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Regional Inequality in the UK


This blog looks at the UK2070 commission's report on regional inequality in the UK ahead of the Budget

The UK2070 commission has released its final report on regional inequality in the UK.

The UK is one of the most regionally imbalanced economies in the industrialised world, the commission was been set up to hold a national inquiry and report back to Government with actions needed to reduce regional inequality.

Between 1998 and 2016, London’s economy grew by 71% compared to around 30% in Yorkshire and the Humber, the North East and the West Midlands regions. Average household wealth also fell by 12% in the North East and East Midlands between 2006 and 2018 but grew by nearly 80% in London, in the North of Tyne area 23% of those in work in 2018 earned below the Real Living Wage.

Regional inequality also has a large impact on education and the standard of living. The report highlights research from the intergenerational foundation which shows that a child who is poor enough to qualify for free school meals in Hackney, one of London’s poorest boroughs, is three times more likely to go on to university than a child who grows up equally poor in Hartlepool.

Data from the Institute of Fiscal Studies in 2019 concluded that absolute poverty is projected to fall in southern regions, the East, Yorkshire and the Humber, and Scotland, but rise in the North East, the North West, Wales, Northern Ireland and the Midlands. Absolute child poverty is also expected to rise in the North East, the East Midlands and Wales.

These statistics all highlight how these regional inequalities are having a real impact on the lives of people living and working in the North East.

The UK2070 report highlights decarbonisation and the move towards a greener economy as a way to help tackle the deep inequalities in the UK. This could be achieved through increased research and innovation funding for regions, investing in sustainable transport and creating new net zero strategies. In the North East we have recently seen the Net Zero Teesside project launched which has the potential to drive almost half a billion pounds into the regional economy.

Better regional planning around housing provision is also recommended in the report with national and regional infrastructure plans to include housing provision to ensure that housing is recognised as part of plans to level up economic performance and that we ensure housing supply meets the needs of the new economy and not past trends. The Chamber have highlighted to the Government how their reforms to panning policy will cement previous trends without allowing for future economic growth and more housing in the North East, more measures to help align economic growth with housing will be useful.

In terms of investing in skills the report recommends ensuring that towns and rural areas have public transport access to colleges and local further education opportunities, a fresh national strategy for the skills agenda and linking this to levelling up investment. The Chamber through our skills forum and our linking business with education events will continue to work to reduce the skills gap in our region. In our letter to the Chancellor ahead of the Budget we have asked for increased funding for Further Education Colleges to ensure that people in the North East, a healthy Further Education system, with high quality courses and training, is essential to ensure that our region’s young people are equipped with the skills businesses need to become more competitive.

Replacing EU funds will also be important, the commission recommends that the UK Shared Prosperity Fund (UKSPF) should be increased from £5bn to £15bn per annum for 20 years with wellbeing included as part of the criteria. The Chamber have been pushing for the Government to release more of its plans around the UKSPF and to ensure that funds are allocated by need rather than on a competitive bidding process. The North East has received relatively high levels of EU funds due to ongoing challenges around deprivation, ensuring that this funding continues in the future will be essential for the North East.

The report also recommends a £300bn 20-year UK investment fund to focus on improving regional inequalities in the UK. This funding would be allocated in a national spatial plan for England which would set out long term funded priorities projects and set the context for sub regional strategies. The strategy would be prepared by a reconstituted National Planning and Infrastructure Commission and approved by Parliament.

With the Budget due tomorrow, it will be important to see which measures the Government sets out to help rebalance the UK’s economy and reduce inequality in order to improve the quality of life for those living and working in the region.