The future of the left since 1884

Into the powerhouse: The growing inequalities of ‘recovery’ Britain

There was a copy of the London Evening Standard waiting for me on the table as I slumped down on the train to St Pancras. The headline snapped at me: ‘LONDON: THE £12BN TECH POWERHOUSE’. “London’s booming tech industry ,” it...


There was a copy of the London Evening Standard waiting for me on the table as I slumped down on the train to St Pancras. The headline snapped at me: ‘LONDON: THE £12BN TECH POWERHOUSE’.

“London’s booming tech industry ,” it continued, “will pump £12bn into the capital’s economy over the next 10 years, according to a major study”.

Full-time Londoners probably don’t notice this storm of activity around them. But as I come and go, yanked back and forth between the capital and Nottingham, sometimes I think I’m in a privileged position to see the woods and the trees.

I notice the little details. Like the thundering din of construction in London. The sound of liquid capital from all over the world being poured, set, hammered, drilled and twisted into shape, rising up from giant cavities in the earth.

I see the house prices rising like mercury, heated by distant investors snapping up new builds from right under the noses of Londoners.

I notice the cutting edge. The innovators, the moustachioed early-adopters of the freshest trends from the booming tech industry. Of course, these people will change the world. And they will create the 46,000 jobs for the capital that my newspaper predicts.

Not that it’s not all terrifically exciting. Of course it is. But outside of the powerhouse, things are very different. There is no flood of capital pouring in. There are whole regions where what little there was, is shrinking.

Starved of real investment for decades, the deindustrialised midlands and north are, save but a few prime spots, becoming no-go areas for capital. Timid funds and PLCs simply will not put their money anywhere but in the core prime locations.

The result? Hyper-cautious investment, an allergy to long-termism and a blinkered obsession with profits from one quarter to the next.

The new threat to the welfare of millions is the question of ownership. Remote funds with no interest in local economies have appropriated British industries, assets and employers.

This form of limited-liability capitalism has led to the grossly imbalanced system we find ourselves with today. After decades of selling off real assets, labour and industry in the name of efficiency, London , the monocentre of our economy –  yet itself phenomenally unequal – is our only basket.

Elsewhere half-empty high streets go unreplenished as shareholder-owned retailers pare down their portfolios or move to cheaper space out of town. And the public sector, often the major employer in the poorest towns, is being cut out of everyday life.

Sobering figures from Labour out this week really spell out the failures of this brand of capitalism for the majority. Since 2010, 80 per cent of all private sector jobs created in Britain have been placed in London. Elsewhere the working poor are being given ultimatums: accept less pay and fewer hours, or pack your bags. Just in the last month, big companies have announced major redundancies – Asda (2,500); Morrisons (2,600) to name just two – as they ‘restructure’ themselves for the modern age and leave the welfare system to subsidise their profits.

So what’s the answer? I spoke to Louise Haigh, Labour’s candidate for the seat of Sheffield Heeley in the upcoming general election. She says that fundamental changes in the way the City operates would have knock-on effects all around the country.

Haigh says: “We need to shift the culture of the capital markets towards the long term. We need to abolish quarterly reporting. The fixation with analysing results every three months means that these figures come first, before investment, research and development, job creation and in some instances, the long-term health of the organisation itself.

“We need to move beyond the concept of shareholder value – anyone who looks after or advises on other people’s money, including companies themselves, should be required to have regard to a wider set of stakeholders than their shareholders: their workers, the communities they operate in, future shareholders”.

The nature of capitalist ownership is attacking the soul of our country. Unless people feel like stakeholders in their own lives, whole communities, towns and cities will feel meaningless and drift further away from the core.

But there are attempts to redress this, if not solutions. Lord Adonis, who produced the report for Labour, has laid out a series of recommendations: support for businesses from government to develop national infrastructures and create jobs, a tripling of the funding devolved to city and county authorities and major reform of Local Enterprise Partnerships (LEPs) to truly stimulate local economies.

My train pulls into St Pancras and I sink down into the tube. As I emerge onto the street at Whitechapel, the thundering and rattling of drills buzzes in my ear, from the construction site of the future Crossrail station behind me. By 2018 when the £14.5bn scheme is complete, this whole area will be transformed, blessed by investment and progress, as the Powerhouse grows and grows.

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