When The Spectator brought together Conservative Party MPs and think tank wonks at Conservative Party Conference earlier this year, kindly sponsored by Barclays, the discussion over how to stimulate regional growth had one key conclusion. The old divide of North vs. South is now over; with the success stories of regional cities like Leeds and Manchester, as centres of innovation, business, and academia, the new economic and cultural divide in the UK is now cities vs. towns. So what does this divide look like, and what are the solutions for it? In a roundtable lunch recently, Barclays and The Spectator brought together Labour MPs to see how the problem might be solved from a different political persuasion. We were again joined by industry leaders and think tankers, The Spectator’s Chairman, Andrew Neil, hosted the discussion.
Those around the table agreed that the problem really is all about cities vs. towns these days. Pat McFadden, MP for Wolverhampton South East, said that the situation in the Black Country is dire. Though Wolverhampton is so close to Birmingham, which is thriving from investment and where the arrival of HS2 is imminent, ‘we’ve got empty buildings that have been sitting there for decades, and every time you try and fix something, there are these land recognition issues that are really expensive, nobody’s really cracked this. It strikes me that if there’s such a thing as a citizenship expectation of what the physical environment you live in should be like, then lots of people are being failed by that, and they’re growing up surrounded by derelict buildings.’
And to some extent, retail banks compound the problem. As Andrew Neil pointed out, Barclays and its competitors seem mainly interested in the large cities across the country – if not London, then it would be investment in Birmingham, Leeds, Manchester, Glasgow, and so on. In the UK, an average of 60 bank branches close each month. ‘When a bank closes in London, [the premise] turns into a fancy restaurant. It probably doesn’t do that in Hull’, Andrew Neil said. The emptying out of towns is historical – as Pat pointed out – but in very real terms happening across the country right now.
Ian Rand, CEO of Business Banking at Barclays, pointed out that the nature of high-street banking, like so much on the high-street, was evolving. There is more and more demand for banking apps when it comes to everyday banking, and these apps are only getting better. highlighting the ever-improving banking apps that retail banks offer these days. Fair enough – as an ordinary consumer it does seem that a banking app has most you need (I was recently very impressed by my app’s ability to take in cheques), but what about the things that an algorithm can’t help you with? Vernon Coaker, MP for Gedling, said ‘So if you look at a small business in my area in the southern part of Nottingham they can’t get a couple of a thousand pounds to start their business, they can’t get 500 pounds. They’ve got a really good idea but they can’t find any premises, and they can’t afford it. Nobody will lend them the money because they don’t trust them. In the past the communities would have financed it through a local bank or the local community coming together, but there’s no way they can get it now.’
The source of that frustration is inequality of opportunity, and Peter Gordon, Head of Government Relations at Barclays, said that, despite branch closures, Barclays is trying to help in other ways. One of its initiatives is educating small business owners on the complex ecosystem of alternative funding – before they are at the scale to lend from a traditional bank. ‘Somebody will sit down with them and say, we can’t do that, but here’s the list of people you can call who would and here’s how you can get access and here’s how it works in your community and here’s how the level of the national scheme look like.’ Sounds interesting, but it’s a little hard to see how business owners can get this education if they have no local branch to go into, which takes us back to the original problem.
The local economies of these left behind regions are made worse by their other problems. Anna Turley, MP for Redcar, tells us a shocking fact – in her constituency, there is nowhere for young people to do A-Levels. ‘It is catastrophic. There are no quality apprenticeships, no multi-vocational education. You have to go out of the borough to complete A-Levels.’ When prospects for the next generation are so dire, it’s no wonder that there is a strong pull for students to go to London and, increasingly, the metropolitan cities that they attend university at. According to the ONS, in 2014, 38 per cent of graduates moved to London for a job; and half of them stayed at their university towns. It’s no wonder, then, that we hear of the innovations and start ups that are coming out from cities like Leeds and Manchester where the university culture is strong. But what happens to those suburbs just outside these regional metropolises?
There’s no easy answer to this, but Anna gives an example of where government funding was targeted, efficient, and helpful. When the steelworks left Redcar, 3,000 jobs were lost overnight. Through a government pot of £50 million, the local colleges were able to pick up skills training in other areas like logistics and construction. Though by no means an unmitigated success, there has been some significant start-up activity spurred by this funding. ‘I think some private sector support would’ve doubled, even tripled, the help.’
The significance of this differential in living standards and life opportunities between cities and towns goes beyond economics. We had a taste of that in the Brexit referendum. ‘In a way the Brexit division wasn’t North-South. Manchester voted to remain. Liverpool voted to remain. It was much more the Wolverhamptons and the seaside towns who voted to leave. There are big forces at work here,’ Andrew Neil said. Matthew Goodwin, Professor of Politics at Kent University and expert on populism, said, ‘I was not surprised at all to see how the coastal towns voted in the referendum… For example in Clacton, local residents openly call it Beirut, because things are falling apart. So my question to the political folk is why has it taken so long?’
Why indeed? No doubt, interest from financiers in areas outside of the major cities of the country is important. But it is also a political question, and as we have seen, it can have political impact. After decades of being left behind, the residents of these coastal and rural towns are watching their city neighbours get richer, while their shops remain empty and youngsters leave for brighter lights. Their disillusionment found expression in the Brexit vote, but if this problem is not tackled effectively and soon in the post-Brexit world, then the wound will not heal. It’s for banks like Barclays to learn from the experiences and knowledge of politicians and academics, but also for the major parties to recognise the isolation of these citizens. Labour’s ‘Our Town’ political broadcast is a taste of what that recognition could look like. The growing divide between cities and towns will be one of the most powerful messages in the next election.