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24/06/2019

Austerity undermines Northern economy, says think tank

Words: Laura Edgar
The north of England / iStock-157336374

Think tank IPPR North has called for the devolution of more power and resources from central government for the north of England, five years on from the launch of the Northern Powerhouse agenda.

This would enable the region and the nation to “prosper”.

IPPR North acknowledges that there have been successes in the North, including the introduction of five metro mayors and Transport for the North, a statutory body that has brought forward a £70 billion investment plan.

However, it believes the government’s “policy programme of austerity” has undermined” the North’s economy. Its research has found that:

  • Since 2009/10, there has been a £3.6 billion cut in public spending in the North. It says the South East and the South West saw a £4.7 billion rise, in real terms. London saw a cut of £256 million.
  • Public sector employment has fallen by 2.8 per cent since 2014, whereas there was a 1.2 per cent fall in London, 1.6 per cent in the South West and 1.7 per cent in the South East.
  • Since 2014, transport spending has risen by £330 per person in London compared with £149 per person in the North, in real terms.
  • Foreign direct investment jobs fell by 23.7 per cent between 2015/16 and 2017/18 in the North. This fell by 21.5 per cent nationally. The researchers say the North is twice as vulnerable to Brexit as London.

IPPR North says these findings, as well as policy and economy changes, have resulted in 200,000 more Northern children living in poor households, taking the total to 800,000 children living in poverty in the North. Additionally, the number of jobs paid less than the living wage rose by 150,000 and the number of cancelled and significantly late trains on TransPennine Express and Northern franchises more than doubled from 20,000 (2.1 per cent) in 2014/15 to 47,000 (4.9 per cent) in 2018/19.

The Northern economy has improved, though, says IPPR North, and this could be the starting point for a new phase of the Northern Powerhouse. Economic growth was “marginally higher” in the North than the national average, growing by 10.7 per cent between 2014 and 2017 compared with 10.6 per cent for the UK as a whole.

The productivity gap also narrowed during this period, with Northern productivity growing by 8.5 per cent – more than any English region, including London – compared with 6.6 per cent in the nation as a whole.

Luke Raikes, senior research fellow at IPPR North, said: “All of England’s regions have serious economic problems – including our capital. Power and resources are hoarded in Westminster and people in all corners of the country miss out.

“That’s why the Northern Powerhouse agenda is important. If we work to power up the North, we can build a fairer, stronger economy for the whole of the UK.

”The north of England must now be a political priority, and the government must go further with devolution and investment to the region.”

Sarah Longlands, director of IPPR North, added: “The Northern Powerhouse agenda has helped to build momentum around the need to address the UK’s unacceptable regional inequalities. But it is clear from our independent analysis that it has failed to tackle fundamental challenges like child poverty, insecure work and poor health.

“If the agenda is to survive, and if we are to build a region, and a nation of prosperity, then the next phase of the Northern Powerhouse must go beyond the rhetoric. A better North is possible but it requires a proper long-term, resourced plan for change which works in the interests of people right across the North”.

In an unrelated statement, the government said people across the North have benefitted from economic growth worth billions of pounds, and powers and money being transferred away from Westminster. It highlighted a number of projects and investments, including a £13 billion transport investment and there being 287,000 more jobs in the North since the launch of Northern Powerhouse.

Prime Minister Theresa May said: "We launched the Northern Powerhouse to support a thriving Northern economy and ensure this country works for everyone. Five years on, our pledge is stronger than ever."

There is much to do, she continued, "which is why it must remain a top priority for government to do all it can to unlock the North’s vast potential, so that both at home and on the international stage the Northern Powerhouse continues to thrive."

Image credit | iStock

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