North-south differences

 

           One of the biggest disappointments of the last fourteen years has been the growing divide between the North and the South of the UK.

          Labour in office promised their policies would reduce inequalities, and start to put right the big gap between living standards and economic success in London and the Southeast of England compared to the rest of the UK.

        They set up or expanded regional and devolved quangos and governments, gave them large  budgets, and attempted to balance the country through government led programmes. The more they did this, the larger the gap got, with London especially powering itself to ever higher levels of growth, wealth and income. The north-south divide existed when Labour came to power, but grew much worse whilst they were in power.

          Labour attempted to cover this over by extending benefits to more and more people to augment their incomes from the state, and by creating more public sector jobs in its heartland northern areas. Whilst some individuals and families benefitted from this state intervention, the inequalities got bigger. The private sector led southern economy just kept outperforming the state led economies of the northern cities in receipt of special programmes.

        The economy did create numerous private sector jobs up to the Credit Crunch  crash in 2008, but these did not go to unemployed people in northern towns and cities sufficiently to make a positive difference.

        Today the Coalition government, like the Labour government before it, says these inequalities are too big and something should be done about them. The government envisages a private sector and manufacturing led recovery, with many more new jobs being created in the great northern cities. Last week we were told that a new High Speed train to Birmingham and Leeds would be central to this vision.

        When you look at the small print you discover that the new train will not be running this decade. Work will not start on the line until after 2015, if all goes well with the project from here. We can’t afford to wait that long to make inroads into the northern unemployment problem.

         I was sent a document recently showing deprivation and unemployment by area, coloured onto a map of the UK. The highlighted areas of low incomes and high joblessness fit well with a political map showing  Labour’s seats. Our politics is not healthy where one party represents most of the low income areas, and the other two parties represent the more successful areas. It encourages a Labour mentality that spending more in the public sector is the only answer, despite the evidence of the last decade that it did not reverse the growing gap or create enough jobs to solve the problem.

          I have written often before of the policies that are needed to foster a faster and wider private sector recovery that spreads to the northern cities as well as to EC1. We do need to spend enough on good quality schools and Colleges, and take what action we can to enable children who cannot go to independent schools to compete successfully with those who can. We need to cut taxes and control the costs of regulation, so business has a better chance of taking root. We need a pro business approach to planning and transport. What is remarkable about central London is the energy and vitality, the round the clock provision of services by a host of competing small businesses jostling alongside global corporations and brands.

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72 Comments

  1. Stuart Fairney
    Posted June 30, 2011 at 6:27 am | Permalink

    Why does the so called North/South divide bother you? The reasons are obvious as you clearly state in your post, as are the solutions. You also note a really nasty phenomena ~ Labour want to end actual poverty about as much as I want to discover an outstanding tax demand. Their whole electoral platform most obvioulsy relies on people who can’t help themselves for whatever reason and depend on the state.

    The tories are not blameless in this area either, but Labour are clearly the worst offenders. Imagine if some Northern constituency suddenly enjoyed a localised silicon valley phenomena and most of the people found themselves in the 50% tax bracket ~ anyone think they would still vote Labour? the whole concept relies on keeping people in poverty and otherwise unemployable middle class socialists in state jobs.

    • lifelogic
      Posted June 30, 2011 at 12:44 pm | Permalink

      The North needs tools for work not aid from taxing other more successful areas (fishing rods not endless state supplied fish deliveries). The aid and bogus Brown state jobs help no one – and render what industry there is yet more uncompetitive. If Cameron started to give a proper small state, low regulation, low energy cost vision, then the North would be just fine. The same often applies to international aid too. It certainly applies to the North of England. People respond to the system they are under and the system says go on the dole, do black market, get a state job or just leave. So that is what they do.

      But Cameron seems to have the wrong genes – I wonder how long his ring finger is relative to his index? Can it be long before they isolate these socialist, emotional, green religion, logic lacking, genes fully.

      • Bazman
        Posted June 30, 2011 at 7:17 pm | Permalink

        Many leave many and many are trapped by commitments. Should a man with a family go down south and live on his own sending a few quid home if he can spare it? Your plan to make them even more desperate is foolish and pointless.

