I spend half my week in London and half the week back home in Hartlepool.
Throughout my life this country has always struggled with the north-south divide. For far too long, the UK economy has been dominated by the powerhouse of London and the South-East and areas in the north and Midlands have often struggled.
Ministers talk about rebalancing the economy away from services and financial industries – I am determined to make the case that this also means helping rebalance regional variations in economic performance.
In my week, I see the differing performances of both north and South. I think it is fair to say that London has an economic confidence, even a swagger, which although it took a knock-back as a result of the recession is now back with a vengeance.
I don’t get that sense back home, quite the reverse. I think the north is struggling and, although we should be at the forefront of any export-led recovery, given that our manufacturing industry is selling its goods to the rest of the world, the disproportionate cuts to public services is hitting this part of the world hard.
This looks set to get worse if a Government announcement this week goes ahead. The Government wants to change the way in which business rates are distributed.
At the moment, local councils collect the tax from businesses and then pass it to the Treasury. All the rates are collated centrally and then redistributed back out across the country to areas based upon population, need and deprivation.
The Government wants to change this, so that councils are able to keep most of the money that they collect. The idea behind this is that it is localism in action, and it also incentivises local areas to make sure that their areas are growing.
The problem is that Hartlepool – and the wider North-East – would lose out on millions of pounds.
Our local council receives about £20million each and every year from the redistribution of business rates.
If this was stopped because councils in the more economically prosperous south kept their rates money, the effect on local services would make the present cuts to libraries and community centres look like a slight breeze compared to the storm that would erupt.
Westminster City Council, in contrast, would stand to keep a billion pounds a year. The local authority would be able to pave the streets with gold plating and give everyone a holiday, while our communities would suffer and poverty would deepen. The north-south divide would get even wider and the ability of our region to be the powerhouse of a modern national economy, through energy and high value manufacturing would be lost.
When Eric Pickles, the Secretary of State for Communities and Local Government, announced this in the House of Commons this week, I asked him whether he would guarantee that any changes wouldn’t mean that Hartlepool would miss out on this £20million a year and that funds would definitely flow back to the town.
He said yes.
It sort of defeats the objective of areas being able to keep the rates if the Government is then proposing to undertake a redistributive exercise.
However, for the good of the town and to ensure the north-south divide doesn’t get any wider, the Government needs to firm up its guarantee.