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Government in denial over North-South divide

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06 August 2007

Ten years of Labour Government has failed to close the gap in prosperity between north and south, according to new research from ippr north to be published in October.

A full sub-regional breakdown for average income is at the end of this release.

ippr north’s report cites Government figures that measure the gap between regions. These figures show that since 1997, the North East, the North West, Yorkshire and Humberside and the Midlands have all moved further away from the national average, on the Government’s favoured measure of output per head (known to economists as ‘Gross Value Added’). Over the same period, London has out paced the rest of Britain.

ippr north’s report shows that the Government’s target (which was set by Gordon Brown in 2002) has only been to reduce the average rate of growth between two groups of regions:

on the one hand, the North East, the North West, Yorkshire and Humberside the East and West Midlands and the South West, and;
on the other hand, London, the South East and the East of England.

The report says this target is inadequate and has led to too little attention and resources going into addressing the north-south divide. The Government is reviewing all its targets in this October’s Comprehensive Spending Review.

Sue Stirling, Director of ippr north, says:

“The Government needs to get real on the north-south divide. At the moment, it is in denial. The Government has not explicitly targeted the gap between rich and poor, nor the gap between north and south. As a result, the work of Labour’s Regional Development Agencies has only succeeded in reducing the north’s relative decline.

“The standard Government line on the north-south divide is that inequalities within regions are as dramatic as those between regions. This is true but just because you deal with inequalities within regions it does not mean you should ignore inequalities between regions.

“This October’s Comprehensive Spending Review will almost certainly scrap the Government’s current target, and not before time. But we need a proper target to replace it that explicitly focuses on the gap between north and south.”

ippr north’s report recommends a new target to reduce the absolute gap in levels of GVA between regions, not just the gap between growth rates. The target should apply to individual regions, not groups of regions. One way of operationalising this would be to have a conditional target, whereby a region whose GVA growth was below average would have the target of achieving above-average growth over the target’s time horizon (in the case of the 2002 PSA target the time horizon was set at 6 years). For regions with above-average growth the target would not apply in the same way as their performance would already be above average – they could be tasked with maintaining their current growth rate.

Notes to editors

The Northern Economic Agenda by Howard Reed, Olga Mrinska and Michael Johnson will be published by ippr north in the autumn.

The Government’s current target is to:

"Make sustainable improvements in the economic performance of all the English regions by 2008, and over the long term reduce the persistent gap in growth rates between the regions, demonstrating progress by 2006."

The Government’s recently published Sub-National Review proposes regionalising this aim by giving each region a single over-arching growth objective aimed at increasing the regional Gross Value Added (GVA) per head. It also sets Regional Development Agencies five outcome-based performance indicators: GVA per hour worked, employment rate, skills attainment, research and development spending as GVA percentage, and business start-ups. But the new objectives do not address the gaps between regions.

Gross Value Added (GVA) per head by region

	1997	2005
United Kingdom	100	100

North East	81	79
North West	90	88
Yorkshire & the Humber	90	87

East Midlands	94	93
West Midlands	93	89

East of England	107	107
London	129	136
South East	114	115
South West	93	94

England	102	102
Wales	81	78
Scotland	99	96
Northern Ireland	81	80

Latest figures for annual average income per head (£ per head)

UK	£13,302

England	£13,486

North East	£11,407

TeesValley and Durham	£11,380
Hartlepool and Stockton-on-Tees	£11,402
South Teesside	£10,980
Darlington	£11,670
Durham CC	£11,531

Northumberland and Tyne and Wear	£11,430
Northumberland	£12,833
Tyneside	£11,223
Sunderland	£10,481


North West	£12,199

Cumbria	£12,814
West Cumbria	£11,850
East Cumbria	£13,693

Cheshire	£13,989
Halton and Warrington	£12,628
Cheshire CC	£14,617

Greater Manchester	£11,833
Greater Manchester South	£11,956
Greater Manchester North	£11,691

Lancashire	£11,768
Blackburn with Darwen	£9,970
Blackpool	£11,085
Lancashire CC	£12,070

Merseyside	£11,810
East Merseyside	£10,992
Liverpool	£10,914
Sefton	£12,576
Wirral	£13,255


Yorkshire and the Humber	£12,224

East Riding and North Lincolnshire	£12,012
Kingston upon Hull, City of	£10,416
East Riding of Yorkshire	£13,460
North and North East Lincolnshire	£11,768

North Yorkshire	£13,784
York	£12,810
North YorkshireCC	£14,096

South Yorkshire	£11,696
Barnsley, Doncaster and Rotherham	£11,428
Sheffield	£12,089

West Yorkshire	£12,068
Bradford	£11,348
Leeds	£12,395
Calderdale, Kirklees and Wakefield	£12,192

East Midlands	£12,543

Derbyshire and Nottinghamshire	£12,251
Derby	£11,708
East Derbyshire	£11,863
South and West Derbyshire	£12,881
Nottingham	£10,071
North Nottinghamshire	£12,264
South Nottinghamshire	£13,877

Leicestershire, Rutland and Northamptonshire	£12,933
Leicester	£10,550
Leicestershire CC and Rutland	£13,684
Northamptonshire	£13,221

Lincolnshire	£12,489
Lincolnshire

West Midlands	£12,134

Herefordshire, Worcestershire and Warwickshire	£13,570
Herefordshire, County of	£12,394
Worcestershire	£13,508
Warwickshire	£14,029

Shropshireand Staffordshire	£12,393
Telford and Wrekin	£11,598
Shropshire CC	£13,181
Stoke-on-Trent	£10,372
Staffordshire CC	£12,862

West Midlands	£11,281
Birmingham	£10,961
Solihull	£15,162
Coventry	£11,167
Dudley and Sandwell	£10,954
Walsall and Wolverhampton	£10,813

East of England	£14,159

East Anglia	£13,166
Peterborough	£12,838
Cambridgeshire CC	£14,268
Norfolk	£12,322
Suffolk	£13,310

Bedfordshire and Hertfordshire	£15,126
Luton	£11,308
Bedfordshire CC	£13,902
Hertfordshire	£16,263

Essex	£14,569
Southend-on-Sea	£14,172
Thurrock	£12,436
Essex CC	£14,849


London	£15,842

Inner London	£17,198
Inner London - West	£22,441
Inner London - East	£13,973

Outer London	£14,948
Outer London - East and North East	£13,533
Outer London - South	£15,719
Outer London - West and North West	£15,715

South East	£14,898

Berkshire, Buckinghamshire and Oxfordshire	£15,496
Berkshire	£15,034
Milton Keynes	£13,943
Buckinghamshire CC	£17,415
Oxfordshire	£15,159

Surrey, East and West Sussex	£15,856
Brighton and Hove	£13,966
East SussexCC	£13,830
Surrey	£17,785
West Sussex	£15,092

Hampshire and Isle of Wight	£13,704
Portsmouth	£11,338
Southampton	£11,173
Hampshire CC	£14,720
Isle of Wight	£11,787

Kent	£13,911
Medway	£12,820
Kent CC	£14,111


South West	£13,260

Gloucestershire, Wiltshire and North Somerset	£13,710
Bristol, City of	£12,446
North and North East Somerset, South Gloucestershire	£13,979
Gloucestershire	£13,653
Swindon	£13,854
Wiltshire CC	£14,481

Dorset and Somerset	£13,558
Bournemouth and Poole	£13,547
Dorset CC	£14,037
Somerset	£13,192

Cornwalland Isles of Scilly	£12,101

Devon	£12,573
Plymouth	£11,635
Torbay	£11,807
Devon CC	£13,029