        • lifelogic
          Posted June 30, 2011 at 10:39 pm | Permalink

          That is not my plan – that is just the system as it currently is. My plan is for growth, new real jobs for all and a booming economy through freedom, fewer regulations, cheaper energy, self sufficient optimism and a much smaller parasitic state sector destroying them.

          • Bazman
            Posted July 1, 2011 at 5:28 pm | Permalink

            A regulation such as the minimum wage/employment and health and safety laws protect the lower wage earners. To argue it does not is laughable. I notice you do not put banking or exploitation by big business of individuals on your road to utopia? A few dead bodies on the way is not a problem to you as you will not be involved in any bad working practices or a dreamer.

          • lifelogic
            Posted July 1, 2011 at 10:43 pm | Permalink

            The best protection against low wages is lots of available alternative jobs. That it how best to protect people from exploitation not more mad employment regulations. People need protecting from business exploitation by fair sensible competition laws and more competition.

          • Bazman
            Posted July 2, 2011 at 9:03 am | Permalink

            The idea that more jobs and less regulation of employers will stop exploitation is laughable. How would this help health and safety? You seriously think their can ever be self employed cleaners calling the shots? Self employed professionals such as accountants or architects yes. You are just creating bands of wandering minstrels to be exploited at will. To think that competition for employers to find cleaners will ever be more intense and will somehow outnumber the number of cleaners is to be either disingenuous or stupid. However you do believe cyclists as commuters not Olympic athletes need to eat more food than car drivers so I am inclined to believe the latter.

  2. norman
    Posted June 30, 2011 at 7:35 am | Permalink

    The main drawback to localism, and setting taxes and spending locally, is that it would reinforce poverty. Not because poor areas are incapable of attracting businesses or providing the skilled workforce for those businesses but because they would be represented by Labour.

    As an aside, why does the HS2 plan assume that only London can provide jobs for people in the north? Surely government can do something (perversely the solution would be for government to do and take less in poorer areas) to ship jobs north rather than ship people south.

    Technology will most likely render HS2 far less useful anyway, technology is advancing at such a rapid pace (64kb should be more than enough memory for anyone – Bill Gates early 80’s; I predict that in 30 years computers will be so large and powerful that only the richest kings will own them – IBM executive 1960’s) that it would be foolhardy to predict what our working lives will be like in 30 years time.

    Google now has functioning driverless cars that it has tested on busy roads – imagine hopping into your electric car, falling asleep, and waking up an hour later at the door of your office.

    But government knows best so let’s pick the winner 30 years ahead of time.

    I see the HS lines in Spain are now starting to close down they are running at such massive losses.

  3. lifelogic
    Posted June 30, 2011 at 7:37 am | Permalink

    If you are hard working and live in one of these depressed areas the best options are to get a state sector job with a good pension, become a labour (usually a hypocrite) MP or union leader, stay on the dole (and perhaps do a bit a barter or black economy) or leave. You need to lower the rewards for not working, get rid of the minimum wage, get rid of the mostly pointless or hugely inefficient state sector jobs. The get rid of the over priced “green” energy that kills industry, get rid of over the top regulation of employment, health and safety, planning and all the rest. And train people to do real practical wealth creating jobs. Get out of the EU, CAP, fishing controls, Carbon pricing and the rest of the anti business laws and get banks to actually lend again. Also change the lefty school and BBC agenda to one of a positive vision rather than a state command economy.

    London is going better (though it is still very depressed on the high street) mainly because it earns from overseas where countries and individuals do not have such high tax and anti business governments as cast iron Cameron’s. A government of pro business words but very very anti- business actions.

    • uanime5
      Posted July 5, 2011 at 6:12 pm | Permalink

      So your solution to people not being able to find work is to bully them for being unemployed and make them work for less money. Why don’t you just campaign for sweat shops and slave labour as well.

      Also how is reducing the number of jobs going to get more people into work? If anything we need more state sector jobs so that private companies will actually have people who can afford to buy their products.

  4. margaret brandreth-j
    Posted June 30, 2011 at 8:27 am | Permalink

    The trouble with lots of smaller competing firms is that as one business appears to make it another will come and swallow it up and leave destruction behind. There are a lot of ‘ people casualties’ when hard fought competition takes precedent. This level of competition also encourages the ruthless con man who persuades others to believe wrongs in others and ‘black mails’. There is more to private / public cohesion than profits . The financial sector can be destroyed by unscrupulous competition.

