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British politicians consigned Blackpool to the welfare scrapheap

Updated: Apr 30

Successive governments have been too concerned with building up the City of London and put too little effort into boosting industry.

people standing in busy london

Blackpool, per capita, has received more levelling up spending than anywhere else. Yet it has done little good CREDIT: Christopher Furlong/Getty


Arguments against interventionist governmental industrial strategies are good ones. Businesses and the market know where to allocate investment far better than any centralised bureaucrat. But it is difficult to look at the British economy today and not observe something of a hollowing out. 


Cities like London, filled with educated and highly-mobile service workers have thrived. But for millions in the North and Midlands – where industry once meant exactly that – the economic damage has been considerable.


None of this is new. In recent decades, devolution, levelling-up, the Northern Powerhouse, and regional growth plans have all been heralded as panaceas to this vice.


Yet, not one of these schemes seems to have worked. In the 1980s, the economic value created per head in London was around 128 per cent of the UK average. Since the end of that decade, this gap has grown near-continuously to its current level of 170 per cent.


Meanwhile, billions have been funnelled from South to North to pay for public services of questionable benefit and an ever-expanding sum on welfare spending. The result has been millions of people growing ever more dependent on the state as they face ever worse outcomes.


Take Blackpool – a parliamentary by-election is being held there next month. 27 per cent of working-age people are economically inactive in the town. Since 2019, it has received almost £200 million in government levelling-up spending. Proportionally, it has benefitted more than anywhere else.  


Yet, the approximately £1,500 of taxpayer money per resident that this equates to is dwarfed by the welfare spending that has poured into the town.


Blackpool’s universal credit bill alone is costing almost £13 million a month.  A hodgepodge of housing, incapacity, and similar benefits will take the welfare spend, excluding pensions, to close to £400m per year.


Put another way, the town with the highest pro-capita recipient of levelling-up funding receives twice as much each year in welfare than it has in capital spending from the levelling-up fund across the entire 5 years of this Parliament.


So, it is not hard to see why measures of employment, mental health, poverty, and more have deteriorated – the government is paying its residents many more times not to work than it is investing in getting them to grow their economy.


The problem, though, goes deeper than this. Northern towns and cities are not merely victims of misallocated spending but of a badly misguided economic strategy.


Government policies benefiting London have included uncontrolled migration, ever-freer trade, and a regulatory state so complex that it is almost as if it has been built in the interests of London’s bloated professional and legal services sectors.


Yet such policies have their costs. The cumulative effect of these changes and our energy and labour policies has seen Chinese goods – fuelled by cheap coal and workers – become perilously cheap by comparison. Our local manufacturers have been run out of business.


None of this was part of a plan. Nobody was elected on this basis. We have drifted into this new economic reality.


No businessman would run a business in which profitable enterprises blindly subsidise those that have inadvertently lost out. Yet, we have run a £2.25 trillion economy this way.  That this strategy may not have been deliberate does not make it a neutral act.


Our leaders seem paralysed in their response, with the paranoia of upsetting the economic sacred cows so precious to the City and governing classes halting any action.


Of course, Brussels’ bureaucracy and bans on state aid long meant that even if we had wished to support industry for many we could not. No such excuse exists today.  


Restoring UK industry– whether primary materials like steel or the high-tech goods of the future – will require us to make manufacturing in the UK genuinely cost-effective.


With welfare spending dwarfing any investment in their industry though, the UK’s towns and cities will never get the industry, economic opportunity, and a fair crack at competing on the global stage.


An industrial strategy may challenge the finer points of Austrian economics and libertarian philosophy but nothing can be worse than our current unplanned deindustrialisation strategy. We cannot pay people not to work and then cry surprise when whole towns do just that.


We need to counteract the plethora of factors making British business as uncompetitive as ever.


The choice is not really about intervening or not intervening in the market.  It is about whether the cumulative effect of our inadvertent deindustrialisation strategy built up by scores of other policies needs combating.


Hence far, our approach has been to shovel the occasional pot of money on the economic losers that government policies have created. These sums have delivered minimal growth and ever more dependency. Rather than creating more welfare cities, we need to restore industry, jobs, and meaningful employment across the country.


Perhaps, the time has come to rethink the traditional conservative opposition to backing core industries through aggressively favourable policies, to prevail in the face of global competition.


After all, this Government has spent 14 years trying to cut welfare and has delivered the highest spending in history. If that spending can’t be cut, isn’t it better to refocus on allowing parts of this country to grow again?


Credit: The Telegraph, 17 April 2024 - by Phillip Ullmann

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