Was that Policy Exchange report so wrong after all?

For obvious political reasons, David Cameron had to run a mile from Policy Exchange’s report on northern cities. But as John Rentoul argues in an excellent column in The Independent on Sunday, the report was actually right about certain things: 

the striking thing about the Policy Exchange report is that its analysis is broadly correct. It specifically said that Liverpool, Rochdale, Bradford and Sunderland were not “doomed”. (This was reported by The Independent under the headline “Cities in North doomed, says favourite Tory think tank”.) The report went on, however: “We cannot guarantee to regenerate every town and every city in Britain that has fallen behind. Just as we can’t buck the market, so we can’t buck economic geography either.”

It is curious that such a statement of orthodox economics should provoke such a reaction, and not just from politicians such as John Prescott – who, in his memoirs, protests his ideological openness while boasting that he never allowed the words “New Labour” to cross his lips – but from the leader of Margaret Thatcher’s party, too.

The reality is that some attempts by national or local government to encourage regeneration have been more successful than others. Those that go with the grain of market forces have a greater chance of success – the most successful example being Canary Wharf in east London, fostered by radical deregulation in the 1980s.

Plainly, just because Liverpool grew as a port does not mean it can never thrive – much of it is indeed thriving. London has not resumed its growth in the past decade because it is the lowest crossing of the Thames. But the desolation of so many urban areas, from Speke to Glasgow East, arises from housing “schemes” built not so much as a conscious attempt to “buck economic geography”, but with no idea that such concepts might even be relevant.

It was left to Edwina Currie, safely away from the front line of politics, to make the point: “If government efforts to help northern cities since the 1950s had succeeded, then there would be no gap in living standards, or employment, or educational achievement, or health.”
Rentoul goes on to note that Tory policy on stamp duty would make it easier for people to move house and therefore encourage greater labour mobility. Precisely, what the Policy Exchange report was advocating..