  5. Denis Cooper
    Posted June 30, 2011 at 8:36 am | Permalink

    How about taking the map showing deprivation and unemployment across the UK, and adjusting business taxes so that they are lowest in areas where private sector investment is most needed and highest in areas where new investment is least needed?

    The differential adjustments could be done on quite a small geographical scale, for example local authority areas rather than euro-regions.

  6. Mike Stallard
    Posted June 30, 2011 at 9:03 am | Permalink

    This is not going to be popular with anyone on this blog. But I shall say it anyway.

    First of all, when the industrial revolution was in full swing, industry, money and socialism followed the coal, iron and steel to Northern England and Scotland. With Mrs Thatcher, it became very apparent that the industrial revolution had gone away and the North and Scotland fell into sharp decline for ever. It is now what it has always been – a nice agricultural place of rolling hills etc etc.

    Secondly, along come Mr Brown and Mr Blair, both Northern/Scottish based, and poured money in. Now the “vulnerable” Northerners are simply living off the State. And they form the vast majority of Northern and Scottish citizens. They vote Labour because they trust them to continue to feed and clothe and house them. They do not trust “the Tory Toffs” to do that and, by and large, they are right. Greece and today’s strikes show that they will not be persuaded that easily to become independent again in a hurry.

    Another thing that has changed is the core belief system of Christianity – Methodism especially – which had many organisations which encouraged people to improve their lot, to do something for others and to work hard in those job which the Lord provided. Trade Unions, Compassionate Socialism, the Labour Party and many, many other big ideas spring from their Chapel roots.

    Now it has gone.

    No amount of railways will make up for the death of Methodism and the main beneficiary is, of course, Jeremy Kyle. And the government is the very last organisation which can help. It is the real cause of the trouble.

    • Javelin
      Posted June 30, 2011 at 9:27 am | Permalink

      John you are wrong calling it a North / South Divide, it is a Labour / Conservative divide. That would be a more accurate description.

      • alexmews
        Posted June 30, 2011 at 6:07 pm | Permalink

        not even sure that is right. it is a net tax payer / net tax recipient divide.

  7. alan jutson
    Posted June 30, 2011 at 9:16 am | Permalink

    John, ever thought that the north south divide simply got wider due to government aid, and movement of government jobs to the north on national rates.

    Yes the north and the midlands used to be the powerhouse of our manfacturing industries, but government briefings of decades about and against manual labour (skilled, semi skilled, and unskilled) in favour of university education at all costs for all, otherwise you are deemed a failure, enouraged people not to enter such industry.

    The North had an advantage over the South by being able to pay lower wages to its workers because the cost of living in the north was lower than the south, Industrial premises and offices were cheaper to buy and rent, so overheads were less and they were able to compete, houses were cheaper to purchase and rent, so the standard of living for the lower wage workers was the same as those in the south, because living expenses were less.

    All this changed when we now have standard nationwide salaries being paid for government jobs which moved north, house prices and the cost of living in the north rose bcause these workers had more disposable income than the locals. Local factories and businesses could not match the wage rates of the state, and their employees suffered the increased costs of the rising cost of living and housing bought about by the higher spending power of the state empoyees.

    Increases in the benefit system rates made working for what was a local living wage, prior to the State wage a nonsese, so an ever increasing number decided going to work was not worth the bother, financially.

    What was a pool of labour where many family members worked for the same establishment, in the same industry for decades, where working was the norm, changed.

    One of my suppliers moved to a government grant area some years ago because he was finding it difficult to recruit semi skilled labour in Oxfordshire. He upped and moved his factory to Wales taking some staff with him, but leaving behind many who had worked for him for years. All the promises of a huge semi skilled /skilled labourforce waiting for him in Wales proved a myth, he had much bigger problems than he had had in Oxford, not only in attracting the right sort of labour, but with their attitude to work in general, and the quality of that work in particular.

    Result he eventually went bust, he has now removed himself from Wales, moved back to Oxford (without any grants), has set up his business again. Now he only has the old labour problem (in house training has helped) and not a work force attitude problem.

    Once you interfere with market forces in a big way, and favour one area above another by the giving out grants and exceeding the local wage rates by importing jobs, you move the local established goalposts and upset the equalibrium that has taken decades to establish.

