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More than platitudes needed to restore our manufacturing base

We live in a deeply divided country. The gaps between wealth and poverty have never been so pronounced.

We live in a country where financial speculators who gamble with our economy are rewarded with excessive incomes many of us could not make in a life-time.

Our economy, politics and public investment are all tailored towards maintaining an over-reliance on the financial sector of the City of London. This has led to vast regional inequality, with Britain being home to nine out of ten of Northern Europe’s poorest regions.

Our Northern regions, once the engine room of our country’s prosperity, have been scarred by generations of de-industrialisation, unemployment and lack of investment.

The Government’s promise to rebalance the economy has never materialised. There is no better illustration of the gap between the rhetoric and reality than the failure to support our steel industry.

The loss of steel production would cement the decline in UK manufacturing and undermine our long-term competitiveness.

I want to see the same commitment to UK manufacturing as we saw to the financial crisis to ensure that thousands of jobs depended on the steel industry are not lost to short term factors, such as Chinese steel dumped on the market driving down prices.

There is a role for Government to support our manufacturing sector and reverse the decline which has seen manufacturing dramatically fall as a share of economic output from 27% in 1970 to just 10% today.

The loss of manufacturing has a wider impact, not only reducing the number of skilled jobs in our economy, but also cutting investment on research and development which is almost exclusively based in our manufacturing sector.

We need a Government committed to supporting UK manufacturing, which means more than platitudes, with changes to public procurement away from the short-term, lowest bidder approach to maximising social benefit and supporting domestic industries.

A revival of manufacturing in our industrial heartlands is only possible if government rhetoric is matched by infrastructure investment.

The current disproportional investment directed towards London will only exacerbate regional inequalities.

IPPR North found that London received twenty-four times the transport infrastructure investment per head than the North East. In fact, a single project, Crossrail, is earmarked to receive nine times more funding than all the rail projects in the north’s three regions combined.

Even when it comes to projects such as HS2, considered to be of national importance, regions like the North East have been excluded. In fact, a consultation by Network Rail suggested that only 11 minutes would be cut from journey times between Durham and London, while we would lose direct services to major Scottish cities.

Connectivity to major national lines as well as within our own region continue to be a problem. While money is no object in relation to Crossrail, the North East is running a Metro service starved of investment with an increasing number of faults as some of our trains approach forty years old. However, the extension of this service across the region would have a much greater transformative impact than HS2.

The failure to rebalance the economy does not only create inequality between the regions, but within London itself there is a stark contrast between the wealthiest and poorest within the capital.

The economic pull of London and the South East draws in education and skills from the regions. For every graduate who moves from London to the North, twelve travel in the opposite direction. This migration deprives the regions of the skills and training required to help grow our economy, but also leads to overcrowding in London driving up house prices and rents and impacting quality of life in the capital.

The transformation required to rebalance our economy requires nothing short of a new industrial revolution.

We need to redesign our economy with the clear social and economic objective of rebuilding our industrial base in order to address the worrying insecure, low pay, zero hour economy created over recent years.

The Government speak of a Northern Powerhouse as an abstract concept which even Ministers cannot define.

We do not need any more slogans but real solutions, such as the National Investment Bank proposed by Jeremy Corbyn.

The new National Investment Bank would be tasked with funding vital infrastructure in education, transport and housing as well as directly to industry in order to develop the modern manufacturing job and high skill technology careers which are currently missing in our regional economies.

The National Investment Bank principal aim would be to create full employment through higher waged and better skilled jobs. It would end the current focus on financial services which has over-heated London’s economy at the expense of the rest of the UK.

The Bank would facilitate access to local finance as we seek to replicate the success of the German ‘Lander’ model which has sustained manufacturing and German industry making them world leaders.

These policies may sound radical but it shows the deficiency of our politics that such a modest proposal for real investment in our regional economies can be characterised as extreme.

Unfortunately, five years of austerity has conditioned us to expect little from our politicians. However, the election of Jeremy Corbyn is an opportunity to transform our politics, renewing hope and making people expect more from our politicians.

A new economic and industrial policy which rejects the political austerity consensus has been long overdue. It is the only option if we are ever to see our industrial heartland renewed for the 21st Century with the quality jobs and skills required to sustain our communities into the future.

