Monday, August 23, 2004
Don't exaggerate the North-South divide
Posted by David Smith at 12:03 PM
Category: David Smith' s magazine articles

The North-South divide is a topic guaranteed to get attention. I know. Fifteen years ago I was interested enough in it to write a book, North and South. This was the late 1980s, when regional differences – in employment, house prices, per capita incomes, health and just about everything else – were wider than they had been for a long time. The prosperity of the 1980s was spread pretty unevenly.

I revisited the issue with a second edition of the book a few years later. This was after the “southern” recession of the early 1990s, when London, the South East, East Anglia and the South West were hit particularly hard by the crash in house prices and negative.

My conclusion then was that the “divide” had narrowed somewhat but that the forces that favoured the South were still in place. Even then it seemed that manufacturing was facing a difficult time and that the more diversified economy of the South would act to its advantage. The full extent of the stock market boom of the 1990s was not fully evident, even 10 years ago, but the financial services industry, disproportionately concentrated in the South East, appeared due for a successful few years.

London’s dominance of political and economic life in Britain, the location advantages of the South East when it comes to access to European markets (still a plus despite the disappointing performance of the euro-zone economy), the concentration of wealth in London and the South East – all looked set to reinforce the divide.

That prediction, according to a new report, appears to have been right. Two researchers at Sheffield University have analysed the results of the 2001 Census and compared it with its predecessor in 1991. Their results, published in a book, ‘People and Places: A 2001 Census Atlas of the UK’, by Daniel Dorling and Beth Thomas, suggests not only that the North-South divide has widened but that it has reached critical proportions.

So wide do London’s tentacles spread, it says, that places like Cambridge and Northampton can be regarded as among its suburbs, while Norwich and Ipswich also come under the capital’s immediate influence.

“The South is London and London is the South; and regional divisions in between are meaningless," it says. In the 10 years from 1991 to 2001, the migration of skilled workers from North to South has accelerated, to the point that most cities in the North are “slowly sinking” as their populations drift away. Between the two censuses Manchester’s population dropped by 10% and that of Liverpool by 8%. Meanwhile, over 1.7m jobs were created between 1991 and 2001 in the booming financial sector, mostly concentrated in the South East.

According to Professor Dorling, one of the co-authors: “Our conclusion is that the country is being split in half. To the south is the metropolis of Greater London, to the north and west is the ‘archipelago of the provinces’ - city islands that appear to be slowly sinking demographically, socially and economically. The UK is looking more and more like a city-state. It is a kingdom united only by history, increasingly divided by its geography.”

Dramatic stuff. Can it be right? Readers will be familiar with the two-tier economy, and the superior performance of services compared with manufacturing over the past decade. This has undoubtedly contributed to faster growth in the South compared with the North. This year, interestingly, analysts at Experian Business Strategies say that the North will outgrow the South. This partly reflects the fact that the housing boom has rippled out from the South East but is mainly due to the global economic upturn, which is boosting manufacturing.

Another surprise is in the unemployment figures. Taking the widest unemployment measure, based on the Labour Force Survey, Greater London – that super economic magnet for the rest of the country – turns out to have the highest regional jobless rate, 6.9%, in the UK. Even allowing for London’s special problems – poor boroughs like Hackney and Tower Hamlets – this does not follow the North-South divide script. Unemployment in the North East, 5.2%, compares with 3.9% in the South East, one of the smallest differences I can remember.

I would not pretend there are no regional differences in the UK. In wealth, per capita incomes and most other respects, the South East is well ahead of the rest of the country, and its influence is indeed growing. But it is important to remember that disparities within regions are greater than those between them. It is important too not to be too apocalyptic about the North-South divide, which the Sheffield study is in danger of doing.

The onus remains for regional development agencies to perform well. They are indeed making progress but, as a recent Trade and Industry Select Committee report observed: “To date, RDAs have not made much impact on reducing the confusingly large number of business support organisations and the schemes they offer.”

The other concern is over regional assemblies. As Bill Midgley, president of the British Chambers of Commerce, has put it: “As things stand businesses see regional assemblies leading to increased costs, more tiers of government and extra bureaucracy with decision-making power becoming less accessible to local communities.” The regions need help, not hindrance.

From British Industry magazine, July 2004