The North/South divide is not new. Differences in economic performance have driven regional policy since the 1930s. Without such support, the plight of areas, which have seen their traditional industries stripped away, would be far worse.
Despite the efforts of government and regions themselves, we have entered the new millennium with regional differences as strong as ever and the prosperity gap widening again. Over the past year, a succession of studies have fuelled the debate over the North/South divide.
The latest GDP figures (see table) show that the poorest regions have been getting poorer while the South and East continue to grow. The Oxford Economic Forecasting Unit predicts that the gap will continue to widen. It concluded that the top performing region, the South East, will grow by 3.7 percent while the North East will expand by 2.7 percent.
In April, Cardiff University published an index of regional competitiveness bringing together a range of official statistics. It likened the North East’s economic plight to emerging second world nations like Chile or former communist bloc countries such as Hungary.
It is the regions which depend most on manufacturing which are suffering the most – this time from the strong pound and global competition. These same regions, with their under representation in the new knowledge-based industries, have also failed to reap the full benefits of the good performance of the UK economy as a whole in recent years.
The picture is complex and no-one can deny there are differences within regions as well as between them. Last December’s Cabinet Office report gave the facts, but it is easy to get swamped in statistics and miss the big picture. This report and the many others over the past year all agree that on virtually every economic and social yardstick, regions such as the North East are at a severe disadvantage.
Extremes within regions may be similar across the country, but there is a world of difference between islands of poverty in a sea of prosperity and islands of prosperity in a sea of poverty.
Regional competitive weakness and poverty show their effect in many ways. It is no coincidence that the North East and other peripheral regions are also at the bottom of the league on health, education and other key indicators.
The new Index of Multiple Deprivation reveals the concentration of these problems in the northern regions. Well over half of the 50 most deprived districts in England are in the North West, North East and Yorkshire and Humberside, a part of the country with only 20 percent of the population.
The North/South divide is a reality now, but is does not have to remain so. The performance of Scotland in recent decades shows what can be done if resources are made available to support the programmes that local people want. The Barnett Formula for allocating public expenditure in Scotland and other parts of the United Kingdom is fundamentally flawed. Public spending per head in nearby Scotland is almost 20 percent higher than in the North East, despite the North East now being significantly disadvantaged.