    The result is a bit like some parts of Africa, decades of massive financial help, and it just gets worse.

    Sorry to say it, but political interference by those who think they know better, but have never run anything themselves in their lives before, except perhaps bath, has screwed things up in more ways than one.

    The deliberate Social engineering of Brown to bribe the ever growing number of people who rely upon the state for their income, wages, tax credits, benefits, houses and the like just made it all worse.

    • Scottspeig
      Posted June 30, 2011 at 9:34 am | Permalink

      Very good and concise comment – I’d not even thought of that concept re: national wages.

      Thank you.

    • lifelogic
      Posted June 30, 2011 at 1:41 pm | Permalink

      Indeed national wage levels and minimum pay need to go. As similarly schools say need to be able to pay Physics/Maths teachers more than English/Geography ones in order to attract some decent ones. The North need to use its many advantages of space, low pay and cheaper houses and talented inventive and practical people to the full.

      Needless to say the unions will resist most sensible moves.

      • Bazman
        Posted June 30, 2011 at 7:15 pm | Permalink

        Your usual advocaton of a race to the bottom with subsidies for the rich/companies then?

        • lifelogic
          Posted June 30, 2011 at 10:42 pm | Permalink

          Nonsense I am encouraging people to build a ladder, shake off the state shackles and start climbing for themselves.

          • sm
            Posted July 1, 2011 at 10:48 am | Permalink

            I think more than a few things would need to change for it to be a ladder.

            Perhaps a guaranteed min income level? which had low withdrawal rates equivalent to marginal basic rate tax until say £20k, unless housing costs substantially fall. Housing benefit/local tax subsidies skew things too much.

            I would add population growth needs to be brought under control, otherwise it becomes impossible with uncontrolled growth in excess of jobs available.

            We will probably need to exit the EU to do this.

          • lifelogic
            Posted July 1, 2011 at 10:46 pm | Permalink

            Certainly they need to control immigration to some degree and exit the EU to do this or wages will tend to go average international levels.

  8. Onus Probandy
    Posted June 30, 2011 at 9:33 am | Permalink

    (Disclaimer: I live and work in the North of England).

    It wouldn’t be hard to do; but no government is brave enough to do it.

    Step 1) Identify a test city. Let’s say Hull.
    Step 2) Anyone with a Hull postcode working at a Hull postcode company, pays no income tax, and no national insurance.
    Step 3) The company employing the above people pay no employer’s national insurance.
    Step 4) … and you’re done …

    Most of the North is a net drain on the government budget. “Creating” public sector jobs simply takes jobs from elsewhere and moves them, at a loss, while at the same time losing the genuine output that would come from a real job. Bastiat, 200 years ago, explained this. The tax these public sector employees pay comes out of a private sector employee’s tax; but the treasury thinks it’s okay to count that as income. It’s not… it’s a net loss.

    Moving a Northerner on benefits to a public sector job is a bigger drain on the public purse than leaving them on benefits.

    The ONLY solution is private sector job creation. The ONLY way to stimulate that in a particular location is to make location-based subsidies.

    If you wanted to stimulate the whole economy for jobs you would remove employers national insurance, which is possibly the most evil tax invented. The incidence falls entirely on the employee, it isn’t progressive, and it makes employment more expensive. What’s that thing…. oh yes, supply and demand… if you make something more expensive you lower demand.

    You clowns (I accept you are one of the least clownish) in charge of government spend all your time debating minutiae when how to stimulate an economy has been known for hundreds of years. A high speed rail link to stimulate jobs? It’s a joke, right? Do you seriously think that the reason the North isn’t doing well is because it takes an extra 30 minutes to get from Birmingham to London?

    • Scottspeig
      Posted June 30, 2011 at 2:37 pm | Permalink

      One issue you have in there was the idea that public sector does not create wealth. While this is true in the main, if the public sector went into manufacturing and exported the goods, they could potentially run a profit… Never as well as a private company though, but then it is the few that benefit rather than the many (I think the thought process goes like that anyway)

      • lojolondon
        Posted June 30, 2011 at 5:59 pm | Permalink

        Yes, well do I remember British Leyland!

      • Stuart Fairney
        Posted June 30, 2011 at 7:28 pm | Permalink

        Like the East German state run car plants that produced the wildly successful Trabant ?

