Monday, October 26, 2020
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Six ways to give the North real help

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SO the working class in the North elected Boris. How can he repay them and make changes which, by 2024, will have helped the North to prosper? Here are six suggestions. Be not deceived. Though every one of these would be opposed by most commentators, all would result in more prosperity for the North within a five-year period. 

Leigh in Greater Manchester has just fallen to the Conservatives. Why on earth would one want to start a business in Leigh, 200 miles away from London, instead of, say, in Lewisham? The only reason for any significant business development in Leigh would be if it were better financially to do so. 

The big things that determine the financial success of businesses are the costs and availability of labour. For instance, hi-tech industry flourishes around Cambridge because there are plenty of mathematicians available at reasonable rates of pay.

A two-bed terrace house in Leigh is available for something over £40,000, whereas the cheapest two-bedroom terrace in Lewisham is £290,000. The cost of living is obviously so much less in Leigh. Here are the measures that would enable Leigh to take advantage of that lower cost of living and hence attract businesses. 

1. Impose regional pay for all public sector workers so that their pay reflects the local cost of living. Since the cost of living is lower in Leigh, the wages of teachers, nurses, firemen, police – the whole lot of public sector workers – would go down. At the moment, the relatively high public sector wages attract the best candidates in the regions. If a private sector employer wishes to attract good candidates, he needs to offer high wages. Regional pay would reduce public sector pay in areas where the cost of living is lower and enable private sector employers, the wealth-creating employers, to run businesses more cheaply. It would therefore attract business investment to low-cost areas. The saving in public expenditure in low-cost areas would enable public sector wages in higher-cost areas such as the South to rise, reducing the acute shortage of public sector workers there. 

2. Make welfare benefits dependent on the local cost of living. At the moment benefits in the North enable claimants to have a comfortable standard of living with little incentive to work, whereas in the South benefits are low relative to the cost of living. Reducing benefits in the North increases the incentive to work and makes available a bigger pool of workers at reasonable costs for businesses in that area. 

3. Have a regional minimum wage which reflects the local cost of living. This enables higher and fair wages for those in the South where living costs are high, and lower and fair wages for those in the North where housing costs in particular are much lower. Businesses would then be cheaper to run in the North than in the South. 

All the above measures raise wages in the South where living costs are high and reduce wages in the North. They provide a steady incentive for businesses to move from the South to the North.

4. Abolish university maintenance loans. At the moment able students do what, for them, is financially the best course. They get places at universities in a higher wage area, often in the South, and in due course generally find jobs there. This produces a continuous brain drain from the North to the South. With no lending for maintenance costs, bright students in the North would study, work, court, marry and settle in the North. This would result in there being a workforce with more ability in the North, something that would attract businesses. 

5. Scrap HS2. The clear evidence is that high speed rail links move jobs towards the big cities they connect to. HS2 from London to Birmingham and Manchester will have many commuting from those cities to London and very few commuting the other way round. Schemes such as HS2 are effectively brain drains, enabling high paid workers, perhaps with family connections or who desire to take advantage of cheap property prices away from the capital, to work in the capital and thus deprive the provinces of their labour. 

6. Do nothing else. Government is not the solution to most problems: government is the problem. Above all, remember those nine terrifying words which strike fear into the hearts of all who hear them: ‘I’m from the government and I’m here to help.’

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Adam Smith
Adam Smith is a pseudonym.

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