Conservative Diary

« Osborne gambles Britain would rather vote for a political party that cuts the price of beer than a government that solves Britain's debt problems. He might be right. | Main | Cameron can claim three historic moral achievements --- 0.7% spent on aid. 2.7 milion people lifted out of income tax. Gay marriage. »

If politicians don’t look beyond the numbers in the Red Book, they’re neglecting Britain’s economy

By Peter Hoskin
Follow Peter on Twitter

Dear me, the numbers in the Red Book are enticing. I know this from first-hand experience. A good portion of my day yesterday was spent constructing charts to show the latest growth, debt, deficit, employment forecasts – and that’s how it has been, for me, for several Budgets in a row. These are Big Charts for Big Figures. Look, the Office for Budget Responsibility has downgraded its growth forecast for this year from 1.2 per cent to 0.6 per cent. That’s significant.

But there’s also a danger to focusing so heavily on the Budget and on the attendant OBR forecasts. These economy-wide statistics and predictions may be important, but they’re often the only thing that we in Westminster talk about. It’s GDP this, and national debt that – and, all the while, some more unassuming numbers are neglected. It’s a reversal of that old saw: we can’t see the trees for the wood.

In which case, I’d like to point out a tree: this report that the Office for National Statistics released last week. It’s about economic growth, but not the economic growth that we usually dwell upon. Instead of GDP, it talks about GVA – the Gross Value Added to our economy by different parts of the country. If you want to know the GVA of London or the North-West or Wales, then this is where to look. It provides a level of local detail that yesterday’s Budget, with its macro-concerns, just doesn’t.

So what do these GVA figures show? Unsurprisingly, that London is powering ahead of the rest of the country – even after the downturn descended. The key, at-a-glance chart is probably this one, which shows GVA growth between 2007 and 2011:


But the report contains plenty of other nuggets. Did you know that, between September 2007 and September 2012, London added about 267,000 jobs to its workforce, whereas the rest of the country witnessed a decline of almost the same amount? Did you know that, over the same time period, London is the only part of the country that had a positive change in its employment rate?

As soon as you start sifting through these figures, it’s difficult to stop. It’s not just regions; you can talk about cities, towns, villages and individuals (although the official statistics do tend to dwindle as you go down). And it’s here where you notice the real imbalances, disparities and, often, tragedies. As I pointed out in the Times (£) a couple of years ago:

“…the problem is rendered far more dramatic in places such as the Welsh Valleys. In most communities here, the proportion of the population on out-of-work benefits has not sunk under 25 per cent since the Nineties. Indeed, on Merthyr Tydfil’s estates it is currently almost 40 per cent. And the tragedy is that much the same could be said of parts of Liverpool, Manchester, Glasgow, Middlesbrough, wherever.

These are the towns and cities that were hobbled by deindustrialisation decades ago, and have been dragged under by the riptides of globalisation that followed. As one Liverpudlian storekeeper put it to me recently: ‘We didn’t notice the recession because we were already in one.’”

“So what?” you might be thinking, “It’s no surprise that the City of London outperforms the streets of Merthyr Tydfil.” But my point is that, surprise or no’, that sort of harsh truth isn’t referenced enough in Westminster. And it skews the debate, as well as the policy. By the time the recovery comes around, I’m sure politicians will be talking more loudly about “encouraging signs of growth” than about the disheartening, longstanding absence of growth in the country’s poorer areas.

To be fair, this Budget has brought about something of an improvement: I may not agree with all of Lord Heseltine’s proposals for regional growth, but at least they’ve got ministers talking as much about localities as about generalities. And it’s always been true that this Government is implementing policies – from free schools to welfare reform – that should help invigorate every part of the UK.

Yet it’s not just a matter of policy, but one of political culture too – and more could be done on both fronts. Next time David Cameron delivers a speech on the economy, or George Osborne presents a Budget, I’d like to hear some of the smaller numbers, not just the ones for GDP, debt and deficit. If politicians only look at our economy from a distance, then they’re not really looking at it – and what will be missed?


You must be logged in using Intense Debate, Wordpress, Twitter or Facebook to comment.