    • uanime5
      Posted July 5, 2011 at 6:21 pm | Permalink

      Here’s a radical idea.

      1) Create more public sector jobs.
      2) Have more public sector workers spend their money in the local economy.
      3) More private sector businesses appear because there are actually people who can afford to buy their products.

  9. English Pensioner
    Posted June 30, 2011 at 9:37 am | Permalink

    I am aware that there are many people up north who would like to be in work; I am also aware that there are a large number of people who don’t want to work and are happy to live on benefits.
    In the past few years, considerable numbers of jobs have apparently been created around the country, which must have been open to all, yet the bulk of these jobs have been filled by immigrants, not the existing unemployed.
    The fact that very few of the local unemployed are prepared to work in the fields in Lincolnshire at harvest time, and that most of the fruit picking is done by Eastern Europeans shows something is wrong with the system.
    The unemployed say that the pay is too low; to me it seems that the benefits are too high.
    Remember the basis of Parish Relief in the old days “No man on relief shall be given more than the lowest paid person working in this Parish”
    Once you can get more by not working than by working, why bother?

    • Scottspeig
      Posted June 30, 2011 at 2:39 pm | Permalink

      Actually, I believe the pay is quite good for the shortness of the season but they see the work as “beneath them”. How they don’t see benefits in the same way I don’t know. It has somehow lost its stigma to the detriment of society.

    • Mike Stallard
      Posted June 30, 2011 at 4:27 pm | Permalink

      I have been mixing with immigrants since they first arrived in their hundreds of thousands under Mr Blair.
      Believe me, they are quickly catching onto the benefits systems.

    • uanime5
      Posted July 5, 2011 at 6:25 pm | Permalink

      Immigrants can live on low paid seasonal work because they don’t have to live in the UK for the 9 months when there isn’t any work. Minimum wage isn’t a living wage in the UK but it’s a luxury wage in Eastern Europe.

  10. Richard
    Posted June 30, 2011 at 9:46 am | Permalink

    The big mistake is Governments thinking they can create jobs.
    They have always failed and they have wasted billions over recent decades investing in lame duck businesses and pet regional projects.
    What they can do is to simply create the conditions where businesses can flourish and this they fail to do, in fact they actually make it much more difficult.

    You cannot expect a man to take a job if he and his family will be substantially worse off after working all week which is what the benefits system does for hundreds of thousands of people.
    You cannot expect people to risk everything to start up a new business when Councils and Governments get in the way with a sticky swamp of regulations and law.

    Then there is the rate of return for risking everything you have on a new venture which
    is very low after high taxes are paid.

    • uanime5
      Posted July 5, 2011 at 6:27 pm | Permalink

      I wouldn’t say taxes are particularly high in this country, especially if you have a business that makes very little profit. Though everything else is correct.

  11. oldtimer
    Posted June 30, 2011 at 9:51 am | Permalink

    HS2 is not going to make much difference when it arrives. From my occasional trips north, it seems to me the north already benefits from a good motorway system and the advantages that offers for freight movement. The real problem, as others have already observed, is the hostile environment in which business must operate in the UK. Regulation, taxation, a future of uncertain and ever more expensive energy piled on top of an economy struggling to cope with an excessive debt burden all suggest that a manufacturing/business revival is a remote dream.

    I thought the last budget was a missed opportunity to make dramatic changes to taxation. The Climate Change Act/Carbon Plan is a ball and chain limiting the scope for new business activity. We are, as Mervyn King likes to point out, in the middle of seven lean years. Unless and until there are changes to the tax regime and national energy policy to spark some sort of recovery, the nation and the north in particular will continue to plod along sinking deeper and deeper into debt. No wonder the companies with cash reserves are either sitting on their hands or investing abroad. The UK is a poor prospect.

    • lifelogic
      Posted July 1, 2011 at 7:25 am | Permalink

      Agreed – socialist government now and doubtless more socialist still post the next election at this rate.

  12. Caterpillar
    Posted June 30, 2011 at 9:59 am | Permalink

    “It encourages a Labour mentality that spending more in the public sector is the only answer, despite the evidence of the last decade that it did not reverse the growing gap or create enough jobs to solve the problem.”

