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That Old Cliché: the North/South Divide. By Adam Rankin

by on January 29, 2012

Going to University has made me a bit of a city hopper. In the course of four years I have lived up North, in the middle (Midlands) and down South. Majority was spent in Liverpool, an exciting and quirky city which has much to offer yet at the same time very little.

In recent years Liverpool, like many other northern cities, has undergone considerable transformation. However a recession followed by years of austerity gives rise to the issue that is described by that old cliché (nevertheless pertaining) “the North/South Divide”.

Unemployment in the northwest region now stands at 8.5 percent and in the Northeast it is 11.6 percent[1]. Figures in a recent Financial Times article reveal that whilst employment has grown by 2.9 percent in London, it has fallen in the north east and Northwest by 3.1 percent and 0.8 percent respectively[2].  It is a trend that is set to continue as the government sheds more public sector jobs.

The Coalition’s hope of the private sector compensating for public sector job losses remains just that; a hope. It may well pan out for the Londonand the South East, but as it stands the North does not stand to gain from the private sector. Even during a decade of growth (1997-2007), private sector job creation in the North was nothing short of a whimper.  Even the “Northern Hub” Manchester experienced a small increase of 1.7 percent compared to London and the Southeast increases of 7.6 percent and 5.2 percent respectively[3].

It is clear that the surge in employment and the regeneration of northern cities like Manchester, Liverpool, Leeds and Newcastle since 1997 was a result of huge public sector investment.  Of course this was necessary after Thatcher ravaged several industrial heartlands, but the consequence is that the North has become too dependent on the state. During sustained periods of economic growth this dilemma is overlooked, however in the aftermath of a recession the problem becomes all too apparent.

In terms of regeneration investment, the era when private sector funding could be levered into schemes through the uplift in land values secured by public investment is clearly over. New ideas on how to increase flows of private investment into the North must be developed. Innovation and SME’s should be encouraged at every opportunity. The Coalition’s Big Society Bank should be raided for funds and by all means some preferential treatment must be encouraged, for example ultra-radical tax breaks to entice entrepreneurs.  Indeed this is only one part of the solution; the government must invest carefully in infrastructure, first class education, scientific research and transport.  Making it easier to get from one city to another without delays is necessary and also the need to incorporate HS2 alongside local services.

If Cameron is genuine about moving away from the London centric model which dominates the UK economy he needs to act now whilst the economic sands are still shifting.

He may even benefit by gaining a few votes in constituencies above Watford

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