UK told branch line economy needs to be put back on track

The director general of Britain’s biggest business organisation has warned the UK is now running a “branch line economy” and is in danger of the collapse of the levelling up agenda.

Tony Danker director general of the CBI opened the organisation’s annual conference with an attack on the consequences of the ‘benign neglect’ in parts of the country over decades.

He warned delivering economic growth in every place in the UK will be the determining factor in the success or failure of the Government’s Levelling Up agenda. The route to achieving that will be by creating, or building on, clusters of economic activity in different parts of the country.

“The Levelling Up agenda is one we share wholeheartedly with the Government,” he said “Billed so far, it’s a lot about politics and public services. City mayors or County mayors. Pride in places and better spaces. It all matters. Business cares about these things. But on those issues the politicians lead.

“Ultimately, what the UK needs to level up, however, is economic growth in every place. Growth that in turn provides better paid jobs, skilled work, firm-level success and creates the kind of virtuous circle that helps a place to prosper.

“So, let’s talk about money. Let’s talk about industry. Every place has an industry they’re famous for. Textiles in Lancashire. Shipbuilding on the Clyde. Steel in Sheffield. Sources of competitive advantage that made them prosperous. Where people learnt a trade and forged a career.

“But the truth is that the UK suffered from de-industrialisation. Since the 1980s, we let old industries die, offering little more than benign neglect for what got left behind. It was an economic policy that was ambivalent about levelling down; Too relaxed about a brain drain as young people leave home to chase better paid jobs. Wages higher on average in the South than the North. Multi-national corporations located overwhelmingly in the South East where new industries thrived. Shuttered high streets in towns and cities left behind. A loss of pride in place.

“We’ve spent the past decades living with these consequences. But now, we’ve got a shot at redemption, a chance to regenerate with nascent industries, such as biotech, space, and cybersecurity, emerging in all parts of the country.

“Even more with net zero, which creates a once in a generation opportunity for the UK’s industrial heartlands to lead in this new industrial revolution as they did the last. In hydrogen. Off-shore wind. Carbon Capture. Electric Vehicles and batteries, and other net-zero solutions. A chance for these places to be world-leading again. If this isn’t levelling up, I don’t know what is.

“But it won’t happen on its own, that’s what we now know. This might be a new line from the head of the CBI, but simply saying the market will fix this is not good enough. There are free marketeers in the debate who say Government should never play an active role like this. But I don’t know a country in the world, including, and indeed especially, the United States, where governments aren’t active in economic geography. Governments don’t create jobs and wealth. Businesses do. But businesses alone don’t make places better. That’s on all of us.”

Danker added: “The truth is that in too many sectors, the UK now feels like a branch line economy. With the most productive parts of a sector, such as HQs, too often based in London and the South East, and the branch managers and the back-office based everywhere else.

“Instead of a branch-line economy, what we want is an economy of many hubs. That means using all parts of the country to their full potential. In a multi-hub economy, clean energy headquarters in the North East call up Edinburgh and London to arrange finance. And London companies like TfL call up Yorkshire, Ballymena and Falkirk for green buses.”

“So I can announce that the CBI will establish a new Centre for Thriving Regions to coordinate the private sector’s commitment to levelling up,” he added. “And it will crack one of Government’s biggest questions, how to bring private sector leadership to a place. Businesspeople want to play that role.

“But to date most of the asks are for committees that oversee public funds. I’d change the ask. Ask businesses to do fundamental economic strategy for regions, as often our best Mayors do. Or be a genuine decision-maker on specific deliverables that make a difference, a university hub, a new logistics centre, a thriving regional airport.

“I have spoken to companies far and wide who want us to do this work. Who want to ensure that we throw the full weight of private sector involvement, ingenuity, and investment behind a shared mission to level-up the country.”

“Instead of a branch-line economy, what we want is an economy of many hubs. That means using all parts of the country to their full potential. In a multi-hub economy, clean energy headquarters in the North East call up Edinburgh and London to arrange finance. And London companies like TfL call up Yorkshire, Ballymena and Falkirk for green buses.”

Tony Danker, CBI

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