Labour tease us with absurd new plan to move Bank of England to Birmingham - COMMENT

Labour's Shadow Chancellor, John McDonnell, certainly set some hares running when he unveiled his proposal to shift a large part of the Bank of England to Birmingham if his party was to win power.

The report setting out ideas for the party's next general election manifesto suggested shifting much of the Bank as well as locating a new National Investment Bank in Britain's second biggest city.

Bank of England offices could also be set up in Glasgow, Cardiff and Belfast, with two smaller regional ones in Newcastle and Plymouth as part of a shake-up of the country's financial infrastructure aimed at ensuring more business investment is provided around the country.

The idea is that too much investment is going into London and the South East, and it needs to be shared out more fairly with the rest of the country.

There's certainly no argument from this part of the country that London gets the lion's share of Government spending. It's taken years to get a measly £65m to tackle congestion at Junction 10 of the M6, while we are still waiting for a decision on a link between the M54, M6 Toll and the M6.

Meanwhile Greater London has so far had around £14.8 billion for the Crossrail scheme, while the Crossrail 2 scheme for the wider Home Counties would probably cost twice as much.

Anything that went even a little way towards creating a more even playing field should get our support.

But moving the Bank of England out of the biggest financial district in the world is something else again. Particularly at a time when the City already faces the loss of around 10,000 jobs and its pre-eminent position with Brexit. Big banks and finance houses are already looking at alternative offices in Paris and Frankfurt, both of which are eager to exploit any perceived weakness in London.

Outlining his grand plan, John McDonnell said: "This is important report drums home the message that our financial system isn't delivering enough investment across the whole country, and in the high-technology industries and firms of the future where it is needed most.

"Labour is committed to working with our financial institutions to help deliver the financing that the fourth industrial revolution will need, as part of its ambitious plans to help build a high-tech, high-wage economy that works for the many, not the few."

There was a positive reception in the West Midlands to the idea.

Paul Faulkner, chief executive of Greater Birmingham Chambers of Commerce, said: “Labour’s plans will be welcomed enthusiastically in the West Midlands and would certainly help to push investment into the region.

“The plans, Labour say, would mark the creation of a new ‘economic policy hub’ in Birmingham. Although it is predicated on a lot of ifs and buts, it’s good that ideas like this are being discussed and would test how meaningful politicians’ words are about devolving powers to the regions.”

And Corin Crane, chief executive of the Black Country Chamber of Commerce, said: “Birmingham is a fantastic city, which is undergoing a huge amount of regeneration at the moment, and it makes absolute sense for as many of these types of services to relocate away from London, which is impacted by such high costs.

"Birmingham’s success is the Black Country’s success and we will always benefit from major relocations like this, as well as Channel 4 and high-profile events such as the Commonwealth Games coming to the area. With our first-class rail transport links to London and international accessibility via Birmingham Airport, this seems like a very sensible suggestion.”

And the Bank of England itself? An official "no comment" and a rather amused chuckle.

If Labour thinks the Conservative Government is having a tough time persuading the luvvies at Channel 4 to move to the West Midlands, what sort of reception does it think it would get from the City if – and it's a pretty big if at the moment – it was to win power and wanted to put its Birmingham plan into effect?

We are talking about the Old Lady of Threadneedle Street, an institution that has been at the heart of London's commercial and financial life for more than three centuries. A great many people with very comfortable London lifestyles and extremely deep pockets would be opposed to such an idea. And money talks. It also has the ability to drag things out for a very long time indeed.

It rather smacks of Mr McDonnell, who has spoken of his admiration for Karl Marx as a "great economist", deliberately having a poke at the bankers and finance chiefs so despised by Labour's left wing. How could he upset them more but by dragging them out of their comfy bolt-holes in Greater London and despatching them to the wilds of Birmingham, Glasgow, Cardiff or Belfast?

Having said that, there is no good reason why a National Investment Bank and a Strategic Investment Board shouldn't be based in Birmingham, as the heart of the manufacturing Midlands and a major financial centre in its own right. After all, the British Business Bank, set up with the backing of the major high street lenders, is based in Sheffield.

It is hard to argue with Graham Turner of GFC Economics, which provided the report for Labour, who said more needs to be done to deal with geographic inequality.

But, as with so many Labour suggestions, this scheme is a big promise the party has no intention of fulfilling. It sounds good, but it's easy to talk the talk when you know you're never going to be called on to walk the walk.

It must be a fun for John McDonnell to tease the finance wonks at the Bank of England with the threat of moving them out of London. They clearly don't take him seriously. But this stuff is no laughing matter for us in the regions. And we deserve better than being used for a cheap shot by a would-be Chancellor and his metropolitan cronies.