Focusing on London
He neatly sums up why Margaret Thatcher was a disaster north of the Severn-Wash line but a huge success south of it:
In the 1930s, the centre of gravity of the British economy shifted to the south-east. […] Manufacturing jobs had peaked in the mid-1960s and the workforce had shrunk by a million. Britain’s industrial competitiveness had been impaired in the 1970s by high inflation, offset by a lower exchange rate. But the first two years of the Thatcher era were a veritable bloodbath. Industry faced a quadruple whammy: higher oil prices; an appreciating foreign exchange rate courtesy of sterling’s emerging status as a petro-currency; rising inflation caused by a doubling of VAT and high pay claims; and sky-high interest rates deemed necessary to reduce the growth in the money supply.
[Then there] was the big bang in the City. This accelerated the economy’s transformation away from manufacturing towards the service sector and the financial services sector in particular. The government’s thinking was that it made sense to exploit the size and international reputation of the City, because this was a sector in which the UK had a comparative advantage.
In other words, Mrs. Thatcher accelerated a process whereby economic activity was moving from north-west to south-east. A more sensible government might have tried to create more economic activity in the struggling parts of the country, but instead they decided to concentrate on the areas that were already doing well.
Larry Elliott continues:
The economy’s structure means that the growth sectors when it recovers are […] likely to be financial services, professional services and communications, digital and media. All three are concentrated in London.
So basically, because a large list of UK governments allowed the economy to shift gradually towards Greater London, this pattern has now been set in stone because all growth will by default happen there.
The future governments of an independent Scotland will certain not just give up and allow the economy to shift to London. It will do its utmost to create economic activity in Scotland.
I just feel sorry for the people of Northern England — they really could use independence from London, too!
By what mechanisms can a government create self-sustaining economic activity in struggling parts of the country that doesn’t result in dependence on government for its continues survival?
By creating the right economic incentives. For instance, manufacturing amongst other things needs a low-ish and stable currency, graduates with the right skills for manufacturing, and a tax system that encourages investment in manufacturing. I’m not an expert, but you can look at the countries that have been successful at maintaining and furthering their manufacturing. The UK’s policies were very clearly tailored towards the needs and wishes of the City of London.
There should have been an expansion of further and higher education opportunities in technical and engineering subjects in the ‘stricken’ areas in the mid 80s. People would then have felt less ‘scrap-heaped’.
“The industries you’re in are no longer viable but look: here are courses to prepare you for the industries of the future …”
Ah I stand corrected. The BTEC was created precisely for that reason.
RT @arcofprosperity: New blog post: Focusing on London http://t.co/QdRF4bx3Sx #indyref
Educating people in technical and engineering subjects only works if there are also jobs that require those skills. I think they “forgot” to create an environment that was conducive to creating new manufacturing industries.
(On the second part) that’s only partly true. I think the tax structure they created, while it favoured the City, also favoured anyone trying to start a business.
(On the first part) II’ve never really gone in for ‘career planning’ but my approach has always been to prepare myself to be in a position to take advantage of any opportunity that comes along. E.g. I found myself basically unemployable in 1994 because of the highly theoretical nature of my university degrees. I did a training course for FE teachers and trainers in Wales, and while I was doing that, and during my short period teaching, I did OU honours level courses in mathematical modelling, so that if opportunities came up, I was ready. During my FE training course, I had a placement in a devastated former mining community called Ebbw Vale. The students that I taught had the attitude: why should I study when there are no jobs? The thinking was utterly defeatist. I was teaching maths and physics to NVQ students but they just couldn’t be bothered and despite my enthusiasm for the subjects, I just couldn’t lift them out of their apathy. They were at the beginning of their ‘working’ lives but they had no interest in making themselves employable should opportunities arise. “There’s no jobs so I’m not going to study” was an ingrained attitude among about 90% of the kids. It was a highly dispiriting experience. I contrast it to Poles from parts of Poland with high unemployment who have enough get up and go to England and work hard at whatever job they can find.
(On the second part) that’s only partly true. I think the tax structure they created, while it favoured the City, also favoured anyone trying to start a business.
(On the first part) II’ve never really gone in for ‘career planning’ but my approach has always been to prepare myself to be in a position to take advantage of any opportunity that comes along. E.g. I found myself basically unemployable in 1994 because of the highly theoretical nature of my university degrees. I did a training course for FE teachers and trainers in Wales, and while I was doing that, and during my short period teaching, I did OU honours level courses in mathematical modelling, so that if opportunities came up, I was ready. During my FE training course, I had a placement in a devastated former mining community called Ebbw Vale. The students that I taught had the attitude: why should I study when there are no jobs? The thinking was utterly defeatist. I was teaching maths and physics to NVQ students but they just couldn’t be bothered and despite my enthusiasm for the subjects, I just couldn’t lift them out of their apathy. They were at the beginning of their ‘working’ lives but they had no interest in making themselves employable should opportunities arise. “There’s no jobs so I’m not going to study” was an ingrained attitude among about 90% of the kids. It was a highly dispiriting experience. I contrast it to Poles from parts of Poland with high unemployment who have enough get up and go to England and work hard at whatever job they can find. I have very little sympathy for people who squander the free educational opportunities they have that people in developing countries would do anything for.
