UK Free market causing a 'branch-line economy' says CBI

The CBI advises ministers that levelling up cannot be left to the free market, with areas suffering from decades of ‘benign neglect’ that has resulted in a "branch-line economy" with too many enterprises based in London and the south-east.

Tony Danker, the CBI director-general, has argued at Port of Tyne at the opening of the business group's three-day annual conference that the UK now has a "chance at redemption" if the high-quality employment needed to take the economy towards net-zero are developed in erstwhile industrial heartlands. The CBI represents 190,000 enterprises that employ 7 million people, or nearly a third of the private-sector workforce. 

Can the UK’s economy improve?
The business has chastised Boris Johnson's administration for a lack of clarity following the UK's withdrawal from the EU and in the transition to a greener economy. The chancellor has postponed a review of company rates, and national insurance levies have been hiked to cover healthcare costs, rising labour costs.

In addition to this, the Industrial Strategy Council, established in 2018 as an in-house think tank to advise on regional development, was also scrapped by the business secretary, Kwasi Kwarteng.

Mr Danker drew attention to pay differences between the north and south, as well as the concentration of multinational firms in the South East, leaving behind regions with neglected high streets.

The recent announcement of a new £96 billion has also fueled further criticism of the UK government and highlights the current’s government’s failure to stimulate growth in other regions of the UK. The Integrated Rail Plan for the North and Midlands will offer "faster" train travel both earlier and cheaper than the original HS2 proposals. Grant Shapps said the eastern part of HS2 has been cancelled, and plans for Northern Powerhouse Rail have been lowered, prompting harsh criticism of the government.

In order to improve the UK's economy, Mr Danker proposed the UK government actively seek former industrial locations and encourage growth in these places again. He states that the UK still has a chance to improve its economic activity in different regions other than hotspots such as London. 

He adds that with the emergence of new businesses such as biotech, space travel, and cybersecurity, there is now an opportunity to build wealth across different regions other than London. Former industrial heartlands should play a part in the transition to a cleaner economy, with pockets of activity in hydrogen, offshore wind, and carbon capture.

Danker is advocating for collaboration, claiming that neither the government nor industry can tackle the problem of making this change. He says,

“The truth is that in too many sectors, the UK now feels like a branch-line economy with the most productive parts of a sector, such as HQs, too often based in London and the south-east, and the branch managers and the back office based everywhere else.”

Future changes to UK economic activity in other regions:
The CBI will announce the formation of a new commission today, the Centre for Thriving Regions, which will operate as a vehicle for the private sector to stimulate the construction of industrial clusters. The hub will host two pilot demonstrations and will be staffed by local, national, and global enterprises as well as universities and colleges from throughout the UK.

He also advocated that corporations, alongside mayors and central government, be included in regional planning, making choices on new investments in colleges, airports, and logistics centres, in order to bring even more change to these underserved areas.

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