Labour set to repeat old mistakes

The Guardian reports that John McDonnell has spoken at the launch of a report commissioned by Labour on how to better direct investment and improve productivity.

A possible Labour plan to move much of the Bank of England from London to Birmingham and other cities would form part of wider efforts to rebalance the UK economy away from a reliance on the south-east, John McDonnell has said.

 The shadow chancellor said too many decisions were made in Whitehall or Westminster, resulting in “a distortion of economic policy direction”, and there was also an argument for holding sessions of parliament around the country. 

 The report, produced by an economics consultancy and a management consultant firm, argues that far too much investment, particularly in high-tech sectors, is focused only on London and the south-east and east of England. To redress this imbalance, the report suggests locating Labour’s planned national investment bank in Birmingham and making the city home to a new strategic investment board to liaise between the Treasury, the Bank of England and the business department. It says some functions of the Bank of England should be moved to Birmingham, with more offices for the bank in Glasgow, Belfast, Cardiff, Newcastle and Plymouth, to ensure better regional decision-making. McDonnell did not rule out the idea that this could mean the Bank largely leaving Threadneedle Street in London, where it has been based for almost 300 years.

I am all for moving administrative functions out of London, but splintering the Bank of England looks like repeating the mistakes of Brown/Balls Treasury when the tripartite system of financial regulation led to speculators playing the system, enabling the transatlantic credit crunch of 2007/8.