20 March 2015

It’s regional inequality, stupid

Inequality within the United Kingdom is growing - not just between people, but its constituent parts. The next government will have to do more to turn the tide.

By Diana Johnson

(Photo By It may take more than an angel. (Photo: Getty))

On a whole range of measures, Britain is more regionally divided than it was thirty years ago. The past five years have seen a re-assertion of this divide as nothing has been done to resolve the fundamental, deep-seated inequities between different parts of the UK. If we don’t do anything to address this in the coming five years, the whole country will lose out – not just those corners of our UK which are falling behind.

These are the three core arguments which tie together all the contributions of a Unions 21 report on tackling regional inequalities, published today, which I have edited. A whole range of different authors – from think tanks, to other politicians and trade unionists – have produced chapters for it. It draws from new research on a range of Government statistics, as well as a Survation opinion poll specifically commissioned for this report, to inform its findings.

The results of Survation’s polling couldn’t be clearer: no matter where voters come from or what political party they support, more agree with the statement that “Britain is more regionally divided than it was thirty years ago” than disagree. This is particularly dramatic for Labour and UKIP supporters (57% of both agree with the statement) and northerners (53%).

There is a strong feeling amongst much of the public that something has changed – and changed for the worse. The facts support their conclusions. The gulf in employment between southern regions of the UK and those further North (including the West Midlands), is higher than it was in the 1970s. OECD figures on growth in regional economies tell the same story: Britain had the highest rate of regional convergence compared with other OECD countries from 1950-1985, but since this point, Britain has seen the highest rate of regional divergence of all OECD member states.

It’s easy to forget that back in the post-war period, London was not nearly the economic powerhouse it is today. Its population, like that of the northern industrial cities, was declining. It was only relatively recently, from the 1980s, that this trend reversed – but only in London. Hull, Manchester, Birmingham and Liverpool are still smaller than they used to be.

Roll the clock back further, into the 19^th century, and the contrast becomes even starker. Industrial powerhouses, particularly concentrated in the north and midlands, accorded these regions a level of economic prosperity comparable to that of London and the South-East. This economic clout also translated into political power, and regional cities were, if anything, more autonomous than London. Birmingham of the 19^th century had its own elected mayor in Joseph Chamberlain whilst London, governed by a weak network of antiquated boroughs, had no mayor, and was largely in thrall to central government.

It is almost a mirror image of modern-day England: in the 1980s, Britain was becoming more centralised just as other European countries were devolving further powers. ONS figures show that across the period 1977 to 1995, GDP per head actually declined in the East and West Midlands, North East, North West, Wales and Yorkshire & Humber. New Labour reversed this downward spiral. We devolved unprecedented powers away from the capital, and people forget that by 2005, unemployment in northern regions had gone down to the national average of 5%.

Sadly, unemployment between the regions has once again diverged, and the revolution in devolution has still yet to be extended to the English regions. What progress that was made has proven all too easy to unravel, as not enough has been done to address some of the deep-seated inequities in Britain’s economy and society, too dependent as it is on service-led, City of London-led growth at the expense of manufacturing and apprenticeships.

The consequence is that some British regions were more vulnerable to the recession than others, and were hit much harder. Eurostat figures show that GDP per capita fell across the UK from 2008-2011 as the recession kicked in. But this decline wasn’t experienced equally between British regions (see below): GDP per capita declined relatively less in London and the South East than in Northern Ireland, Yorkshire & Humber or the West Midlands.

A future government needs to launch Britain into a broad-based recovery that lifts up all reaches of the country, and re-balances the economy. The coalition, despite their pronouncements to the contrary, have palpably failed in this objective.

Many regions have lost out in the apparent “recovery.” Across the UK as a whole, Gross Value Added (GVA) per capita declined in 2008, but recovered every year thereafter – it was therefore on an upward trajectory by the time the coalition came to office. Sadly, this increase has been concentrated in some regions more than others (see below).

The past five years, in a nutshell, have seen a re-assertion of the historic divides between regions. Nothing has been done to tackle the fundamental, deep-seated inequities which are underpinning this regional divide.

The existence of such stark regional inequity should concern the whole country. The North’s problems, Wales’s problems and the South West’s problems are not parochial, regional issues – they are Britain’s problems too.

Some parts of the country have depressed, hollowed-out economies. They still haven’t recovered from industrial abandonment under Thatcher, and still have yet to discover a new economic purpose. Demand for their housing is low, and the number of new households is rising well below the national average. The proportion of empty homes in local areas illustrate this shift: the North-East has by far the highest proportion of empty homes of any region of the UK.

In other parts of the country, the cost of living is spiralling out of control. Masses of British graduates flood in to chase work opportunities, and they join migrant workers from every corner of the world – all push up the prices of rented housing and increase over-crowding and pressures on transport. Many (but by no means all) parts of London have this problem: the quality of life satisfaction of our capital’s residents is consistently below that of any other part of the UK.

These twin problems surely cannot be seen in isolation: they are two sides of the same coin, and we can’t tackle one without the other. Indeed, so many of the problems which progressives have set themselves in tackling are intimately connected with regional inequality. A future Labour government, to stand any chance of addressing the inequality between rich and poor people, has to address the inequality between rich and poor regions.