Welcome to the Research Brief, where Spotlight, the New Statesman’s policy section, brings you the pick of recent publications from the government, think tank, charity and NGO world. See more editions of the Research Brief here.
What are we talking about this week? “The State of the North 2024: Charting the Course for a Decade of Renewal”.
I’ve heard of this one before. You may well have done, because this is the latest in a series of annual reports from the Institute for Public Policy Research North (IPPR North), about – you guessed it – the state of the north of England.
Great. So how is the north doing then? Well, firstly, the report is very pro-north, as you might imagine. IPPR North, the Manchester-based division of the larger centre-left think tank IPPR, is keen to point out the positives. The north is home to dynamic, cosmopolitan cities, world-leading research institutions, a great inward investment offer, tonnes of red-brick universities, diverse communities and cultures, and an abundance of talent.
Sounds great. Let’s get a train up there right away! That’s where you’ll come across your first hurdle. One of the problems in the north of England is a lack of transport connectivity. Train services are famously poor. And, you might have heard, the high-speed rail link between Birmingham and Manchester, HS2 phase II, has been cancelled, meaning north-south lines for freight, local and long-distance passengers are sharing Victorian-era lines that are already stretched to capacity.
Oh dear. Yes. But poor connectivity isn’t the core subject of this report. There are plenty of other areas in which the gap between the north of England and more prosperous regions like London and the south-east are apparent: “Gaps in power, wealth, opportunity, and health result in shorter, sicker, less fulfilling lives,” it says.
Is it all bad news? Not quite. The report notes some definite improvements in the arena of regional inequality since the “State of the North” reports first began publishing a decade ago. For example, there is: a more widespread acknowledgement of the problems related to geographical disparities; a cross-party consensus and commitment (at least in the rhetorical sense) to the devolution agenda; greater recognition and understanding of the public’s dissatisfaction with regional inequality, especially following the Brexit result; and the formation of new, successful devolved institutions with executive mayoral leaders in city regions across England.
So what’s the problem then? Despite a few years of the Northern Powerhouse project, devolution settlements, city deals, and a near-constant chanting of “levelling up” under Boris Johnson, wealth divides between the north and the rest have only widened.
How is that even possible? Because these policy programmes have really only amounted to tweaks, tinkering and ad-hoc bits and bobs of funding that paper over the cracks of disinvestment, austerity and sluggish private sector growth. They have lacked the necessary structural and fiscal backing that a genuine levelling-up agenda would require. “State of the North” says that “the gap per head between the average wealth per person in England overall and the north stood at £71,000 in 2020, almost double the gap in 2010, [which was] around £37,300”.
Where is this inequality coming from? The UK remains one of the most centralised countries in the Organisation for Economic Cooperation and Development (OECD). Political decisions are taken in Westminster and Whitehall, and this political centralisation buttresses an economic model that has become reliant on a strong service-based economy concentrated in London and the south-east, inflating asset bubbles, and making the capital unaffordable even for middle earners while starving other regions of public and private investment. The decline of the traditional industries also disproportionately impacted the north of England, while London and its environs benefited much more from the rise of financial and tech services, and a new wave of economic globalisation.
It sounds like a lose-lose for everybody. Exactly. Having such an unbalanced political and economic system distorts lives and opportunities everywhere, making it impossible for the average worker to rent in the high-growth metropolis where they can find work, but depriving people in, for example, the north-east of decent, well-paid jobs.
What do we do about it? Well, political parties are already noticing the north, at least partly because of electoral calculations, according to the authors. “Recent polling indicates that up to one third of the north’s constituencies could change hands at the coming general election,” making it the most electorally volatile region. Proper commitment to real regional levelling up could reap electoral dividends.
“State of the North” gives five core recommendations: “restore voters’ trust” with a cross-departmental approach to promoting regional equality; “rebalance wealth in England” with a fairer, equal system of taxation between income and capital gains, funding regional economic development and steadying local government finances; “empower places” with longer-term, needs-based settlements for local government finance; “create opportunity across England” with a green industrial strategy aimed at creating climate-friendly, high-paid jobs for the future; and “rebuild healthy places” with targeted local plans to remedy health inequalities and gaps in healthy life expectancy.
Easy-peasy. If only. Labour and the Conservatives have both indicated a desire to move to longer-term financial settlements for local authorities, but neither party seems keen on offering a big rescue package to a sector in the throes of a financial crisis. The shadow chancellor, Rachel Reeves, has also ruled out equalising capital gains and income tax, as the report proposes. That’s a measure that would hit asset-rich individuals disproportionately concentrated in London and the south-east, and, IPPR North says, could pay for a host of new regional investment strategies. The opposition has also rowed back on its green investment pledges.
We shouldn’t get our hopes up, then. You know what they say – things can only get better?
In a sentence? Despite years of regional equality strategies promoted by Westminster, wealth, health and prosperity gaps are widening and a long-term, cross-departmental approach backed by sustained investment is needed to turn this around.
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