UK left with ‘branch line economy’ after years of neglect – CBI
The UK “feels like a branch line economy” in many areas after years of neglect in left-behind parts of the country, according to the head of the CBI.
Tony Danker argues that the successful delivery of the government’s “levelling up” agenda will be determined by whether it delivers economic growth in every part of the UK.
Mr Danker will make the remarks days after the government was accused of going back on promises of regional rail investment as HS2 was scaled back and a new Manchester-Leeds line abandoned.
CBI director-general Tony Danker argues Britain must become ‘an economy of many hubs’
The CBI director-general will say in a speech to kick off the business organisation’s annual conference that it “wholeheartedly” backs the “levelling up agenda”.
He added: “Simply saying the market will fix this is not good enough.
“I don’t know a country in the world – including, and indeed especially, the United States – where governments aren’t active in economic geography.”
Mr Danker argued that while it is businesses rather than government that create jobs and wealth, governments must also play their part to try to “make places better”.
He said: “What the UK needs to level up is economic growth in every place.
“Growth that in turn provides better paid jobs, skilled work, firm-level success and creates the kind of virtuous circle that helps a place to prosper.
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“The truth is that the UK suffered from de-industrialisation.
“Since the 1980s, we let old industries die – offering little more than benign neglect for what got left behind – it was an economic policy that was ambivalent about levelling down.
“Too relaxed about a brain drain as young people leave home to chase better paid jobs.”
Mr Danker highlighted the disparities in wages between north and south and the location of multinational corporations in the South East while left-behind areas were left with shuttered high streets and “loss of pride in place”.
“The truth is that in too many sectors, the UK now feels like a branch line economy,” he added.
Mr Danker characterised this as a situation where head offices were too often based in London with “the branch managers and the back-office based everywhere else”.
“Instead of a branch-line economy – what we want is an economy of many hubs,” he said.
“That means using all parts of the country to their full potential.”
Mr Danker said the country had spent the last decades living with the consequences of the neglect that he described but that nascent industries such as biotech, space and cybersecurity as well as the “new industrial revolution” created by net zero gave a “shot at redemption”.
The speech comes in the context of widespread criticism of the government’s rail plan for the Midlands and the North, announced last week.
Lord Jim O’Neill, vice chairman of the Northern Powerhouse Partnership, told Sky News that ministers had managed to disappoint “virtually everybody” with the plan.
Four people have been arrested by police investigating cyber attacks targeting M&S, Co-op and Harrods.
A 20-year-old woman and two males, both aged 19, and a male aged 17, were detained in London and the West Midlands this morning as part of a National Crime Agency (NCA) operation.
They were arrested at their homes on suspicion of Computer Misuse Act offences, blackmail, money laundering and participating in the activities of an organised crime group.
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Electronic devices were seized from the suspects and are currently being analysed by forensic experts.
M&S halted online orders, and shelves were empty in shops after the cyber attack on the retailer earlier this year.
The initial hack into the retailer’s systems took place in April through “sophisticated impersonation” involving a third party.
Disruption is expected to continue at the retailer until the end of this month.
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Mickey Carroll in May answered why M&S cyber attack was so bad.
The Co-op and Harrods were also subsequently targeted by hackers.
Paul Foster, head of the NCA’s National cybercrime unit described the arrests as a “significant step” in their investigation, which remains “one of the Agency’s highest priorities”.
He added: “…our work continues, alongside partners in the UK and overseas, to ensure those responsible are identified and brought to justice.”
The National Crime Agency is keen to “signal” to “future victims” the “importance of seeking support and engaging with law enforcement”, stating that “the NCA and policing are here to help”.
The NCA has also thanked M&S, Co-op and Harrods for their support in their investigations.
The arrests, which took place early on Thursday morning, were supported by officers from the West Midlands Regional Organised Crime Unit and the East Midlands Special Operations Unit.
Earlier this week, the chairman of M&S told MPs that the hack had been “traumatic” and like an “out-of-body experience”.
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Archie Norman, however, refused to be drawn on whether the retailer had paid any ransom.
“We are not discussing any of the details of our interaction with the threat actor, including this subject, but that subject is fully shared with the NCA,” he said.
It is estimated that the cyber attack will cost M&S up to £300m this year.
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Days after M&S was attacked, the Co-op was targeted and forced to shut down some internal systems.
Harrods was then hacked, and also had to shut some systems despite its website and shops continuing to operate.
Of those arrested, a 17-year-old British male and a 19-year-old Latvian male were from the West Midlands.
A 19-year-old man was from London and a 20-year-old woman from Staffordshire.
Royal Mail is to be allowed to scrap Saturday second-class stamp deliveries, under a series of reforms proposed by the communications regulator.
From 28 July, Royal Mail will also be allowed to deliver second-class letters on alternate weekdays, Ofcom said.
The post will still be delivered within three working days of collection from Monday to Friday.
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The proposals had already been raised by Ofcom after a consultation was announced in 2024, and the scale back was proposed early this year.
Royal Mail had repeatedly failed to meet the so-called universal service obligation to deliver post within set periods of time.
Those delivery targets are now being revised downwards.
Rather than having to have 93% of first-class mail delivered the next day, 90% will be legally allowed.
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The target for second-class mail deliveries will be lowered from 98.5% to arrive within three working days to 95%.
A review of stamp prices has also been announced by Ofcom amid concerns over affordability, with a consultation set to be launched next year.
It’s good news for Royal Mail and its new owner, the Czech billionaire Daniel Kretinsky. Ofcom estimates the changes will bring savings of between £250m and £425m.
A welcome change?
Unsurprisingly, the company welcomed the announcement.
“It is good news for customers across the UK as it supports the delivery of a reliable, efficient and financially sustainable universal service,” said Martin Seidenberg, the group chief executive of Royal Mail’s parent company, International Distribution Services.
“It follows extensive consultation with thousands of people and businesses to ensure that the postal service better reflects their needs and the realities of how customers send and receive mail today.”
Citizens Advice, however, doubted whether services would improve as a result of the changes.
“Today, Ofcom missed a major opportunity to bring about meaningful change,” said Tom MacInnes, the director of policy at Citizens Advice.
“Pushing ahead with plans to slash services and relax delivery targets in the name of savings won’t automatically make letter deliveries more reliable or improve standards.”
Acknowledging long delays “where letters have taken weeks to arrive”, Ofcom said it set Royal Mail new enforceable targets so 99% of mail has to be delivered no more than two days late.
Changing habits
Less than a third of letters are sent now than 20 years ago, and it is forecast to fall to about a fifth of the letters previously sent.
According to Ofcom research, people want reliability and affordability more than speedy delivery.
Royal Mail has been loss-making in recent years as revenues fell.
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In response to Ofcom’s changes, a government spokesperson said: “The public expects a well-run postal service, with letters arriving on time across the country without it costing the earth. With the way people use postal services having changed, it’s right the regulator has looked at this.
“We now need Royal Mail to work with unions and posties to deliver a service that people expect, and this includes maintaining the principle of one price to send a letter anywhere in the UK”.
Ofcom said it has told Royal Mail to hold regular meetings with consumer bodies and industry groups to hear their experiences implementing the changes.
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