Eric Ollerenshaw MP: The north of England declined under Labour - but the Government is well-placed to close the north-south divide

Eric Ollerenshaw is MP for Lancaster and Fleetwood.

I read with interest Andrew Rawnsley’s article in last Sunday's Observer, which was headlined "No wonder the coalition hasn’t got many friends in the north", which led Tim Montgomerie here on ConHome to ponder What could solve the Tories’ northern problem? Both set me thinking.

In 1992 a document of vital importance to the birth of New Labour was published. Southern Discomfort, written by Giles Radice - then the Labour MP for Durham North, now Lord Radice - was a pamphlet which argued that the Labour Party was failing to connect with aspirational workers in the south. It identified very clearly that Labour would never win a majority in the House of Commons without winning in the south and then set out a strategy as to how to do that. That strategy – mainly presentational, but also calling for an end to demands for higher taxes, for instance – was largely adopted and implemented by Tony Blair and helped bring about Labour’s tremendous electoral success.

I reference Southern Discomfort for two reasons. Firstly, because such a divide is as apparent for Labour as it is for the Conservatives. Secondly, because whilst Labour could change its tone – ‘tough on crime and tough on the causes of crime’ for example – we in the Conservative Party need to do a lot more than that if we are truly to win over the North. Labour didn’t have to demonstrate its commitment to the south with ‘south specific’ policies. All the changes made were more of a one nation kind – talking about opportunity for all, not raising taxes, tough on crime etc.

So, it is not just a matter of changing our language or looking or sounding more northern, as part of Rawnsley’s article focused on - although I think that is fairly important too. The fact is there is a real problem in wealth differentials and relative wealth creation in the UK. As such, Rawnsley was right to point out that "income per head in the poorer north-east of England is less than 80% of the national average". What he didn’t flag up was that Gross Value Added (GVA) per head at current basic prices actually fell in each of the three northern ‘regions’ between 1995 and 2009. With 100 being the UK average, the North East saw a decline from 82.9 to 78.2; the North West from 90.2 to 86.4; and Yorkshire and the Humber from 89 to 82.9. That decline was even sharper, albeit from a higher base in the Midlands as well.

Without wishing to labour the point, here are a few examples of some of the biggest relative economic declines on a ‘sub-regional’ basis, including my own county of Lancashire.

(For the record, I should point out that the lowest regional GVA is seen in West Wales at 62.6 and Cornwall at 64.5)

The point is, the north declined under Labour.

In a way, this actually represents an opportunity for us. It is a chance to show that we can make a difference, a tangible difference, where Labour failed. We northerners like to see actions as well as words. If we can demonstrate progress in moving to close the north-south divide, then we will have a real achievement to take to the electorate.

It so happens that I am quite confident that this Government can deliver for the north. And I believe it has made a good start.

Personally, I think infrastructure is key, which was sadly neglected under Labour even when the economy was booming. As Simon Reevell MP noted on this site on Monday, High Speed Rail is an excellent example of how the Government is seeking to make the whole country better for business. HS2 will vastly improve journey times between London, Manchester and Leeds; increase vital rail capacity to ease overcrowding on main routes like the West Coast Mainline; and is estimated it will bring in an additional £13 billion to the economy in the north of England. I understand the concerns of those living near the proposed route but if the Government’s pledge to rebalance the economy between north and south is to mean anything, improvements to transport infrastructure of the kind HS2 will bring must be allowed to proceed.

But as Tim said on Sunday, HS2 is a long way off – probably twenty years. That is why upgrades to rail networks – through electrification or increasing the number of carriages on congested routes like the West Coast Mainline – are so important in the shorter term. As are road building projects like the M6 link road near my constituency. The project had sat on the drawing board for an amazing sixty years! The coalition government has finally delivered.

Moreover, we have recognised that the private sector needs a boost if the northern economy is to grow. Eleven of the top 50 constituencies with the most public sector employees are in the North West, for instance. We need to support enterprise in the north if the necessary public spending cuts are not to have a further disproportionate and damaging effect on the north. And again, the Government has recognised this, establishing the £1.4 billion Regional Growth Fund to support those businesses with job creating ideas.

Enterprise Zones should, with the right infrastructure in place, also help business in the north. I sincerely hope it will see some companies relocate northwards but I also hope it can assist companies already based in the north to expand, or help start-ups to find a profitable base. To have so many Zones, eleven already identified and a further ten to be announced soon, shows the importance attached to the scheme.

I also believe the whole localism agenda will help northern communities find solutions most appropriate to their own needs. Too often, in the past, solutions to close the north–south divide have been passed down from on high by the centre. The scrapping of Regional Development Agencies is welcome – I believe the new Local Enterprise Partnerships will mean communities have more control over projects for the area as they cover smaller geographical areas. It also means that places like Lancaster are not dwarfed by the presence of a Greater Manchester or Liverpool in their RDA. Plans to allow local councils to keep the business rates they collect will also help individual authorities boost business in their areas.

Those are the things already happening and, like I said, I feel positive about those measures. However, we could of course go further. Despite it being a Lib Dem manifesto commitment, I am personally attracted to the idea of Regional Stock Exchanges. Perhaps not one for each region, but a Stock Exchange for the North might have enough critical mass to work. It would help medium-sized companies access finance for expansion through sources other than the still ‘miserly’ banks. It would also allow people to invest in their local communities.

Likewise, I was interested in the excellent Civitas Report by Stephen Clarke on how ‘local banks’ are so successful in Germany and Switzerland and how they have helped business growth in those countries. As we reassess our own banking system through Sir John Vickers’ independent review, we should not rule out also considering whether a more radical change might yield benefits.

To summarise: the north declined under Labour; our Government has pledged to rebalance the economy; we have started out well; we must see through those initial policies, but we must keep looking at more radical options too. And if we can actually deliver economic improvement for the north – sustainable improvement based on the private sector - we will reap the benefits.