THE FARCE OF REGIONAL DEVELOPMENT GRANTS IN THE UK

Dateline: 9th December 1999

Even accepting wealth and employment variations within regions, the North-South divide is almost as clear today as it was in 1934 when the then Government started a "temporary programme" of subsidising poor regions. The “programme” has lasted 65 years and led to ever greater distortions of regional wealth and employment!

Like most State subsidy it has had the exact opposite result to that intended – and it was the policy of classic "third way" politicians of both major parties. The North has suffered unduly from the decline in manufacturing because for decades politicians in London have deliberately subsidised only manufacturing investment into the poorer regions – deliberately excluding more modern higher value added services. The subsidies have attracted peripheral investments to peripheral regions in a declining sector – with predictable results.

The vast majority of those subsidies were financed by taxing the very regions which were being "helped". To this farce was added enormous mortgage subsidies from which the South East benefited most, pension fund subsidies from which London-based funds benefited from the flow of regional personal capital and joining the European Union for which only the South East of Britain is not on the periphery. It will take generations to undo such State-induced distortions.

The tragedy is that it is precisely such regional subsidy which will be applied by the new European Superstate when its farcical “single currency” produces great disparities of wealth. Like all authoritarian corporatism and State socialism, their practitioners, when exposed as failures on the smaller stage seek a bigger stage where they are less accountable and dismissable.