A successful Northern Economy

An attempt to descruibe what wouold make a successful Northern Economy.

All very nice, but almost none of it is about the economy. It\’s about governance a bit, about social matters a bit, but not really about the economy. Take this nice piece of wibble for example:

A successful northern economy will build on the heritage of skills and enterprise in all places, not just in cities considered economic drivers. It will value the vernacular, rather than trying to be like everywhere else. It will invest in the necessary technologies (including high speed rural broadband) to support this and build a culture of support and facilitation among local and central government agencies.

Apart from the fact that high speed broadband (as opposed to the dial up/ broadband difference) doesn\’t make any difference at all, it\’s just the usual ritual cant about inclusiveness isn\’t it?

There\’s three things that are wrong with the \”northern\” economy.

1) The exchange rate\’s too high.

2) Wages in one sector of the economy are too high.

3) The private sector is getting crowded out.

The solution is to cut government, cut wages (and taxes) and the exchange rate, well that\’s more difficult.

The thing is, the UK is not really an optimal currency area. Interest rates are set for the needs of the economy of London and the SE. The heavy industry and manufacturing that made the North rich in the first place (yes, much, much richer than southern parts like Somerset and Dorset way back when) gets screwed by haing them set to cool the housing markets down south.

In theory a more local currency, the \”northern pound\” could be introduced to deal with this. It won\’t be and the nef style things, much more local like the Brixton pound, won\’t help.

That\’s the part of the problem that we\’ll probably not solve.

We\’ve a national pay system for those working for the government. This has to go. The £28,000 a year you get as a nurse in Esher, Surrey, is in local terms near a pittance. It\’s damn good money in those places where a house is bought out of the newsagent\’s window for £5k (yes, these places do in fact exist). And it\’s not just nursing: civil service pay rates, the low, they\’ve all got to be locally based, not nationally.

Finally, the private sector getting crowded out. There are areas where 70 % and more of the economy is government: this is close to East Germany of old levels. It didn\’t work there then, isn\’t working here now. Part of that is those wages.

Abolish national pay bargains, abolish the national minimum wage, reduce the taxes and regulatory burden in those poor areas and see the private economy grow.

11 thoughts on “A successful Northern Economy”

  1. “The heavy industry and manufacturing that made the North rich in the first place (yes, much, much richer than southern parts like Somerset and Dorset way back when) gets screwed by haing them set to cool the housing markets down south.”

    There are ways to cool the housing market that don’t involve higher interest rates- taxes on property would have that effect without disrupting the economy in cloth cap country.

  2. Ross,

    Yes, but as long as house prices provide the baby boomer generation with their pension pot (or so they believe) and baby boomers are one of the single largest voting blocks that is going to happen.

  3. Given that some of these regions are just money pits there’s nothing to lose by experimenting on them. No, not with scalpels and electrodes, but with school vouchers, simplified tax and benefit systems and so on. Employers NI is sitting up and begging for the axe. It was bearable during high employment but is a complete anachronism now.

  4. Every school and hospital should be free to set their own wages. That would change a huge amount. Imagine if we had the oportunity to send patients up north for cheaper operations.

  5. Haha. Tim, you’ve cottoned on to the way in which the EU could have worked like clockwork but due to politicians, never stood a chance.

    In the UK sovereignty based in Westminster was parked in Brussels. This left a vacuum down south which hoovered up local democracy and accountability. It centralised local government to keep the bastards in London busy. Really, with the EU and local councils there doesn’t need to be much going on in Westminster and we don’t need 650 MPs but instead we have unaccountable local government because so much is set (and funded) from the centre.

    Had things gone in the other direction – that as Brussels gained authority local democracy gained authority also – we would be less likely to see the problems we have now. The way you would do that is with local taxes providing far more of local spending revenue then they do at the moment. You would have the internal competition that the politicians claim to want to be for but never get around to unleashing.

    In a UK context the actions of the Government are preventing/discouraging the northern workforce from using their advantage of lower living costs and preventing communities from being able to try different things – LVT instead of council tax or a local sales tax, a local income tax or whatever.

  6. Imagine if we had the opportunity to send patients up north for cheaper operations.

    I can imagine that, serf, it’s an excellent idea.

    One of the things that infuriates me about socialists is that there are more ways of using As money to benefit B than simply taking it from one and giving it to the other. Some alternatives may even be of benefit to A.

  7. Thinking about the northern pound, Scotland already has the power to issue notes, so why not disconnect Scottish pounds from English pounds and let northerners use those?

  8. Lets have some real re-generation. That means setting up special economic zones – (starting in Hull) where taxes and regulation are cut. Then watch the resurgence of northern manufacturing.

  9. Cutting taxes and regulation etc in depressed northern areas would be a good idea but can you imagine the shock horror there’d be if it was done ? Professional northerners and Guardian columnists would rant about treating the north as a repository of cheap labour and and poor conditions in order to enrich the filthy south ( just as they do now with the emerging economies overseas ). Moaning southerners would go on about the north getting special treatment just as they do now with the Scots. A political non-starter.

  10. At last, the Timmy manifesto, neatly put. Huzzah! Any political party willing to put into practice everything in your last sentence gets my vote.

Leave a Reply

Your email address will not be published. Required fields are marked *