Regional inequality worsening in the north despite 'levelling-up' agenda

IPPR North says coronavirus has worsened inequality and sets tests for progress
Greater Manchester is one of the areas with the highest unemployment rates. Photo: Parrot of Doom/Flickr/CC BY-SA 3.0

The north of England is seeing little evidence that the government’s “levelling-up” agenda is materialising, as the coronavirus crisis widens the north-south divide, a think tank has warned. 

In a damning report today, which calls for greater regional devolution, IPPR North has proposed a set of “tests” to redefine and increase accountability for the government’s pledge to “level up” across the UK.

It says the government must invest in improving people’s health, skills and wellbeing in the north up front, rather than focusing on increasing productivity as a route to achieving these goals.

“If the economic argument were not enough, social justice demands that the economy of a wealthy country should offer all its citizens the opportunity to live a good life. The alternative is bleak; inequality corrodes democratic engagement, social cohesion and communities, as well as damaging individual lives,” the report warns.

But the report warns that the government’s task to rebalance regional inequalities has become harder as the Covid-19 pandemic has disproportionately affected several areas of the north.

Reliance on unemployment-related benefits has reached levels not seen since 1994, according to the report, with some 657,900 people in the north claiming as of October 2020.

Unemployment was highest in some of the cities that have been hardest hit by the Covid-19 pandemic and the measures taken to suppress it. They include Blackpool, which has an unemployment rate of more than 11%, as well as Greater Manchester, Liverpool city region and Leeds city region, all of which are in or have recently been under tier 3 restrictions.

Meanwhile, 40% of women are paid less than the real living wage, and healthy life expectancy falls below the English average in the majority of northern local authority areas. 

“Covid-19 has thrown our long-term inequities and lack of resilience into a stark spotlight. A recovery that simply restores the old order would be unsustainable and – for many – unacceptable,” the report said.

The report called for a “more robust and accountable form of devolved power than England has enjoyed in well over a century” that goes beyond a system of delegated budgets with reporting to central government departments.

And the IPPR has proposed four tests to address these problems and hold the government accountable for its 2019 general election manifesto promise.

Under the first test, “a fairer north”, we will know that progress is being made when the productivity gap between the north and the English average is reducing, and when there is a closer link between growth in productivity and growth in median wages.

The second, “better work, health, and pay”, will be met when people in the north all earn at least the real living wage; when there is a reduction in the difference between median wage levels across different regions; a reduction in the gender and ethnicity wage gaps, which are both above the national average; and an increase in life expectancy.

The third, “a jobs-led recovery”, requires a “substantial” reduction in unemployment as the economy recovers post-pandemic; an increase in the density of jobs; and a reduction in the number of children living in relative poverty.

To meet this test, the report adds, “Particularly harsh impacts of the Covid-19 crisis on the employment rates of particular places, demographic groups and/or sectors (‘scarring’) should not be observable in the longer term.”

And the final test, “an empowered north”, will be met when all parts of the north have a devolution settlement. Voter turnout must also increase to at least the national average, gender equality must improve on local councils and the north must see an “end to the policy of austerity and the development of a fair funding formula to fund the work of local authorities”.

“The challenges of Covid-19 as well as the impact of Brexit and the climate emergency, will require a re-think of regional economic policy to date. As this report has made clear, the ‘shifting sands’ of the economic context means that the North must ‘build back’ from a more challenging place than other parts of England,” the IPPR said.

Mike Hawking, head of policy and partnerships at the York-based social change organisation Joseph Rowntree Foundation, said the report “holds up a mirror to the current economic situation in the north and none of us will like what we see”.

“The true test of any economic recovery must be whether it is felt by everyone, no matter where they live. There have been endless promises of investment, yet the government’s recent spending review pledged less money to boost weaker local economies next year than they have received in the past,” he said.

A Treasury spokesperson said: “Recovering from coronavirus is the biggest challenge the UK has faced in living memory and we can’t shy away from the fact our national recovery will be difficult. But we are totally committed to levelling up opportunities across the whole of the UK as we build back better.

“Whilst we have taken unprecedented action to protect jobs through the furlough scheme we have also taken significant steps with new investment in green technologies to create thousands of high-quality jobs in the north, setting out plans for freeports, and investing £100bn in infrastructure to boost growth.”

They said the £4bn Levelling Up Fund announced in the Spending Review last month would “support the fabric of everyday life, including high streets and train stations”, while planned reforms to the Green Book would add a focus on the regional impact of government projects.

They also pointed to plans to open a Treasury office in the north of England, as part of a civil service-wide move to move 22,000 roles out of London and the southeast, and plans for a new infrastructure bank.

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