England’s north-south divide is deepening, says new report

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England’s north-south divide continues to deepen despite two years of “levelling-up” rhetoric from the government, according to a landmark new report to be published tomorrow.

Entitled State of the North 2021, and produced by IPPR North, the northern branch of the Institute for Public Policy Research thinktank, the report compares levels of public investment in London and the south-east with that in the north. Its authors estimate that, in the five years to 2019/20, London received the equivalent of ?12,147 per person, while in the north the figure was only ?8,125.

Treasury data indicated that if investment in the north had matched that in London over the five years from 2014/15, it would have meant an extra ?61bn of spending in areas such as transport, infrastructure and skills. The south-east, the report states, is home to one-third of the UK population but now accounts for 45% of its economy and 42% of its wealth.

The stark disparities will fuel concerns among “red wall” Conservative MPs that the government’s flagship policy is underfunded, and do not fulfil Boris Johnson’s promise to rebalance the economy. The chancellor, Rishi Sunak, has effectively capped the main levelling-up fund at ?4.8bn for this parliament. Critics say this is a drop in the ocean after decades of underinvestment and 10 years of austerity cuts.

In November, after pressure from the Treasury, the promised eastern leg of HS2 from Birmingham to Leeds was scrapped and a proposed high-speed line between Manchester and Leeds downgraded. At the time of those decisions, the chair of the Northern Research Group of Tory MPs, Jake Berry, challenged Johnson over whether “voters in the north [were] right to take the prime minister at his word”.

As well as highlighting the scale of the funding gap between the north and south-east, the IPPR report also points to Germany, where successive governments have spent an average of EUR70bn a year reducing regional divides since reunification in 1990.

Jonathan Webb, one of the report’s authors, said: “However we measure investment in levelling up – whether we compare with Germany’s successful efforts to rebalance its economy, or to London-level investment – it’s clear that central government simply hasn’t put its money where its mouth is when it comes to rebalancing the economy. Levelling up will be consigned to the list of hollow, unmet promises made to people in regions like the north for a long time now, if it isn’t underpinned by investment and, crucially, fiscal devolution.”

The levelling-up white paper, detailing the government’s plans, has been repeatedly delayed. It is now due by the end of the month. Responding to the IPPR study, the shadow secretary of state for levelling up, Lisa Nandy, said: “For all the talk of levelling up, the story of this government has been to strip power from communities across Britain. After a decade of empty slogans and broken promises, the levelling-up paper must finally provide the resources and a plan to deliver the radical change we have been promised.”