The real ‘new politics’ of post-crisis Britain: Part I

The Conservatives understand – and exploit – the electorate’s concerns about ‘place’

Craig BerryAs I argue in my forthcoming book Austerity Politics and UK Economic Policy, if austerity were simply an argument about the merits of deficit reduction, its critics on the left would have won hands down.  Indeed, the regularity with which George Osborne now delays the deficit reduction end-date clearly shows that he agrees.  Alas, austerity is more than simply a laboratory experiment for macroeconomic theory.  It builds upon instincts among the electorate around security and fairness that have sharpened since the financial crisis, which I believe have given life to a new politics of ‘place’.

In Part II of this post (to be published next week), I argue that Labour has been too slow to grasp the centrality of place to post-crisis political discourse in Britain. This first part outlines the character of the politics of place and shows how the right have used it to justify and embody their austerity agenda.

Crises destroy complacency about the basic building blocks of our lifestyles, of which physical space is probably the most fundamental; accordingly, people are now more concerned about the spatial organisation of their lives. Place – and associated concerns around identity and belonging – has therefore become a key dimension of numerous political and policy dilemmas.  The most obvious examples are heightened anxiety about immigration and membership of the European Union, which both reflect concerns about individuals’ and communities’ ability to exercise control over their own social environment, even if they manifest politically as rather spurious claims about economic impacts.

More generally, however, the crisis appears to have unleashed or unearthed a wider set of anxieties about the security of forms of spatial organisation – from our homes, to our towns and cities – which were once taken for granted, or more precisely, which we once assumed were immune to the ebbs and flows of the wider economy.

The genius of austerity is that it quietly builds these anxieties into the case for the smaller state. In terms of our homes, or so the argument goes, the Conservative Party will naturally support our desire for home-ownership so that we can secure our own financial well-being – at the same time, however, the state’s ultimate responsibility to provide decent homes is further diluted.

In terms of our towns or cities, the Conservative Party promises to empower local communities to take control of their own economic destiny, as exemplified by the ‘Northern Powerhouse’ agenda. There are two key ruses at the heart of this agenda.  The first is that it is designed to correct the North/South divide.  In fact, inequality between Northern and Southern regions has grown significantly under the Coalition and Conservative governments, not least due to their decisions on how and where to cut public spending.

The second ruse is that the ‘Northern Powerhouse’ represents some kind of empowerment for the North vis-à-vis central government.  The tacit Conservative argument in this regard – inspired by the ‘new urban economics’, which claims to have identified market-led forces of ‘agglomeration’ as the key to local prosperity – is that successive governments have effectively held back Northern cities and regions precisely because they have sought to manage Britain’s geographical inequalities. By having to support depressed regions, more resilient regions have suffered.  Of course, when the political elite is telling us to ‘beggar-thy-neighbour’, even if the neighbours in question are just a short trip down the M62, most of us want to believe that our town or city belongs in the latter camp, while that down the road is in the former.

This helps to explain why the so-called devolution agenda actually involves so few economic powers actually being devolved (and the powers that are being localised will come attached to severely depleted budgets anyway). If the North wants to succeed, it must prove itself in the only arena that matters, the global marketplace, and compete internally to an extent for the scraps of foreign direct investment that might come our way.

Invariably, Northerners will attempt to rise to the challenge. We are a proud bunch – but we should remind ourselves what pride is often said to come before!  By accepting the argument that we can and should take more control of our own areas, Northern cities and regions have entered negotiations with central government over devolution at an immediate disadvantage, because it is assumed that, before the crisis, we had complacently allowed ourselves to become dependent on the South.

Once this assumption is allowed to go unchallenged, the authority for determining the details of what devolution should look like in practice will always belong to the right. The result is a devolution agenda founded on the principle of a smaller state, partly reconstituted at the metropolitan level, shorn of the redistributive mechanisms that hitherto had properly acknowledged the dependence of London and the South-East on the economic contributions of the North to the national economy.

It is not my intention here to criticise civic leaders in the North that have signed city-deals with the Treasury, or signalled their intention to do so. They recognise the politics of place and reflect the desire among their electorates for greater control over the local area.  Moreover, when it comes to acquiring the powers that this might entail, George Osborne’s ‘Northern Powerhouse’ is the only game in town, even if it is rigged.

The argument on austerity will not be won by academic macroeconomists dusting off their Keynesian textbooks. It must be confronted as it exists in actuality, not theory, and this means constructing a progressive politics of place – the absence of which is the subject of the second half of this post.