Kerslake: UK’s regional inequalities require action on scale of German reunification

Commission chaired by former civil service head blasts government’s approach to economic development and calls for new £10bn-a-year fund

Lord Bob Kerslake Credit: Parliament TV

By Jim Dunton

30 May 2019

A commission chaired by former civil service head Lord Bob Kerslake has criticised the government’s approach to driving economic development outside London and the South East and likened the scale of the nation’s divide to that of 1990s Germany.

The UK2070 Commission takes a snapshot of issues that lie behind the “huge gulf” between the UK’s best and worst-performing towns and cities and looks at ways the imbalance could be addressed – particularly against the backdrop of the UK’s 2016 decision to leave the European Union.

Among other things, the commission has criticised successive governments’ handling of regional policy, from the Urban Development Corporations of the 1980s and 1990s to the Regional Development Agencies and the sub-regional Local Enterprise Partnerships that succeeded them under the 2010 coalition government.


The UK2070 Commission’s Fairer and Stronger report, published today, says UK regional policy has been “bedevilled by a lack of spatial strategy, continuity and longevity” mirrored by a fragmented approach investment in major projects.

“Unlike other countries, the UK has no overall national plan for economic and infrastructure investment,” it says.

“The national context provided by government’s Industrial Strategy has no explicit spatial dimension. Nor is there a systematic national auditing of the patterns of government investment.”

The report said Local Enterprise Partnerships had been funded more poorly, typically through “deal-based” arrangements”, than the RDAs they replaced and were “limited by the scale and control of resources” despite doing much good work. A recent National Audit Office report on progress with LEPs said the Ministry of Housing, Communities and Local Government had “made no effort to evaluate the value for money of nearly £12bn in public funding” channelled to the 39 partnerships in recent years. 

Kerslake's UK2027 report likened the scale of inequalities the UK faces to the reunification of East Germany and West Germany following the fall of the Berlin Wall.

“Post- reunification Germany faced major challenges in the divergent economic performance and life chances between East and West,” it said. 

“There was a national consensus that a decisive action was needed. By 2014 around €1.5tr in public money had been made available for investment in regenerating and renewing cities, regions and infrastructure, supported by a spatial framework to tackle the inherited social and economic inequalities.”

By contrast, Kerslake said the UK had “relied on short term, reactive, underfunded project bidding processes, with a perverse ‘policy’ environment which reinforces past areas of growth, rather than unlocking new areas with future potential”.

Among his recommendations is the creation of a 25-year “UK renewal fund” programme designed to ensure investment in infrastructure, and encourage talent and investment at home and from across the world. 

In his introduction to the report, the crossbench peer said the “uncomfortable reality” was that government initiatives had failed to stem economic disparities, particularly between London and the wider South East in recent years.

“Whilst the focus of this report is economic and spatial, we are acutely aware that it sits within a wider political context of how to bring the UK back together again after one of the most divisive periods of its history,” he said.

“In other words, there is a political as well as an economic imperative to addressing the issues that this report highlights.

“Much public investment has worked in the opposite direction. If we are really to shift the dial on spatial inequalities, what we require for the future will need to be structural, generational, interlocking and at scale.”

The commission is due to hold a symposium on its findings next month, with further reports anticipated to follow.

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