    Once UK is back on straight and narrow, pass a law such that X% votes are not counted for any party in government that runs a deficit greater than 3%.

    Good, fast, AFFORDABLE, transport can break localised monopolies – the HS2 may well eventually help in that, but is in the distant future and seemingly only one project.

    London has a long history of many peoples and ‘things’ flowing through it, this is often a source of an innovative mindset, to generate this systemic effect elsewhere will be challenging. (Birmingham may be possible if the HS2 just got on with it, and Birmingham International was expanded. The enterprise zones need to be linked by high speed everything and the UK’s missing VC industry needs to be encouraged to start and hopefully located outside London – But all the ‘national’ things that are in London – stadium, museums, theatres will always act against this – move these to Birmingham and the flow of people and ideas will change. In my not too distant past when I have chatted with professionals in London, these are the reasons they want to be In London, or New York, and hence these are the reasons some organizations don’t move. The M1 doesn’t feel the same as the M4, maybe not even the same as the M40 – get the corridors working. )

    Greenbelts limit cities’ evolutions and are probably not as good for the environment as greencorridors – replace gbs with gcs.

    Regards acting on left/right mindsets I think we need some clearly biased TV channels – the BBC leans left, but is ‘branded’ unbiased, a few separate news channels but with known bias might help. Also I think the Coalition has missed an opportunity in the current government. It could have concentrated on both forms of freedom – economic and individual, the good parts of the two parties – but has tended to focus more on the bad parts of each party – left/right needs to be seen to be looked at more critically.

    With respect to education, I am afraid I would still go with a policy of here is an educational voucher for your kid to spend anywhere, topped up or not, state or private. And, to get unis to perform, I would make them responsible for the student loans, we should have learnt about morale hazard and the taxpayer by now.

    The behavioural role models might need to be looked at as well, all premiership footballers that misbehave on or off the pitch – violence, language or just being stupid (!!!) should be dropped. With freedoms come responsibilities.

    And much more nuclear power now (even some thorium based to build relationships with India).

    • lojolondon
      Posted June 30, 2011 at 5:57 pm | Permalink

      I agree with almost everything you say, but wanted to make this point :

      “Good, fast, AFFORDABLE, transport can break localised monopolies – the HS2 may well eventually help in that, but is in the distant future and seemingly only one project.”

      Affordable????? I just did a fare-check on National Rail, and a ticket on the current train from London to Manchester tomorrow would cost £167. I bet tickets on the HS train will cost 30% more whenever it is finished, late and 100% over budget.
      Currently poor people drive to London, as you can get there and back on a single tank of petrol, if you put two passengers in your car you would save another £340. So we taxpayers are about to spend a fortune to get another, duplicate, even more overpriced service that will stop every time Bob Crow has a hangover, or when it rains or anything unusual happens, and poor people will not use it because only business people can afford it on their expense accounts. This is not ever going to be progress.

      • BobE
        Posted July 1, 2011 at 12:00 am | Permalink

        Trains can’t work in the uk

      • lifelogic
        Posted July 1, 2011 at 7:27 am | Permalink

        Agreed

  13. Kal Kahm
    Posted June 30, 2011 at 10:13 am | Permalink

    “The private sector led southern economy just kept outperforming the state led economies of the northern cities in receipt of special programmes.”
    Therefore it’s not a huge leap to assume that state intervention is a bad thing and should be kept to an absolute minimum so that the only source of wealth (private business) is allowed to flourish.
    If so why is this allegedly Conservative rum coalition not abolishing quangos and bureaucracies wherever they are?

  14. Steve Cox
    Posted June 30, 2011 at 10:38 am | Permalink

    Why focus so much on the North-South divide, which in many ways is less severe than the East-West one? Most of Wales is now poorer than Cornwall, the poorest region of England. In spite of almost a decade of the Welsh Assembly, Wales is the poorest country in the Union. You’re quite right that we need to cut taxes and regulation in these areas, but how on earth can that be achieved when another pointless layer of political management and machination has been foisted on the Welsh people? OK, a small majority did vote for it (I personally voted against devolution), so perhaps the Welsh have simply got what they asked for. As you say, poor regions tend to vote for Labour, and now the Welsh assembly has a Labour administration with no power sharing. I don’t really see how a mini Socialist government on Cardiff Bay can be expected to foster wealth creation. Rather the reverse will probably occur (and indeed has happened during the last decade). Wales is the only area of the UK where Council Tax is not being effectively frozen. Is that encouraging entrepreneurship and business growth? The only solution to this that I can see is for the UK government to say that based on the Welsh Assembly’s pretty awful record, allowing devolution was a big mistake, so the Assembly will be scrapped. That is about as likely as Britain leaving the EU, though, and would be deeply unpopular with many Welsh people who, like the Scots, seem oddly proud that they are free to mismanage their economy into Balkan levels of poverty. I have no answers, I am afraid, but please do not forget about the poor West when you are pondering these matters.

