If we’re serious about ensuring that growth benefits the many and not the few, we must also tackle inequality between regions
The task of a future Labour government is not merely to deliver economic growth and opportunity across Britain as a whole. It is to ensure that every part of the country – north to south, east to west, rural and urban – shares in the fruits of this new prosperity.
It is in the interests of the whole country, not just those regions which are falling behind, that we do this. The flip-side of under-development and under-investment in deprived parts of the UK, which have still yet to recover from industrial abandonment under Thatcher, is over-development, a cost of living crisis and congestion in other areas, such as many parts of London. A strategy for broader-based growth, fundamentally rebalancing the economy, would improve life quality for everyone.
The challenging question, however, is how we achieve this – how do we deliver a rebalanced economy that works for every corner of the UK?
This is the crucial question which a recent report, which I have edited, hopes to get to the bottom of. ‘Rebalancing the Economy: New Thinking on Regional Inequalities’ is published by Unions 21 and includes contributions from a range of politicians, trade unionists and think tanks. It has been released today, and can be downloaded from Unions 21’s website.
None of us claim to have all the answers. Nor are we under any pretension that regional inequality in the UK can be subsumed into a simplistic north/south narrative, or even one of London versus the rest: different regions of the UK come out worse on different dimensions. London has an employment rate and life expectancy in line with the northern average, whilst the city with the largest proportion of inter-generational unemployed families is Nottingham. Regional inequalities express themselves in a variety of ways, and across a variety of localities: for the sake of the whole country, we have to work to tackle all of them.
The challenge we are faced with, in doing this, is immense. On a whole range of measures, Britain is becoming more, not less, divided between regions. As we note in our report, ONS and Eurostat statistics show that some regions of the UK were hit much harder by the recession than others; and many aren’t feeling the effects of the apparent ‘recovery’. This is just the continuation of a trend set in the 1980s: from the 1980s through to the late-1990s, the divide in GDP per capita between regions intensified, as did the gap in employment.
Survation opinion polling, carried out especially for this report, shows that much of the British public are astutely aware that things have changed: far more agree with the statement that Britain is more regionally divided than it was 30 years ago than disagree.
Over these past five years, nothing has been done to reverse these fundamental inequities. To stand any chance of reducing the divide between regions, we need to work to re-balance the economy away from service-led growth, and invest in local economies across the British regions. The coalition have done neither.
As the Work Foundation’s Ian Brinkley highlights in his contribution to the publication, manufacturing output over the past four years has grown much less than that of financial and business services and gross value added. Alan Johnson MP, in his contribution, argues persuasively that some parts of Britain still haven’t recovered from industrial abandonment under Thatcher: even today, there is still a need for them to re-discover their economic purpose. All too often, they get precious little help in finding a new place in the British economy.
They have also slashed funding in regional growth. The previous New Labour government had set up a number of Regional Development Agencies (RDAs) – one in every region – partly so as to tackle regional inequities (on balance, northern RDAs received more government investment than southern ones).
One of the coalition’s first acts upon coming to office was to scrap the RDAs. They have since replaced them with more localised Local Enterprise Partnerships (LEPs), but they took their time in doing it: a funding vacuum was created because they dismantled the infrastructure for RDAs well before they put in place the LEPs. National Audit Office figures (see below) show that in 2012/13 and 2013/14, Britain’s regions received precious little in the way of targeted investment.
Despite coalition pretensions to the contrary, swingeing cuts to regional growth have been the reality of the past five years. NAO figures couldn’t be clearer (see below): the Tories have slashed regional investment by almost 50 per cent.
The task of a future Labour government is to turn this around. The next Labour government, if elected in May, needs to spearhead renewed investment in the regional growth. It needs to devolve unprecedented powers to local government to so they can invest in the skills of their own local workforce, in a way which is appropriate to the needs of their local businesses. And it needs to fundamentally re-balance the economy away from service-led, City of London-led growth and towards a broader-based economic structure.
In short, for the sake of the whole country, the next Labour government needs to accord a high priority to reducing regional inequities. Indeed, all of Britain’s modern-day problems are inter-linked: if we’re serious about tackling inequality in pay, re-balancing the economy and ensuring that the proceeds of growth accrue to the many and not the few, we must also tackle this inequality between regions. It is impossible to do one without doing the other.
Diana Johnson is Labour MP for Hull North and shadow Crime and Security minister. Follow her on Twitter
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