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Are we all in this together when it comes to benefits of growth?

THE 1980s fashion revival is, by the day, becoming ever-more visible. Walking down the high street feels at times like stepping back more than a quarter-century. It has all gone a bit far, with Rick Astley even putting in an appearance in Inverness recently, which we are told boosted hotel revenues in the Highland capital.

Songs from the eighties which you thought, and certainly hoped, you had heard for the last time are blaring out of the radio.

The fashion and music revival brings back memories of the damaging decline of heavy industry under Margaret Thatcher, and of the yuppies in the City of London with their large mobile phones. It also conjures up comedian Harry Enfield's Loadsamoney character, an obnoxious Cockney plasterer who epitomised the everyone-out-for-themselves culture of the Thatcher era.

And it all provides a most appropriate backdrop for a call yesterday by Strathclyde University's Fraser of Allander Institute for a revival of regional policy aimed at supporting investment and economic growth in parts of the UK outside London and south-east England.

During the 1980s, there was a sharp focus on the contrasting fortunes of the likes of those yuppies working in the City and people elsewhere in the UK losing their jobs as the mining and steel industries were dismantled.

This focus became far less sharp during the long period of growth between the early 1990s and the global financial crisis, which began in summer 2007 and took a lurch for the worse in the autumn of the following year when US investment bank Lehman Brothers collapsed.

Given the misery caused by the Westminster Government's austerity programme, and the house price boom in London and south-east England fuelled by the Coalition's hastily-implemented policy of inflating the residential property market, it is hardly surprising there has now also been a revival of the 1980s focus on differing economic performances of the UK nations and regions.

Not at all surprisingly, First Minister Alex Salmond has been quick to seize upon the issue of London's growing economic dominance as he continues to put his case for Scottish independence.

In a keynote speech in the UK capital earlier this month, Mr Salmond portrayed London as the "dark star". He was quoting London School of Economics professor Tony Travers, who described London as the "dark star of the economy, inexorably sucking in resources, people and energy".

Meanwhile, the BBC's Evan Davis has been exploring London's dominance, and the question of whether the city's success is good or bad for other parts of the UK, in a two-part series entitled "Mind The Gap: London Versus The Rest".

Professor Brian Ashcroft, economics editor of the highly-regarded Fraser of Allander commentary, said yesterday: "We don't want to dampen London's growth. We want to spread it."

The superior economic performances of London and

south-east England are highlighted

by Fraser of Allander.

Scotland, even though it fares relatively well among the UK nations and regions, is well adrift of London in terms of average annual growth in the period from 1998 to 2008. The extent to which Scotland trails London is much more pronounced in the period from 2009 to 2012. These comparisons are based on nominal gross domestic product figures from the Office for National Statistics, as opposed to data from the Scottish Government.

Mr Ashcroft believes that, for Scotland and other parts of the UK outside London and south-east England to share to a greater extent in the emerging economic recovery, the Westminster Government must go through a two-stage process.

He observes that it must, first, admit that private sector investment is too weak and act to address this at a UK-wide level.

Mr Ashcroft believes it must then recognise that there is a case for differential investment incentives across nations and regions of the UK. He highlights the degree to which this could benefit the overall UK economy in the long run. For instance, he points out that there would be less danger of some parts of the UK growing so fast that inflation became a problem.

Mr Ashcroft sees potential for the UK Government to attract investment to particular nations or regions through the tax treatment of projects or through cash subsidies.

He also flagged up what the Scottish Government could do, within the current constitutional set-up, by giving more money to Scottish Enterprise and raising the amount of Regional Selective Assistance grants.

Mr Ashcroft noted the need to act within European Union state aid rules but seemed confident there was potential to do more to stimulate investment.

Fraser of Allander pointed out that the EU's General Block Exemption Regulation allowed for regional incentive programmes under certain criteria. It also observed that academic evidence on the impact of regional policy in the 1960s showed that it worked best when the national economy was expanding or recovering and firms were thinking about investing, and declared: "So now would be the right time."

A return to regional policy looks well worth considering.

Surely Prime Minister David Cameron will be a fan of such a move, given his "we are all in this together" catchphrase. Presumably his familiar rallying call, even though its accuracy has rightly been challenged, must in his mind apply to the fruits of economic growth, not just to the Coalition's nasty austerity medicine.

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