As long as London hogs our wealth, we'll be Europe's most divided country

The idea that the state has a duty to equalise living standards has not entered the British constitutional brain
Click to follow
"Cohesion" is not a word to love. The European Commission loves it, and so do younger British politicians of centre-left persuasion. It should mean what happens when people think and act coherently. But somehow it doesn't. The truth about the C-Word is that it is incoherent.

As Brussels handles the term, cohesion means social unity - between wallets rather than minds. A village, a nation or even a supranational Union is considered to be cohesive when its members do not feel intolerably divided by contrasts between living standards. Here the signs of incoherence emerge, for it is not living standards which divide the inhabitants of Northern Ireland, and yet Belfast is plainly not a city of cohesion.

In the same way, cohesion is assumed to be a Good Thing. But that begs the question of whether a bit of vigorous class struggle within a society may not be an even better thing: a sign of life, at least. The graveyard is, no doubt about it, a fine and cohesive place.

So how cohesive is the United Kingdom? On Thursday the European Union published its first Report on Economic and Social Cohesion, as required by Maastricht. The reaction in Britain was exactly what you might expect. The Tory daily papers entirely ignored the report. The Financial Times gave a serious account of it, but omitted the bits most critical of Britain. The Independent and the Guardian made a meal of it, emphasising with relish the decline of cohesion in Britain after 17 years of Conservative government.

The Commissioner for Regional Policies and Cohesion, Monika Wulf-Mathies from Germany, said that the Union's structural policies "do work in narrowing the gap between the rich and the poor". But, to be fair, she thinks that cohesion means more than simply lifting the incomes of those at the bottom of the heap. In Eurospeak, the opposite of cohesion is not disintegration, as you might expect, but "exclusion" - the expelling of human beings to the margins of social existence, which is mostly caused by unemployment.

This means that Britain gets a good cohesion score from Frau Wulf-Mathies for some things, and a bad one for others. Her report congratulates the British government for the remarkable fall in unemployment figures over recent years. On the other hand, the report complains that relative poverty - defined as an income less than half the national average - has increased in Britain until it affects more than one household in six. And the gulf between rich regions and poor regions of the United Kingdom is growing wider.

That is the interesting bit. Again, it needs a little decoding. There are at least three kinds of "gap between rich and poor" which the European Union wants to overcome. One is the gap between unequal individuals and families - a problem usually left to national governments. The second is the difference between the nations which make up the EU, measured by figures like gross domestic product (GDP) or by unemployment percentages. The third is the regional gap: the local contrasts existing within a single nation state.

The Commission observes that the regional gaps in Britain are increasing. Anybody could have told Brussels that. The report talks about low productivity and weak employment growth in places such as South Yorkshire and the West Midlands, and suggests that the problem is made worse by cuts in the public services of poorer regions and by the increased costs of public utilities - gas, water - which have been privatised. Again, no surprises. But then the authors of the report say something new. They claim that Britain's attitude to its regional economies is the opposite of the attitude taken by the rest of Europe.

Other states deliberately transfer resources to the poorer regions, in order to distribute national prosperity more fairly. Britain, however, does the reverse. For example, some 3 per cent of Brittany's GDP is contributed by Paris. But some 3 per cent of the wealth produced by East Anglia goes to London.

Britain remains the most tightly centralised state in the Union, rivalled only by Ireland. The very phrase "regional economy" has a foreign ring. Even the term "the Scottish economy" is still regarded as an absurdity by many economists and civil servants. The idea that somebody would sit down and work out the GDP of East Anglia seems farcical, irrelevant. Yet the Commission's researchers have done so. For them, a region can have a quantifiable economy of its own, even in free-market conditions.

With the centralisation of Britain go archaic attitudes about the duties of the centre to the periphery. In the 19th and 20th centuries, London took over poor relief from the parishes and made it a national responsibility. "The Government" should, on moral grounds, try to prevent outlying provinces from collapsing into such misery and famine that they become depopulated. The thought behind the welfare state, with its regional development programmes for Distressed Areas, did not go much further than that. The idea that the state has an overriding duty not just to rescue the poorest but to equalise living standards on a geographical basis - that idea has never entered the British constitutional brain.

And this is precisely one of the points which still divide Britain from the rest of Europe. I wrote a few months ago about how the German constitution binds the state to "ensure a reasonable equalisation between financially strong and financially weak Lander". The politicians do this by haggling out a redistribution table, which transfers tax income from a Land like the city-state of Hamburg (the richest region in Europe, with 189 per cent of average European wealth) to a struggling Land like Saxony (only 53 per cent, which is even less than Andalucia). Most regionalised nation states, and the European Union itself, follow exactly the same principle.

Britain does not. Until recently, some facts of economic geography helped to excuse this. For the past century, the economic map of Britain has resembled a human hand: the palm, down in the south-east, was always warm, but at the least sign of frost the industrial fingers began to go numb from their tips. No country in northern Europe had such enormous regional differences - in living standards, in economic structure - as Britain. "Relief" or "development" was a task accepted by central government, but "equalisation" by transfers of cash was unthinkable.

Now, though, the hand has vanished. There are no longer northern "fingers" dependent on coal, steel and engineering. Economic life across Britain is more standardised than it has ever been, except that the south-east of England - the true "subsidy junkie" - gorges an utterly disproportionate share of public spending.

This cannot go on. Economically, Britain is no longer a geographical freak. The excuse for not accepting the duty of any normal European state to equalise living standards throughout its territory has vanished. Politically, too, the British pendulum is beginning to swing back. Whatever the result of the coming elections, and whatever happens to Scotland and Wales, regional government is coming to England sooner rather than later.

When it does, the elected assemblies at Manchester and Newcastle and Norwich and Bristol will turn the state finances upside-down. They will certainly ask London for marginal tax-raising powers. But they will also agree among themselves, with the government as referee, that rich regions will have to subsidise poor regions until there is a common British living standard. And at that moment "cohesion", in the European sense, will finally take root in Britain.