Brexit boris
oris Johnson’s first political priority is to deliver on the Leave vote. His second must be to address its causes. “Answering, at last, the plea of the forgotten people and the left-behind towns”, as he put it in his first speech outside 10 Downing Street. To tackle these concerns, Mr Johnson announced a £1.8bn cash boost for the National Health Service, reflecting totemic pledges to increase its funding during the campaign. It follows his promise of a new railway line in northern England and a £3.6bn fund for deprived towns. It was clear many Britons used the EU referendum as a super-protest vote that was less about the UK’s relations with the 27-nation bloc than about the desire for change at home. Yet Brexit itself will do little to address voters’ concerns. Instead of spending on every politically convenient project, the new prime minister should take a focused approach to tackling the underlying, often longstanding problems. Some pointers towards the real sources of discontent come from focus groups run by two think-tanks, the UK in a Changing Europe and the Joseph Rowntree Foundation, in so-called left-behind areas, many of which voted Leave. Very few of the low-income Britons who took part referred to immigration or the country’s trading relationships. Instead they highlighted poor-quality jobs, declining high streets and deteriorating services. Many resented the government in London, and its perceived indifference to their needs, much more than Brussels. The task for the government is, above all, to create a more level-playing field — both between London and the rest of the country, and between those who go to university and those who do not. That will require cross-departmental efforts and targeted regional initiatives, of the type Tony Blair and Margaret Thatcher — whose environment secretary Michael Heseltine became the unofficial “minister for Merseyside” — used with some success. The Northern Powerhouse project should be given higher priority. A more even pattern of English devolution, bringing local decisions closer to those they affect, is also needed. Roughly 37 per cent of England’s population has some form of regional government, but progress has stalled. Successive reforms and years of austerity have left local authorities as skeleton organisations that provide social care, bin collections and little else. Restoring community requires rebuilding both genuine local democracy and funding municipal Britain’s elderly day centres, libraries and museums again. Closed shops and dilapidated high streets are another visible reminder of decline. Keeping unviable and unappealing shops open is wasteful, but local authorities could help to accelerate the transition to new kinds of town centres. National governments should look at reform of business rates as well as the digital sales tax. Many in the focus groups were clear on what they wanted to see: bustling streets full of independent shops and lively cafés, similar to more affluent parts of town. Another sensible step is giving those who do not go to university the same support as those who do, and making it easier to retrain as an adult. The next prime minister should implement the Augar review of higher education, which called for the government to open up tuition fee loans to all, including adults looking at a second career. Leaving the EU will, ironically, make it harder to respond to many challenges facing the UK. Those in power cannot use that as an excuse. Policymakers should try to rescue something positive from the referendum and listen to the message it sent — even if they did not like the form it took
Free Ports
Ports have always been places where the rules do not strictly apply. Attracting merchants, sailors and travellers, they were spaces for exploration, innovation and, frequently, transgression. A proposal by the UK government to create 10 so-called freeports after Britain leaves the EU aims to bring some of this spirit back to coastal parts of the country. Such fresh thinking for how to address Britain’s economic divides is welcome, but the freeports are no silver bullet. The threat of disruption from a no-deal Brexit cannot be defused so easily. Critics rightly point out that freeports — areas where goods can be brought in customs free, stored or processed and then re-exported — are allowed within the EU. The proposal from the British government, however, appears to mix these areas with “special economic zones” where companies are offered tax advantages and the kind of urban development corporations that, through a more streamlined planning process, created the financial centre Canary Wharf in a former industrial part of London during the 1980s. In the US, where there are around 230 “foreign trade zones”, freeports are often used to cope with an anomaly in the customs regime: parts can face a higher tariff than finished goods. Freeports allow for components to be brought in tariff free and used to assemble products which then only have to pay the lower duty when they are exported to the US. Without the free port the associated manufacturing jobs may not be in the US at all. This tends to be less of a problem for EU member states. Instead, the trading bloc’s 82 freeports tend to be hubs for the logistics industry thanks to streamlined customs procedures. Bremerhaven, a container port situated next to the Free Hanseatic city of Bremen, is still a free zone. Meanwhile, the port of Trieste, in Italy, has kept its freeport status since it was originally awarded by the Holy Roman Emperor Charles VI in 1719. The evidence on the effectiveness of such zones is mixed. When tariffs are low anyway, opt-outs have less value. They can also lead to jobs just shifting from outside the zone to within it rather than creating any overall increase in activity. Their success depends on access to transport, skills and capital close to the port. They may play a role alongside other initiatives, however, in bringing business to deprived areas. Liz Truss, the UK trade secretary, referenced the regeneration of London’s docklands in the 1980s, which benefited from a new light railway line along with the development corporation. Outside of EU state aid rules, the government could more easily offer tax incentives for investment as well. Brexit has provided a wake-up call for national politicians similar to the riots in Liverpool and London during the 1980s, which spurred the creation of development corporations, notably the Merseyside Development Corporation that regenerated Liverpool’s Albert Docks as well as the London Docklands Corporation. The EU referendum vote demonstrated that many of those living in coastal areas around the country were similarly frustrated and alienated by the direction of the UK and living standards. Freeports will not be a substitute for sensible macroeconomic policies. Canary Wharf, now among the most successful examples of an urban regeneration programme in the UK, went bust after the early 1990s recession. It only became a success when the economy recovered. Urban regeneration will not offset the economic damage of a no-deal Brexit to areas dependent upon manufacturing exports to the EU.
