South of the River – Mind The Gap

I’ve been lucky enough to visit two local Victorian monuments this week, John Marshall’s Temple Works and the Holbeck railway viaduct. They got me thinking about how economic development works.

I wouldn’t call myself an economist, but I have an interest, I dabble. So I was keen to watch Evan Davies’ programmes on BBC2 about relationship between London and the rest of us. The programmes were called ‘Mind The Gap’ and they demonstrated with vivid graphics how much of the wealth of the UK is created in London and how little elsewhere.

It wasn’t always like that. When Temple Works and Holbeck Viaduct were built it was the North of England that was producing the wealth. Evan explained the economic theory of ‘agglomeration’, which apparently explains the clustering of industries. People need to be close to others in their field to spark innovation and grow. For example Silicon Valley in California, or bio-medical companies around Cambridge.

London’s relative position has changed gradually over time. Britain had the great advantage of being the first industrial country, selling its goods across the globe. But other countries caught up, first in Europe then around the world. Since the Second World War production has increasingly moved to wherever the cheapest labour was. Britain’s textile industry disappeared, followed by heavy engineering. Both hit South Leeds, hard.

The process was accelerated in the 1980s when the Tory government decided to close the pits and to relax the rules and lower the taxes around financial services (banking). London was always Britain’s banking centre and apparently buying and selling shares is creating wealth. The north went from a position of producing coal to buying coal – that doesn’t create wealth, at least not in Britain. So an asset becomes a liability, we move from the black into the red.

I’m not sure if London’s political dominance stems from its new economic power, or is a result of it. I increasingly think that if Scotland get’s its independence, Yorkshire should petition to go with it.

Take rail for example. Crossrail is a new line running east-west under London. It had problems getting off the ground (or under the ground) but there was no debate about whether it was needed and what economic benefit it would bring. Everyone in London thought it was a good thing and although it serves only one city and therefore counts as local transport, part of it is being paid for by us up north.

HS2, the new high speed rail link from Leeds to London, is much more controversial. It has to prove an economic case and we have to explain to politicians in London why we want to be connected. I’m in favour of HS2 and ‘Mind The Gap’ highlighted two reasons for that.

Firstly, it pointed out that even techie companies like Google don’t want to work by email, phone and Skype. It’s official, people doing business want to meet in person, who knew? If London is grabbing all the business Leeds needs to be in good contact with it. The second reason is that the northern cities, especially Leeds and Manchester need to be better connected and HS2 will free up capacity on the existing network.

My third reason for supporting HS2 is a sort of reverse NIMBY-ism. I think I’m a PIMBY – Please In My Back Yard. The new HS2 station is planned for the South Bank, or Holbeck/Hunslet, or whatever you want to call it. It will have its own little agglomeration effect, attracting other development. There is a chance to replace the jobs that were lost when the factories that used to stand there closed down.

Creating jobs close to Beeston, Belle Isle and Hunslet is one thing, making sure local people can get those jobs is another. HS2 might not be completed for another fifteen years, but we need to start now to make sure people in South Leeds have the skills and confidence to get the jobs that come with it. The Council are lobbying for construction of the line to start in Leeds in which case its effects will be felt even sooner.

I was reminded of just why those jobs are so important by a survey of young people who are not in employment, education or training (NEET in the new-speak jargon). It demonstrates very clearly how damaging unemployment is. The longer you are jobless the less confidence you have; the worse your health, both mental and physical; and the less likely you are to engage, for example by voting.

The survey broke some myths about “scroungers” too. Lack of experience was cited as the main barrier to getting work and very few said lack of well paid jobs was the problem. They would be happy with minimum wage, they just want the chance to work. Encouragingly, a large majority said that given the right support they could contribute a lot more to this country.

I suspect South Leeds will always be a bit rough around the edges, it’s one of the things I like about the place. However, full employment would make a huge difference, it would bring back the area’s confidence, it’s sense of pride. That’s got to be something worth fighting for.

I’ll be back next week with more of my views from South of the River. If you’re on Twitter, you can follow me: @BeestonJeremy.