Andy Burnham is off on his travels this week, aiming to reconnect No 10 and the government with voters and communities across the UK. But just weeks before he set out his stall as prime minister, promising to rebalance the economy with growth in every postcode, a government agency, National Highways, underlined the pulling power of the country’s dominant city-region. It announced that a giant tunnelling machine, 16.4 metres in diameter, “the largest ever used in Europe”, was to take England’s most expensive road under the Thames.
The Lower Thames Crossing (LTC), so far priced at £10bn-£11bn, is proving to be a contested 14.5-mile venture on the edge of Greater London. Objectors and local councils say it will deliver only short-term congestion relief and destroy ancient woodland and habitats. At 2.6 miles, the road tunnel will be the country’s longest, involving twin-boring for two three-lane highways connecting the M25 in Essex to the A2/M2 in Kent. The government has so far committed £3.1bn for funding the tunnel. It expects the rest from the private sector. We shall see.
No matter that the LTC is, on some estimates, likely to cost more per mile than the HS2 rail link from London to the Midlands, which, as things stand, will end illogically at Handsacre junction in Staffordshire – instead of connecting to Crewe, a key rail hub linking England, Scotland and Wales.
The prime minister’s ambitions are bold, but from where I’m writing, 282 miles north of London, in the Tyne valley, it’s clear that the priority of successive governments is sustaining the growth of the capital as it faces unprecedented demand for energy and water to service the more than 200 datacentres operating, or under development, in this expanding city-region.
National Highways insists that the Lower Thames Crossing will give “millions of people more choice on where they live, work and spend their valuable time” – assuming there’s adequate power to sustain more building. Fine words. But contrast this with the decision of the agency to scrap a 13-mile dualling of the A1 in Northumberland, where six people have died over the past year in road accidents, as poor value for money. From such issues, seen as small in a national context, bigger resentments grow over London domination.
And that could get worse. No matter what initiatives might be announced by Burnham on his travels, he faces one overarching challenge: squaring the seemingly unstoppable market-led growth of big tech and AI in and around London, with his wider ambition for a more balanced economy throughout England. This is the task in a country without a national planning framework – still less a regional policy – to determine priorities over the next 20 years or so.
In these islands, England is now the outlier. Unlike Scotland, Wales and Northern Ireland, it lacks a strategy for national development to ensure that one city-region does not dominate the national economy at the expense of others.
What’s happening is seismic. Ron Martin, a professor of economic geography at Cambridge University, says London is fast reinventing itself as a global tech capital, in its third reincarnation of the last 100 years. First, in the 1920s, he says that London housed “70% of mass consumer industries”. When manufacturing began to leave, partly fuelled by an interventionist regional policy, which directed industry to development areas in the north of England, Scotland and Wales, financial services filled the void. And then came big tech. According to the consultancy Deloitte, the “golden triangle” of London, Oxford and Cambridge accounted for almost 70% of total investment in the high-growth tech sector in 2023, with London alone attracting 132 foreign direct investment projects, reflecting its position as the leading European city for digital technology.
These are early days, of course, for the prime minister. His major initiative to devolve more powers and, potentially, a portion of locally raised income tax and business rates to the 18 English mayoral strategic authorities or city-regions, will be fleshed out in an autumn white paper. So far, cautiously, Burnham’s ideas have been welcomed by the Institute for Government, and others, but they will need fine-tuning to ensure both an equalising formula to compensate poorer areas and a scrutiny mechanism to oversee financial transparency.
What’s promised is not regional policy as we knew it – the previous system aligned with the EU’s structural funds tailored to help poorer regions: those with GDP levels well below the union’s average. This is very different. In a clear break with the past, it represents a place-based, asymmetric devolution strategy, driven eventually by empowered city-regions. That does seem like progress. But the prime minister must know it will take time to bed down, beyond this parliament.
Until 2010, England had eight defined regions, plus Greater London, with well-funded regional development agencies (RDAs) and government offices for the regions (GORs) providing a direct civil service link to Whitehall, and regional spatial strategies to underpin growth strategies. While relatively short-lived, over their 12 years, RDAs collectively levered an estimated £5.7bn in private funding for business support and regeneration. They were described as having “a track record of successful delivery” by the National Audit Office, the government spending watchdog. But they were never designed to bridge a persistent divide between London, the greater south-east and the rest of England, in stark contrast to the principles of earlier regional policy based on rebalancing the economy away from the capital.
That may change, but even in the best-case scenario, Burnham’s medium-term devolution strategy will take some time to deliver material improvements in the quality of life for millions; those marooned in the postcode lottery between winners in prosperous places and losers in left-behind communities. Think of the former industrial heartlands of the north, the run-down seaside towns, the seemingly forgotten parts of rural England. The active state the prime minister envisages must fill a huge void.
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So what to do? For a start, England needs a reborn national agency to kickstart both neighbourhood renewal and business support. It would partner councils, the private sector and institutions close to government with expertise and resources to access funds from entities such as the crown estate, a £16bn asset newly blessed with borrowing powers, and from the Treasury-owned National Wealth Fund, with its £27.8bn of public-private money to invest in partnership with others.
Beyond that, we need a new settlement for England – a country without a vision, still less a plan – where the demand for energy and water alone in the south-east, alongside the pressure for new housing, will have to force a rethink about national priorities. That thinking needs to start now.
Fortunately, we’re being told that, as he travels the land, the prime minister is in listening mode.
