UK economy: The Midlands engine
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- Country Data and Maps
- Economist Intelligence Unit
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- Politics, News Analysis
- Political Geography
- United Kingdom
Bagehot: The Midlands engine
Westminster may be brain-dead but some parts of Britain are buzzing with ideas
THE Palace of Westminster is one of the most depressing places on Earth at the moment. The only people in a good mood are swivel-eyed Brexiteers and fever-brained neo-Marxists. Everybody else is miserable: frustrated by the intellectual vacuum at the heart of the government and worried that Britain may be drifting to disaster. Michael Heseltine, a Tory grandee, laments that "we have effectively no government". Nicholas Boles, a former minister, says that Theresa May "constantly disappoints".
The reason for the depression is the failure of centrist politicians to answer the questions posed by the two great wake-up calls of the past decade. The financial crisis demonstrated that Britain was dangerously dependent on a single, volatile industry. Brexit proved that millions of people felt that the country was not working for them. Mrs May has shown signs that she has heard the alarms, talking about launching a "modern industrial strategy", helping the "just-about-managing" and spanking snout-in-the-trough bosses. But she has failed to turn words into deeds.
The comfort is that there is more to the country than Westminster. Bagehot recently escaped from London to visit the University of Warwick and discovered a world that is every bit as problem-solving as Westminster is problem-bogged. Builders are hard at work on a vast National Automotive Innovation Centre which is due to open later this year. The wider region is also enjoying a revival. In May the West Midlands acquired its first elected mayor, Andy Street. Coventry has just won a national competition to succeed Hull as Britain's city of culture.
But this slice of Middle Britain offers more than just a collection of new buildings and initiatives. It offers the outline of a new governing philosophy. This philosophy is centrist in the sense that it tries to build on the best ideas of the past 40 years, such as recognising the creative power of business. But it is reformist in that it accepts that the old model put too much emphasis on London and finance, and forgot about making growth inclusive. Call it reform-centrism.
Reform-centrism's starting-point is to build links between the knowledge economy and ordinary firms. Britain has an old prejudice against linking high minds with low deeds like making things. That prejudice used to be expressed in its preference for training its ruling class in subjects such as classics and history. More recently, it has encouraged the idea that the country's future lies in finance and other services. In 1980 Warwick attracted an academic-entrepreneur, Kumar Bhattacharyya, who thought this was nonsense and set about turning Warwick into one of the world's leading centres for research in manufacturing. The Warwick Manufacturing Group is now an ever-expanding set of buildings housing cutting-edge research into smart cars, 3D printing, robotics, materials science, biomedicine, cyber-security and much else. It gets 95% of its funding from industry.
The focus on practical knowledge allows reform-centrism to deal with three big problems. The first is Britain's lack of inclusive growth. Lord Bhattacharyya helped to persuade Tata to buy an ailing Jaguar Land Rover from Ford in 2008. JLR is now Britain's largest carmaker, accounting for 30% of production. Warwick offers apprenticeships that allow students to earn degrees while working for local firms. The second is productivity growth, which has been disappointing for decades and flat since 2008. Warwick works with 1,000 world-class companies and advises more than 1,800 small and medium-sized ones. The third is regional imbalance. Stuart Croft, the vice-chancellor, talks about the importance of "place-making"--that is, building on the region's strengths and tackling its weaknesses. He argues that Mr Street's arrival as mayor has turbocharged place-making. The West Midlands has long suffered from regional fragmentation and political rivalry. Mr Street, a Tory mayor on Labour turf, is an "extremely energetic symbol of collaboration".
Warwick is not alone. Dozens of universities across the country have forged close relations with business. Sheffield University's Advanced Manufacturing Research Centre is pioneering new ways of 3D printing and building modular nuclear reactors. Manchester University is beginning to feel like a British version of MIT, with its industry-focused institutes and business-sponsored research programmes. The University of Surrey has a space centre. The West Midlands is one of six areas that acquired mayors last May, including its erstwhile rival, Greater Manchester.
Made in the Midlands, wasted in Westminster
These research centres have driven a striking manufacturing revival. Britain recently saw its longest sustained growth in manufacturing output since 1994. It is also a world leader in niches such as satellites, drones, aeroplane wings and racing cars. More Formula One teams are based there than anywhere else. Success in manufacturing is no longer a matter of economies of scale and cheap labour. Instead it relies on things that play to Britain's advantages: bright ideas, clever design and rapid customisation.
There is only one problem. However hard you try, in an over-centralised country you cannot get away from Westminster politics. Brexit, a policy that started life as the hobby-horse of a Tory clique, could be the biggest shock to manufacturing since the second world war, disrupting supply chains, ruining just-in-time deliveries, forcing companies such as JLR to think again about being based in Britain, and, on top of all that, making it harder for universities to attract world-class academics. In launching his criticisms of Mrs May's do-nothing government, Mr Boles borrowed one of George Orwell's more obscure phrases about "boiled rabbits", who lack both courage and convictions. Another Orwell phrase is perhaps even more apposite: that Britain resembles nothing so much as a "rather stuffy Victorian family", where "the young are generally thwarted" and "most of the power is in the hands of irresponsible uncles and bedridden aunts".
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