Image Copyright: kadmy / 123RF Stock Photo

5 Comments

  1. Mervyn Hyde says:

    The reason I persist in making it absolutely clear that we can do and achieve anything we want to do because WE CAN PRINT THE MONEY TO DO IT.

    Over the past forty years this country has been indoctrinated in the belief that the Private sector knows best. The results are so plain to see a blind man can see it.

    We don’t actually need an investment bank to lend speculatively into the private sector, we can spend money directly where it is needed, if that means creating industry, then that is what we can do, Jeremy has talked about green investment, well we could set up and fund the research alongside the means to produce it.

    Over the last forty years the private sector has left these shores for more lucrative profits elsewhere. WHY SHOULD WE SIT AROUND WAITING FOR SOME MULTI BILLIONAIRE TO COME ALONG AND SEE HOW THEY CAN MAKE MORE MONEY FOR THEMSELVES EXPLOITING OUR TALENTS WHEN WE COULD DO THAT OURSELVES WITHOUT THEIR MONEY.

    Now is the time for people to wake up, the cat is now out of the bag, we don’t need the Banks nor the private sector, the state can ascertain need and fund it accordingly.

    This article in the Guardian may throw some light on what I am saying:

    http://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity

    Lets not trap ourselves in the old Neo-Liberal orthodoxy, we now all know that the deficit is a lie, so lets do what is ever necessary to take back control of our economy instead of being the debt slaves to the Banking and Financial sector and the private sector will only milk the state for what it is worth.

  2. David Ellis says:

    Money cannot be printed willy nilly. The collapse of the banks showed that.

    1. Mervyn Hyde says:

      David: I really don’t think you know how money is created, the Banks do print it willy nilly every day of the week.

      The Bank of England explain that the only control over the Banks is interest rates.

      1. David Ellis says:

        which is why they collapsed. the bonds they had issued on the repackaged loans they had made bore no relationship to reality. when this was realised their ponzi scam crashed to the ground.

        1. Mervyn Hyde says:

          You are conflating what I said, IT IS A FACT THAT WE CAN PRINT MONEY TO INFINITY, We don’t for obvious reasons, BUT THE PRIVATE BANKS DO PRINT MONEY OUT OF THIN AIR EVERY TIME THEY MAKE A LOAN, THEY DO NOT IN FACT RING UP THE BANK OF ENGLAND TO ASK THEIR PERMISSION THEY JUST DO IT.

          The Banking crash came about because of the interconnect between all the worlds banks and other financial institutions such as the City and Insurance who trade their PONZI schemes, ultimately it was the Sub prime mortgage scam that brought the pack of cards tumbling down, sending the world banking system with it.

          Because the Banks were not lending (they did not trust each other) Brown stepped in with a financial guarantee that would enable the banks to lend again, the reason it failed to do the job that was prescribed, was that the Banks used the QE to pay down their debts and protecting the financial assets of the 1%.

          So that you understand completely and without confusion, Money is created in the economy by the Private Banks lending, it doesn’t happen by lots of little people beavering away producing nuts and bolts etc, that is why the Bank of England quotes “that 97% of all money in circulation was created through debt,” in other words, someone or business borrowed it into existence.

          That is how we get money, if people stop borrowing, we go into recession because there is not enough money to spend. That is why they borrow in the first place.

          THAT IS FACT. That is how the system works, What we need to do, is to print that money into the economy debt free, by the government spending according to need, not as we do now, wait for someone to want to consume and borrow into existence.

          It is not rocket science, but you do need to have to think about it.

          Jeremy’s form of Corbynomics is QE for the people, in reality he doesn’t need to create bonds in order to issue money, he can just print it.

          A bond is a piece of paper that can be lodged with the Bank of England in exchange for an agreed amount of currency, we usually call these pieces of paper IOUs.

          In case you get confused further, if you read the Bank of England document, it tells you that for accounting purposes they charge interest on these QE bonds, but in fact do not end up charging the Banks at all, they just cancel the numbers out. So the banks get free money in it’s entirety, whilst the customers of the bank pay back their loans with interest.

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