I’m sick of the North being the poor relation – it needs a private sector recovery

Do you know which regions of the UK have grown most over the past decade? It’s London and the South East, unsurprisingly. But at the same time, the North West, Yorkshire and the North East ended further behind the rest of the country in 2010 than in they started in 1997.

There was a boom alright, but much of it didn’t travel North of Leeds.

Now I’m both a believer in the power of the state and in the economic (and moral) importance of redistribution, so in some ways I don’t have a problem with the affluent South being taxed to provide jobs in the North. Kelvin Mackenzie had a good whine last year about the poor downtrodden South, but speaking personally, I was brought up in the North East and I now live in the London suburbs, and I don’t need anyone to tell me that if that it’s the former, not the latter, which has been failed by the shape of the British economy.

But there’s a serious flaw with the way Labour has always dealt with the lack of growth and jobs in the North as manufacturing withered (and was actively dismantled). The answer has either been to encourage low skill/low wage jobs in low cost business parks (the reason you often get Geordie voices on the phone when you reach a British call centre) or you create government jobs by moving them to the regions. The latter one was fine when Labour were in power – government work was safe, paid well (on the whole) and had decent pay and conditions. Much maligned RDAs stimulated local economies, oversaw some state spending and provided quality jobs too. It wasn’t enough to keep pace with London, but there was something of a renaissance in Northern cities like Newcastle, Manchester, Leeds and Liverpool.

But then the Tories came, much of the money was cut and the jobs disappeared – putting many regions back to worse than square one. Relying on state spending to plug employment gaps in many parts of the country is , it turns out ashort-term and fatally flawed idea, because for it to be a successful long term plan relies on the Tories never winning another election. And the Tories will always come back. Always. And when they do, investment in the North East is rarely a priority – especially when some would prefer the North to close and move it to Cambridge (presumably onto the college greens and backs).

That’s why a statist redistributer like me is quietly enthused by Ed Milibands plan, outlined today, for a series of regional banks. In many ways they’ll work like Building Societies (no bad thing) but they’ll have a specific remit to lend to small and medium sized businesses. The crisis in lending is holding back growth in the economy, and this kind of localisation of banking might be one way of dealing with that. But crucially, it might also help companies in the regions to expand and grow, to create jobs – good jobs, permanent jobs – in places where Labour has only ever managed employment triage and the Tories don’t give much of a toss about.

That won’t be enough on its own. Many of the regions need long term investment and a co-ordinated plan to rebuild industry and refocus on new technologies (especially in the green sector), but it’s a start – one that could help the regions recover permanently, rather than just sporadically, and help the regions keep pace with London, rather than withering in its shadow, as has been the policy (implicit or explicit) or every government in recent memory.