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The Progressive Policy Think Tank

From election turmoil to city stability

Strong and stable Mayors offer an alternative to a weak and wobbly national government, says Ed Cox – and that's good for businesses.

Once again, British politics has served up a soap opera. The winners are looking like losers, while the losers are claiming victory. Northern Ireland is thrust into the limelight. The Queen’s speech is put on hold. The Prime Minister is tearing up her manifesto and appointing new aides. And all the time our European neighbours sit counting down the clock.

But what might be good for the 24-hour news cycle is a disaster for British business. There was already uncertainty before the EU referendum a year ago but the vote to leave made things that much worse. To be fair, business and consumers largely held their nerve and in the immediate post-referendum period our economy has proved remarkably resilient. Until now.

The economic signals weren’t great when Theresa May announced the general election. It is hardly surprising then that the economy barely featured during the election campaign. In the wake of the result it has been good to hear business voices calling for calm, but according to polling carried out at the weekend, business and consumer confidence is now plummeting. Prospects for the second half of the year are not looking good.

It is important to remember that business investment in Britain is lower than almost all comparable nations and has been declining for the past 25 years. According to recent IPPR analysis, UK corporations are now net savers in the economy paying more to shareholders in dividends than they are investing in future growth. But given the amount of political uncertainty, who would blame them?

It doesn’t have to be this way. All developed nations are rocked by their national politics from time to time, but most have far better coping mechanisms.

At a democratic level, our first-past-the-post voting system is predicated on the idea that it will deliver a clear result but these days this is rarely the case and too many people feel their votes are wasted. Without anything other than our first choices, at times like this it is almost impossible to read the detail of the public mood and we end up with ‘coalitions of chaos’. It is surely time now to move to a twenty-first century voting system that would allow for all our votes to count and for our full preferences to be accounted for as our elected representatives seek to form a government.

Another way more developed economies cope is through having more decentralised decision-making. If any politician has looked ‘strong and stable’ in recent weeks then it’s Andy Burnham. The recently elected mayor of Greater Manchester has been a picture of composure during the devastating Manchester bombing and will continue to offer clarity and certainty in a city region that knows its business.

Take, for example, the speedy decision-making that will very soon bring us all ‘mobikes’ – a Chinese bike-sharing scheme that will trump other city bike schemes in its cost and ease of use and at no cost to the tax-payer. This is the kind of investment that can be quickly unlocked by devolved decision-making, but our new mayor needs more powers like this and fiscal powers too if he is going to unlock bigger investments, public service transformation, and keep the economy turning at a time of national crisis.

But mayors alone won’t be enough. We are already witnessing the way in which devolved nations like Scotland and Northern Ireland are having such a significant voice in the national debate. But not our English regions, the real drivers of growth. Once again, more advanced economies mitigate the risks of central government uncertainty with strong regions or federal states.

I have long argued that as we enter the Brexit negotiations, the North of England needs a strong and united voice. This is getting ever more urgent. Even Greater Manchester is too small and our city regions too fragmented to go it alone. Brexit secretary David Davis has offered the Northern mayors a summit meeting in York and they should seize that opportunity with some haste.

Similarly, Transport for the North has a busy period ahead as central government seeks to nail down road and rail spending plans for the next five years. Now is the time when we need a united voice across the region as the slightest chink of parochialism will give the bureaucrats all they need to forestall investment.

With central government in turmoil, step up strong businesses and stable cities and regions, this is where we will find true confidence and supply.

Ed Cox is the director of IPPR North and tweets at @edcox_ippr.

This blog first appeared in Greater Manchester Business Week, a business supplement from the Manchester Evening News.