Ministers urged to 'go big' with £200bn of extra spending to tackle North-South divide
Boris Johnson has been urged to pump an extra £200bn into Britain’s regions over the next two decades to make good on his pledge to “level up” the country and tackle a stark North-South divide.
An 18-month inquiry by the UK2070 Commission - chaired by former civil service head and Labour adviser Lord Kerslake and drawing on work from six universities - found that London’s productivity growth over the past decade was nine times higher than that of the entire area dubbed the ‘Northern Powerhouse’ by ministers.
According to the group’s final report, the London economy grew by 6.74% over the past 10 years - almost twice the UK average.
In contrast, the ‘Northern Powerhouse’, which is focused on Manchester, Liverpool, Leeds, Sheffield, Newcastle and Hull, grew by just 0.72%.
While London and the South East put on 1.27 million new jobs over the same period, the Northern Powerhouse added just 330,000 to its total.
Lord Kerslake said: “The Government’s desire to level up the UK economy is welcome. However, the scale of the challenge we face is such that we need a generational shift if we are to avoid serious decline and division."
He added: “Many people in Britain feel left behind by growth elsewhere and that has contributed to an acrimonious debate about Europe. We now face a decade of potential disruption – leaving the European Union, confronting the impact of climate change and adjusting to the fourth industrial revolution.
“Our research shows clearly that these inequalities did not grow up overnight. They reflect an over- centralised system which fails to comprehend the reality of regional need and consistently comes up with policies which are either under-resourced, too fragmented or too short-lived to make a difference. Some policy guidelines have actively stacked the odds against the regions.
“Time is not on our side and we cannot afford to keep on repeating those mistakes. Government must therefore think big, plan big and act at scale. Bluntly, if it can’t go big, it should go home.”
The Commission is calling on ministers to triple the promised Shared Prosperity Fund - set up to replace lost European Union funding after Brexit - to £15bn per year and continue that commitment for the next two decades.
This would, the report says, cost £200bn over and above the amount already planned.
The Government is also being urged to oversee a “connectivity revolution” to join up cities with neglected towns, and the Commission argues that investment in infrastructure should rise to at least 3% of the UK’s gross domestic product.
Meanwhile the report calls for the formation of new ‘Networks of Excellence’ to boost research and development outside London and the South East, as well as work to tackle the “historic underperformance of the UK on skills”.
Lord Kerslake said: “This is not a debate about North vs South or towns vs cities. If we continue on our current trajectory then the threats to regional livelihoods and the pressures on London and the South East will become so severe that everybody will lose out.
“We also need to recognise that the price of failing to reverse this decline will far outweigh the cost of investing now in creating greater opportunities. Properly investing in levelling-up will come at a cost but so will doing nothing about it.”
The research comes ahead of the 11 March Budget, with Chancellor Rishi Sunak widely expected to unveil a major round of infrastructure spending.