Greg Clark MP: The key to a Conservative revival lies in our cities

Greg Clark is Financial Secretary to the Treasury and MP for Tunbridge Wells. Follow Greg on Twitter.

There are 158 constituencies in the North of England. Just 43 of them returned a Conservative MP at the last general election. By way of comparison, Labour took just ten of the 197 constituencies in the South of England outside London. We could comfort ourselves with the thought that Labour has the bigger problem, but complacency won’t win us a majority. Nor is national unity best served by the polarisation of the electoral map. Of course, in any democracy, there will geographical variations in support for different parties – but few countries are as starkly polarised as our own.

It’s therefore time to take the North-South divide seriously. And to do so we need a better understanding of the nature of that divide. For instance, this is much more than a matter of physical distance from Westminster – after all, you can travel hundreds of miles from Big Ben and still find yourself in true-blue territory. We also need to look past differences in the socio-economic make-up of North and South. Though these do exist, it’s also the case that if you compare people from the same backgrounds, Northern voters are less likely than their Southern counterpart to support Conservative candidates.

Clearly, there’s something else going on – a lot of things, in fact; but for me the biggest single factor that distinguishes the North from the South is cities. If you look at where people actually live, the North is much more urban place than the South. Of a total Northern population of 13.5 million people, 8.5 million – almost three-fifths – live in the metropolitan counties of Merseyside, Greater Manchester, South Yorkshire, West Yorkshire and Tyne and Wear. Other heavily urban areas such as Hull and my native Teesside are home to much of the other two-fifths.

Of course, the South has cities too. But leaving London aside, they’re fewer in number and generally smaller in size. Of England’s eight ‘Core Cities’ (the largest cities beyond the capital), five are in the North, two in the Midlands and only one (Bristol) in the South.

And if one doesn’t leave London aside? Well, in many ways, this only increases the contrast between North and South. London is in a category of its own – an order of magnitude bigger than any other city in Britain, a world city of enormous economic, political and cultural importance. So while the North is a region of cities, the South is a region of smaller communities centred on a single metropolis in which wealth and power is concentrated to an extraordinary degree.

In my view, there is no serious analysis of the North-South divide that doesn’t begin with this vast difference in economic geography.

As a capital without a counterweight, London’s sheer size helps explain how Britain became one of the most centralised countries in the free world. At its height, the industrial revolution provided the North – and its growing cities – with the dynamism they needed to escape London’s gravitational pull. But the technological and political products of that revolution gave Whitehall the means and the justification required to exert its control to an ever-greater degree.

There are those who say that cities that were once in the right place to exploit the opportunities of industrialisation, are now in the wrong place in the era of globalisation. But this utterly misses the point. The greatest strength of cities is their ability to innovate. By providing the greatest possible concentration of people and institutions, cities are where new ideas have the best chance of taking wing. Furthermore when it comes to applying new ideas to their own governance, cities – as spatially coherent, living communities – are ideally placed to know their own strengths and weaknesses and to adapt accordingly to changing economic conditions.

This is why over-centralisation has been such a disaster for urban Britain. Over-mighty and over-extended, central government has, for decades, robbed our cities of their trump card: their ability to do things differently. This has been bad for the country as a whole, but particularly bad for the North – being a region characterised by its distinct and diverse cities.  Each of these communities should have been empowered to plot its own course to the post-industrial future, but they were instead subject to the uniform prescriptions of a distant bureaucracy.

It is this deliberate policy of disempowerment, and not geographical determinism, that explains the economic decline of the North.

In 2012, the Government published its Unlocking Growth in Cities report which compared England’s eight core cities (the largest cities outside London) with their equivalents in Germany, France and Italy. In Germany all eight of the biggest cities outside Berlin outperformed the national average in terms of GDP per capita. The same was true of all but two of the Italian core cities. In France, three of the eight outperformed the national average, while none fell significantly below it. Moreover, it wasn’t only GDP that followed this pattern, it could also be seen in respect to the percentage of the workforce with higher qualification and rates of innovation (as measured by patent applications).

Patterns like this don’t form themselves over night. They are the result of decisions taken over a century of ever increasing centralisation. In more recent decades, there have been signs of economic renewal in our great cities, which are especially visible in the regeneration of their city centres. But huge reserves of untapped potential remain. The progress that had been made since the 1980s is only the start of what is both possible and necessary.

Our cities have already proved that they can make good use of whatever freedoms that national governments have granted to them. But halting, fitful experiments in localism are not enough. Only a sustained and expanding policy of radical decentralisation will do.

There need to be qualitative differences in the process of reform too: The irony of previous attempts at decentralisation is that they have been highly centralised in nature – Whitehall has decided which resources and responsible to devolve, making a one-size-fits-all offer to each community on a take-it-or-leave it basis.

The City Deals programme, which I’m responsible for as Cities Minister, takes a completely different approach. Each deal is bespoke, not off-the-peg. It is agreed in a two-way negotiation between central government and the city in question. Each community has a right of initiative – to propose what it wants in the deal. And rather than the city having to show why it should have this or that item in the deal, the burden of proof – in the event of a disagreement – is on Ministers to show why it shouldn’t.

The first wave of City Deals have already been agreed with the core cities of Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield. The second wave, involving twenty additional urban areas, is currently in progress. With the publication of Lord Heseltine’s landmark report on promoting growth in local economies – No stone unturned – decentralisation will move to an even higher gear.

From the moment that this Government took office and set about dismantling the apparatus of top-down state control, we made it clear that each decentralising reform represented a point of departure not a destination. To remove a central control, to devolve a decision-making power doesn’t just serve a purpose in itself, it lays the foundation for further decentralisation – by reducing dependency on the centre, building up local capacity and inspiring further city-led initiatives.

I believe that this dynamic process of change will produce positive economic results for our cities long before any shift in party political allegiances. However, it is pretty clear to me that the old order of disempowered Northern cities, prevented from shaping their own futures, was very much to the advantage of our opponents.

All the time the main question is "what can the Government do for our cities?" then the party of tax, borrow and spend will have the upper hand.  But if we can change the question to "what can this city do for itself?", then many good things are sure to follow.