Andy Burnham may struggle to keep his promise to Britain’s economy | World News

By Mihir S Sharma

One of the extraordinary things about the UK — a matter of no particular note to those born there, but startling to those who are not — is the postcode. The combination of letters and numbers that identifies a dozen or so adjacent addresses is far more granular than its equivalents elsewhere, and is a testament to the efficiency of the British state machinery and its ability to reach every corner of the nation when it tries. 

It’s also a reminder of how little that same state has done to address stratification and inequality in Britain. The government’s Social Mobility Commission wrote in 2020 that people were born into a postcode lottery; in some parts of the country, the pay gap between the affluent and disadvantaged was 2.5 times larger than others.

When Andy Burnham, almost certainly the UK’s next prime minister, promised in his first major policy speech to deliver “good growth in every postcode and hope in every heart,” he was pledging to change that. It’s an understandable goal for the first northerner in No. 10 since Harold Wilson.

It is also, obviously, an impossible mission. Not just because a postcode is a truly tiny area, but because that is not how growth works, not in Britain nor anywhere else in the world. Economic expansion is lumpy. Some sectors, areas and towns carve out a new path to prosperity, and others follow their lead. The transformation is accompanied by the arrival of new cities, and by the movement of people to more dynamic parts of the country.

If growth ignites in England’s North, for example, the towns where it first takes hold will themselves be magnets for outsiders, from the South, the Midlands, Scotland and the world. Burnham, after seven years as mayor of Manchester, a city that welcomed many southerners, will have noticed this himself.

The North, like many other parts of the West — Northern France, America’s midwestern “rust belt” and so on — feels left behind by the economic shifts that caused its deindustrialisation. And yet it was the industrial revolution that created so many of its towns in the first place.

Clusters of enterprise and industry take off because their resources, their natural endowments and their locations feed the dominant sectors of the day. The southwest provided lead and tin to Roman Britain. The Cotswolds and Lincolnshire supplied wool a millennium later. Then coal and iron ore brought Blake’s dark Satanic mills to the green hills of the Midlands and the North. However hard a government tries, it cannot turn back time and technology.

Growth must be inclusive, but of people not places. No individual should be left behind because the town they were born is no longer the epicenter of innovation or entrepreneurship. They deserve the same state services, and the same opportunities, as everyone else.

Yet nobody can credibly promise three things together: Growth, equality and stasis. Burnham said, in his big speech, that young people “should not have to leave to get on in life.” But one look at China, the rest of Asia and Europe’s own past shows that’s exactly what they do when an economy is growing. The state should help them chase their dreams, not tell them to sit at home.

The biggest difference between places at the economy’s leading edge and those that aren’t is worker productivity. In London, for example, output per employee is 35 per cent higher than the national average. Young people should not feel trapped in places that only offer them lower-productivity, and thus lower-wage, jobs. They need to be encouraged, even helped, to move. By one estimate, nearly 40 per cent of wage variation across the country is explained by whether young adults upped sticks and went elsewhere.

This inward migration helps both the regions they move to, which continue to thrive, and those they leave, which end up having more capital left over for each worker and so get a productivity boost. This actually drives private investment to the previously left-behind regions, when accompanied by decent infrastructure and strong local institutions. 

This is how, in the 1960s, northern Belgium overtook the south of the country, once the richest part of Europe. Economic history shows that mobility — geographical and social — drives growth in investment, productivity and income much more than any other policy does.

By contrast, trying to foster growth everywhere all at once is too hard a task for any government. England’s north-south divide is not unique. Italy and Germany have had national divides as deep. But Germany’s pouring of perhaps €2 trillion ($23. trillion) into its post-communist east didn’t solve much. Regional inequality persists.

Today’s political leaders should not overpromise and under-deliver to places that have been failed so often. That will fuel a populist takeover, not prevent it.

If the new British government switches its focus from place to people, however, it could fulfil the spirit of Burnham’s pledge. The policy answers are familiar: worker skills, infrastructure spending, cheaper housing in the places where people want to move, better services in the places they’re leaving. That doesn’t mean they’re wrong. Real “levelling up” has never been tried.

After all, the next PM is not like others who’ve pledged this in the past. He is of the North himself, and represents an area close to where he grew up.