I think there are cultural attitudes in some parts of the UK that linger over from socialist days that are not conducive to economic development, the attachment to State solutions to all problems being a major one. Tall Poppy syndrome also seems to be a bigger thing in the north than in the south. There is possibly also a lack of confidence about one’s inherent ability to improve one’s situation.
(II) While in theory the tax structure might have “favoured anyone trying to start a business”, I think the fact that companies didn’t appear in huge amounts outwith London shows that something more was needed.
(I) Of course it’d be nice if everybody was proactive and energised, but I don’t think you can create huge unemployment and remove most known sources of employment and just expect everybody to educate themselves and emigrate. That’s not government, that’s just throwing in the towel.
But why didn’t people or communities think to themselves, “these industries are becoming outdated, we’d better figure out what to do next?” before the crunch came. There was such a massive resistance to change in the 70s and 80s that it could be reasonably said that they partly brought it upon themselves. They must have known that their employers were not economically viable. The Thatcher government didn’t create the unemployment: they largely brought it on themselves by not allowing any change or flexibility in their working practices so their customers simply went elsewhere for steel, coal etc. It would be like if I insisted on (somehow) writing my iPhone code in Fortran and refusing to work if the customer disagreed. I would pretty quickly not have any work and it wouldn’t by my customer’s fault …
I guess even though I’ve travelled and lived all over the world, I’m pretty much still a product of the south of England culture which values an entrepreneurial outlook and self-reliance rather than state-reliance … which is why I think the south is more successful than the north (of England) where it seems like there’s more of an attitude of ‘I’ll fester on the dole until someone opens a big factory/office nearby’ instead of ‘I’ll get myself some skills and go where the jobs are’. I bought my ZX81 by doing paper rounds, selling geraniums from my front garden to people at the bus stop, and clearing leaves for neighbours. I had my first job when I was 16 and worked a Saturday job while studying for my A Levels. I worked while I was at uni (in a bookshop) and when I haven’t had a full time job I’ve done bits and pieces of work for random people to make ends meet. I don’t get why people don’t think like that in other parts of England. It seems like it’s a cultural difference between north and south.
Indeed. However, you don’t seem to be a fan of splitting England up… 😉
It would be the north’s loss … 😉
Neither would your average northern English person, I very much suspect.
Yahoo Answers is never the place to go looking for answers … but some interesting comments here:
http://uk.answers.yahoo.com/question/index?qid=20100527042119AAnzzuf
Phyllis and I were discussing this in bed last night, and we came up with two reasons why the cultural difference exists: Both are based on the fact that Scotland & N England industrialised very early (~120 years before Thatcher’s governments), and very completely in many areas, so (1) many people didn’t know anybody in their neighbourhood that didn’t work in the local industry (coal, steel, etc.) and (2) they didn’t know anybody in their families that had ever worked anywhere else (working in the local industry would have been going on for 4-5 generations). This meant that when the jobs disappeared, there was no knowledge of the alternatives. Compare this with S England (and Denmark and NZ), where industrialisation happened later and less completely, so that more people knew people with different jobs, and more people lived in villages (where you can grow some food in your garden and try to sell it).
I think you could be onto something there. Thinking about the south coast belt where I grew up: it has for a long time (200 years) had quite a diverse economic profile: fishing; London commuters (since the railways); tourism; farming. Same would go for the rest of the south east in different ways I guess.
When I tried to do Phyllis’s family tree, I didn’t find anybody for generations that wasn’t born and bred in Glasgow. One great-grandmother was born in the Manchester area and then moved north (so that’s hardly coming from a village setting), and one great-grandfather was born in Newton Stewart. I think she’s quite typical. Almost nobody in Glasgow has ancestors living anywhere else since the Highland clearances.
The thing is that being Danish, I’m much more like you — the huge factories employing entire towns are completely alien to me.
I guess unlike me you grew up with stable, consensual Social Democracy whereas I grew up with socialism followed by Thatcherism.
I had high hopes for Blair … I voted for Labour in 1997 … it seemed like he’d made Labour see sense economically but would be a bit ‘softer’ and heal the divisions. I was sorely disappointed with his government … re-confirmed my ‘Animal Farm’ beliefs about the Left: eventually they cherry pick bits of capitalism for their own gain while still claiming to be for the People.
BTW, this discussion was inspired by gardens. A long time ago I blogged this: http://blog.widmann.org.uk/2006/06/15/67/ — where I hypothesised that the tiny gardens in Scotland were due to applying planning laws meant for SE England here. I then discussed this idea with an academic in a pub, who said that I was completely wrong — gardens are small in Scotland because people have been living in tenements for so many generations that all knowledge of how to keep and use a garden has disappeared, which is why most Scots just want a tiny garden they can use for a barbecue, but no plants.
I agree that I think you’re wrong about planning laws as these laws have generally been set locally rather than nationally.
I think that’s urban living generally in the UK: I grew up in a terraced house with two tiny gardens, front and back, which were always overgrown until my mother had them paved over.
Then we moved to a flat with a front garden and a bus stop outside. Whenever we were in the garden, people waiting for buses would give unsolicited advice on our gardening techniques (or lack of!). We got that one paved over too in the end …