just in these industrial clusters, but also in the enabling social and physical infrastructure of skills, housing, culture, health and transport. 

Continuing the German theme, Michael Gove quoted Manchester's most famous German emigre, Friedriech Engels, in setting out the intellectual case for levelling up, and announcing the Government's refocused approach to investment zones. Lisa Nandy followed by saying that Labour was committed to fundamental political change and devolution, so that local people can ‘take back control'. Assessing both together, we can take some reassurance that one of the key German preconditions for serious levelling up is being met - long term political consensus in favour of economic rebalancing and devolution. Lisa Nandy went one stage further through supporting a constitutional commitment to this, echoing Gordon Brown's report. But what neither was entirely clear about was the scale of long term, intergenerational investment and fiscal devolution that this will require, nor the industrial and economic strategy on which this would need to be based.

The great paradox of British politics is that, having left the EU, we are now increasingly trying to model ourselves on Germany.  The question is: are we prepared to will the means for this, as well as the ends? The answer from the Convention of the North, was clearly affirmative, let's hope our national politics can deliver this too.

Ben Lucas is founding director at Metro Dynamics

@metrodynamics

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