oris Johnson’s first political priority is to deliver on the Leave vote. His second must be to address its causes. “Answering, at last, the plea of the forgotten people and the left-behind towns”, as he put it in his first speech outside 10 Downing Street. To tackle these concerns, Mr Johnson announced a £1.8bn cash boost for the National Health Service, reflecting totemic pledges to increase its funding during the campaign. It follows his promise of a new railway line in northern England and a £3.6bn fund for deprived towns. It was clear many Britons used the EU referendum as a super-protest vote that was less about the UK’s relations with the 27-nation bloc than about the desire for change at home. Yet Brexit itself will do little to address voters’ concerns. Instead of spending on every politically convenient project, the new prime minister should take a focused approach to tackling the underlying, often longstanding problems. Some pointers towards the real sources of discontent come from focus groups run by two think-tanks, the UK in a Changing Europe and the Joseph Rowntree Foundation, in so-called left-behind areas, many of which voted Leave. Very few of the low-income Britons who took part referred to immigration or the country’s trading relationships. Instead they highlighted poor-quality jobs, declining high streets and deteriorating services. Many resented the government in London, and its perceived indifference to their needs, much more than Brussels. The task for the government is, above all, to create a more level-playing field — both between London and the rest of the country, and between those who go to university and those who do not. That will require cross-departmental efforts and targeted regional initiatives, of the type Tony Blair and Margaret Thatcher — whose environment secretary Michael Heseltine became the unofficial “minister for Merseyside” — used with some success. The Northern Powerhouse project should be given higher priority. A more even pattern of English devolution, bringing local decisions closer to those they affect, is also needed. Roughly 37 per cent of England’s population has some form of regional government, but progress has stalled. Successive reforms and years of austerity have left local authorities as skeleton organisations that provide social care, bin collections and little else. Restoring community requires rebuilding both genuine local democracy and funding municipal Britain’s elderly day centres, libraries and museums again. Closed shops and dilapidated high streets are another visible reminder of decline. Keeping unviable and unappealing shops open is wasteful, but local authorities could help to accelerate the transition to new kinds of town centres. National governments should look at reform of business rates as well as the digital sales tax. Many in the focus groups were clear on what they wanted to see: bustling streets full of independent shops and lively cafés, similar to more affluent parts of town. Another sensible step is giving those who do not go to university the same support as those who do, and making it easier to retrain as an adult. The next prime minister should implement the Augar review of higher education, which called for the government to open up tuition fee loans to all, including adults looking at a second career. Leaving the EU will, ironically, make it harder to respond to many challenges facing the UK. Those in power cannot use that as an excuse. Policymakers should try to rescue something positive from the referendum and listen to the message it sent — even if they did not like the form it took
Free Ports
Ports have always been places where the rules do not strictly apply. Attracting merchants, sailors and travellers, they were spaces for exploration, innovation and, frequently, transgression. A proposal by the UK government to create 10 so-called freeports after Britain leaves the EU aims to bring some of this spirit back to coastal parts of the country. Such fresh thinking for how to address Britain’s economic divides is welcome, but the freeports are no silver bullet. The threat of disruption from a no-deal Brexit cannot be defused so easily. Critics rightly point out that freeports — areas where goods can be brought in customs free, stored or processed and then re-exported — are allowed within the EU. The proposal from the British government, however, appears to mix these areas with “special economic zones” where companies are offered tax advantages and the kind of urban development corporations that, through a more streamlined planning process, created the financial centre Canary Wharf in a former industrial part of London during the 1980s. In the US, where there are around 230 “foreign trade zones”, freeports are often used to cope with an anomaly in the customs regime: parts can face a higher tariff than finished goods. Freeports allow for components to be brought in tariff free and used to assemble products which then only have to pay the lower duty when they are exported to the US. Without the free port the associated manufacturing jobs may not be in the US at all. This tends to be less of a problem for EU member states. Instead, the trading bloc’s 82 freeports tend to be hubs for the logistics industry thanks to streamlined customs procedures. Bremerhaven, a container port situated next to the Free Hanseatic city of Bremen, is still a free zone. Meanwhile, the port of Trieste, in Italy, has kept its freeport status since it was originally awarded by the Holy Roman Emperor Charles VI in 1719. The evidence on the effectiveness of such zones is mixed. When tariffs are low anyway, opt-outs have less value. They can also lead to jobs just shifting from outside the zone to within it rather than creating any overall increase in activity. Their success depends on access to transport, skills and capital close to the port. They may play a role alongside other initiatives, however, in bringing business to deprived areas. Liz Truss, the UK trade secretary, referenced the regeneration of London’s docklands in the 1980s, which benefited from a new light railway line along with the development corporation. Outside of EU state aid rules, the government could more easily offer tax incentives for investment as well. Brexit has provided a wake-up call for national politicians similar to the riots in Liverpool and London during the 1980s, which spurred the creation of development corporations, notably the Merseyside Development Corporation that regenerated Liverpool’s Albert Docks as well as the London Docklands Corporation. The EU referendum vote demonstrated that many of those living in coastal areas around the country were similarly frustrated and alienated by the direction of the UK and living standards. Freeports will not be a substitute for sensible macroeconomic policies. Canary Wharf, now among the most successful examples of an urban regeneration programme in the UK, went bust after the early 1990s recession. It only became a success when the economy recovered. Urban regeneration will not offset the economic damage of a no-deal Brexit to areas dependent upon manufacturing exports to the EU.
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