Is there a North - South divide?
North-south divide is not so firmly entrenched
Sir, Coverage of the Centre for Cities report (January 20) paints an overly negative picture of the north-south divide, which fails to take into account business creation and lending. The British Business Bank is supporting the growth prospects of tens of thousands of start-ups and smaller businesses in all regions of the UK.
The north-south divide is not so firmly entrenched that regional smaller businesses are unable to flourish, and we are working hard to ensure the UK’s financial markets support their continued success and growth.Keith Morgan CEO, British Business Bank January 21, 2015 11:12 pm.
UK’s north-south divide has widened, says think tank
Centre for Cities says data shows gap has created two-tier economy as study urges politicians to devolve power to cities. For every 12 net new jobs that have been created in cities and towns in southern England since 2004 only one has been generated in towns in the rest of Britain, according to a report by a thinktank that has compared urban areas across the country.The thinktank, the Centre for Cities, found that the gap between Britain’s best and worst performing towns and cities had dramatically widened in the last 10 years, creating a two-tier economy of dynamism and decline.Its annual report, entitled Outlook 2015, compared the performance of the UK’s 64 largest cities and towns and found the south far outperforming the north between 2004 and 2013.The research data come after a year in which devolution to city regions proved a hot topic in national and local government, with the chancellor, George Osborne, setting out a vision for building a “northern powerhouse” to compete with London and the south.During the 10 years studied in the report, the population of towns and cities in the south grew by 11.3% – double the rate of towns elsewhere. Milton Keynes was found to be the fastest growing place in the UK, expanding by 16.5%, followed by Peterborough and Swindon.Only two places outside the south, Northampton and Cardiff, featured in the top 10 for population growth. Sunderland, meanwhile, was the only city to shrink, losing 1.4% of its population.But as southern cities have prospered, they have become less affordable as places in which to live.
In 2004 the average house in a southern city or town was nine times people’s average earnings. By 2014 the price had grown to more than 13 times the average wage, the report says.Yet there was virtually no change in affordability in cities elsewhere.Not all the most dynamic areas were in the south, however. Aberdeen and Warrington had some of the largest increases in the number of businesses, while Edinburgh and Coventry also made the top 10 in the list.Grimsby and Blackpool, meanwhile, were found to be the only two towns to have fewer businesses in 2013 than they did in 2004.The report makes grim reading for other northern towns. Rochdale finds itself once again towards the bottom of the tables. The former mill town in Greater Manchester lost 9,300 jobs from 2004 to 2013, a drop of 12.2%.Commenting on the figures for jobs growth, Simon Danczuk, Rochdale’s MP, said : “Most of the areas with bad jobs growth figures are in the north and they make a mockery of Osborne’s northern powerhouse claims. The reality is we’ve been a northern punchbag in this parliament and when people in my constituency won’t open a shop because the business rates are three times more than the rent then you know ministers are not on the side of enterprise.“Add to this the abject failure of the regional growth fund, businesses being starved by the banks and Tory thinktanks arguing that northern cities are beyond revival – and a clear picture emerges. Ministers are paying lip service to the north, and are not really serious about rebalancing our economy.”Given the scale of the challenge facing the next government, the report asks all parties to ensure their visions for cities are based on significant devolution of fiscal and structural powers, providing incentives for towns to support economic growth, and giving greater flexibility to ensure money can be spent where it is most needed.In November, Greater Manchester became the first city region to sign a devolution deal with central government.
In exchange for Greater Manchester arranging to have a directly elected mayor, who will work in partnership with the combined authority, a series of London-style powers is to be devolved, including some relating to transport, planning, housing, police and skills.Andrew Carter, acting chief executive of Centre for Cities, said: “The stark picture the report paints of the enormous gap in the fortunes of UK cities over 10 years underlines why a ‘steady as she goes’ approach must be scrapped.“We must move from thinking that bundling up new funding streams with bureaucratic delays, or simply tinkering around the edges with well intentioned announcements, will be enough to reverse trends that are becoming increasingly entrenched. ”Carter added: “Cities need long-term funding and strategic planning, and policies that go to the heart of addressing the key drivers of economic growth – including transport, planning, skills and housing.”
Looking beyond the north-south divide
We need to look at the devolutionary needs of connected urban systems rather than perpetuate north-south caricatures.The Centre for Cities – incubated at IPPR – deserves enormous credit for pressing the cities agenda in the policy world and consistently revealing astute analysis about the role of Britain’s urban centres in driving economic growth. Their annual Cities Outlook report has become a milestone in the media calendar, and its accompanying Cities Factbook is a reference tool for many in local government and beyond. But the media’s decision to paint this year’s outlook as a story of a growing north-south divide betrays an over-simplification of economic realities.In broad brush strokes few doubt that a north-south divide exists and few would question the fact that in the past decade it has grown. However there are numerous reasons why such a characterisation obscures important details in a way that makes easy headlines but distorts the important debate.First of all, it’s simplistic analysis. The Cities Outlook report brings together a range of indicators by which England’s ‘primary urban areas’ are judged: population growth, business growth, jobs growth and housing costs. In each there is a case for a broad north-south differentiation, but that picture is obscured by more than a handful of anomalies.Half of the top 10 cities for business growth, for example, lie outside of the south and include perhaps unexpected growth cities such as Warrington and Middlesbrough. In terms of private sector jobs growth, four out of 10 of the worst performing cities are in the south including both Swindon and Gloucester, which is bottom of the league. And both Newcastle and Barnsley find themselves in the top 10s for jobs growth and private jobs growth respectively.So clearly there’s a more complex picture emerging, with some places outperforming (or underperforming) against wider regional patterns. Recent data on GVA growth in the past year shows that the West Midlands and Greater Manchester grew faster even than Inner London. This should be of no surprise. It is clear that some cities are doing much better than their near neighbours – not least the bigger ‘core cities’ where the effects of enhanced connectivity and agglomeration together with significant regeneration investment during the last Labour government have clearly made a difference.The trick now is to ensure that the benefits of growth in bigger cities such as Bristol, Nottingham, Newcastle and Leeds bring dividends further afield. This is where crude city ranking doesn’t work well. High-flying Manchester, for example, will have a big influence on the future fortunes of cities such as lower-flying Rochdale, Bolton and Wigan. City connectivity – not measured in this outlook – is key and far from competing with one another to climb up the rankings, it is more important that cities work together to ensure they play mutually supportive roles in their wider sub-national economies.It is the idea that different cities fulfil different roles in a national economy that casts further doubt on the north-south characterisation. Comparing anywhere with London is a risk. As a global hub city – with all the strengths and weaknesses that entails – it is unlikely anywhere in England will ever match up. The UK’s ‘urban system’ will forever be dominated by such a global player, but what is important for Britain’s other cities is not that they can compete with London but that they can compete with their European counterparts.In our recent State of the North report, IPPR North compared UK cities with comparators overseas: the picture was mixed but productivity comparisons with cities in Germany, Spain and France put all but two UK cities (Aberdeen and Exeter) in the lower half of the distribution.Where the north-south rhetoric does stack up is on devolution. The Outlook report is right to point out that to date approaches to devolution have not ‘met the scale of the economic challenges facing UK cities’ but goes on to identify one exception: London. In the capital, city-region wide governance has given it unprecedented powers over strategic planning, transport, skills and housing and this has made a big difference.With every political party now promising city devolution, the debate must rage about whose proposals go furthest and fastest, and Centre for Cities will rightly play a vital role in urging more radical approaches. But aside from the headlines, the debate would do better to look at the devolutionary needs of connected urban systems rather than perpetuate north-south caricatures.
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