Economic development under the Coalition Government

Abstract

The general election in the UK in March 2010 resulted in the formation of a ‘Coalition’ Government between the Conservative Party and the Liberal Democrats. Replacing 13 continuous years of Labour governments signified that the Coalition would seek to implement some form of institutional restructuring that would influence the shape and practice of economic development, although the resultant organisational manoeuvrings have been starker than many originally anticipated. It is this context of politically induced policy reform that provides fertile ground for investigation and critical analysis. Beyond the act of forging policies of compromise, an immediate challenge facing the embryonic government was to respond to the spatially variable repercussions of a national economic recession following the Credit Crunch of 2007–2008, marked in part by the collapse among others of the Lehman Brothers Bank in the US and state-led rescue packages for UK financial institutions such as Northern Rock, which wielded worldwide ripple effects. Growth slowed in the UK, unemployment was rising, and interest rates, house prices and consumption were all declining. Business loans and bank lending were punitively restrictive and investor confidence was plummeting. The recession impacted the UK regions in differential ways with the English north–south divide exacerbated. This prompted arguments, which gained traction with the Coalition Government, that extant regional policies had failed to tackle the problem of disparities (Overman and Gibbons, 2011). Ministers began to evoke a zealous antiregionalist discourse (Shaw and Robinson, 2012) whereby administering policy according to the concept of regional economies was quickly rendered ‘a non-starter’, with the Communities Secretary, Eric Pickles, amongst other ministers, claiming that regional institutional architecture generates arbitrary scales of territorial organisation, reflecting ‘bureaucratic convenience’ rather than the interests of business and other local actors. Of fatal concern, as far as the incoming government was concerned, was the level of state borrowing which was forecast to be 118bn in 2009 (House of Commons,