Financial Times: How to bridge England’s north-south divide

By the Editorial Board

4 June 2019

Britain’s regional inequalities are deeply-rooted. After William the Conqueror won the Battle of Hastings in 1066 and seized the English throne, he ventured north to pacify the wilder parts of his new kingdom. His brutal campaign against Anglo-Danish rebels, called the Harrying of the North, depopulated and impoverished northern England.

In more recent times, government attempts to address geographic inequality have been sporadic. Urban Development Corporations, set up in the 1980s, lasted a decade, as did the Regional Development Agencies that replaced them in the late 1990s. The current incarnation, Local Enterprise Partnerships, are poorly funded and have had little success in their eight-year lifespan. London’s appetite for the Northern Powerhouse has waned since former chancellor George Osborne, its architect, left government.

A report published last week by the UK2070 Commission, run by a former head of the civil service, Bob Kerslake, has called for a long-term plan and a national renewal fund along the lines of Germany’s East-West reunification strategy. To compare the north-south divide to the challenge of reforming a command economy in communist East Germany is deliberately provocative; but the commission does float some useful ideas. starting with substantial devolution of power to the north, combined with a £10bn-a-year fund with a 25-year investment horizon.

Germany’s reunification programme has not healed the country’s divides, but by some measures it has a better record than Britain’s abortive attempts. Output per head in the state of Sachsen overtook England’s north-west in 2011, according to EU data. Brandenburg’s output per head improved to 89 per cent of the EU average by 2016, compared with 79 per cent in 2000. Over the same period, however, Yorkshire and the Humber fell from 98 per cent of the EU average to 84 per cent in 2016.

Funding alone is not enough. Britain already redistributes vast amounts from the south of England to the north. Instead, public spending needs to be redirected to transport investment, research and development, and improving skills. The report calls for an “MIT of the north” and points out that Britain has an unstated, countervailing regional policy in which spending on science, culture and administration is concentrated in the south. It is easy to be fatalist about inequalities that have lasted so long. But a report from the Institute for Fiscal Studies, published on Tuesday, offers hope. The influential think-tank finds that the Sure Start program, a flagship policy of the New Labour government which set up centres to deliver services to young children, cut the gap in hospitalisation rates between rich and poor children in half. It is a reminder that policy, sustained over the long term, can address seemingly intractable inequalities, although it can be expensive — the IFS estimates the government recovers just 6 per cent of Sure Start funding through lower health costs.

More recently Sure Start has similarly suffered from stop-start policymaking. Funding for the centres, which comes from local government, has been cut by two-thirds since 2010. That means Britain may have to live with the after effects of cuts to early years programmes for a long time.

If Britain wants to address its divisions, policymakers need to take the long view. In her first speech as prime minister, Theresa May pledged to tackle Britain’s “burning injustices”. Now, as she leaves office, little progress has been made. Her successor should try harder to stop history from repeating itself.

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