    http://www.walesonline.co.uk/news/wales-news/tm_objectid=17101417&method=full&siteid=50082&headline=most-of-wales-now-the-poorest-area-in-uk-name_page.html

    • Scottspeig
      Posted June 30, 2011 at 2:45 pm | Permalink

      Wales is not a country. It is a princedom. Just thought I’d hrow that in, as theoretically they shouldn’t have the assembly…

    • Mike Stallard
      Posted June 30, 2011 at 4:33 pm | Permalink

      The regionalisation of the UK and indeed the whole of Europe has been planned for years by the EU. It was Mr Prescott who pushed it forward, hoping to introduce the Regions throughout the UK. Scotland, Ireland and Wales were the only ones he managed to get through because they had far more support. The one in the North East was a failure. However the Regions were still introduced anyway secretly.
      Now they have been scrapped. But for how long?

  15. sm
    Posted June 30, 2011 at 11:01 am | Permalink

    Perhaps a National strategy to retain needed competences/skills may help.
    Maybe an engineering plan to produce national assets required for the future.
    Gas storage,Water grid,power grid etc. An improved capacity road network to enable cost advantages to be realised for mutual benefit.

    With construction slowing it would seem a good spend in potential multiplier effects- whilst the whole financial system is restructured properly.

    Encourage some engineering to store surplus power via innovative methods. Sea resovoirs emptied by windfarms or overnight surplus power – available for peak demands or even wind powered desalination attached to storage ready for use in droughts.

    We may yet need a ‘Hoover dam’ project or projects. We seem to choose systemically funding a broken banking model and corporatist state where some do very well and the ordinary citizen or taxpayer very badly.

    Remember the North/South divide is shrinking as a large part will probably devolve soon- so start to plan accordingly for a seperation.

  16. Peter Richmond
    Posted June 30, 2011 at 11:05 am | Permalink

    It is interesting to look back in time. Many Victorian entreprenuers were Quakers committed to both business success and social responsibility. (Think, Cadbury, Lever, Rowntree to name but three). Ideally we would like to replicate this spirit within our society. But across Europe, it seems to have declined with the rise of socialism and communism. Interestingly it is still to be found in the US where many rich people are still to be found. I grew up in the north in the 1950s and benefited from a supportive family environment. Dad was a small businessman-a grocer in pre Tesco times who saw clearly the emergence of large supermarkets now with us. I went to the local grammer school and off to university to study science. It was this supportive environment that helped me and I am eternally grateful for that State Scholarship that took me off to places and roles I could only dream off and which no doubt many people still stuck in poverty in our many deprived areas still probably only dream about – if they can envisage the dream that is.
    I am not sure how you deal with the family and cultural side of life but education helped me and I think it can help others.

    • Mike Stallard
      Posted June 30, 2011 at 4:36 pm | Permalink

      The Christian side – of whatever denomination – was the cause of the industrial revolution with its stress on the family, the dignity of labour and the rewarding, under God, of hard work and thrift.
      Now that has all but disappeared as Christianity is shrinking very fast, we are left without motivation, honest and fair entrepreneurs, family or decent workers.

    • uanime5
      Posted July 5, 2011 at 6:38 pm | Permalink

      Most of the European ‘socialist’ countries are much more Christian than the UK. Germany has two major Christian parties (Christian Democratic Union of Germany and Christian Social Union in Bavaria), Italy has the ‘Union of Christian and Centre Democrats’ party, and Poland recently built a giant statue of Jesus.

      Also most Communist countries in Europe were Christian.

  17. Mark
    Posted June 30, 2011 at 12:19 pm | Permalink

    Industry in the North has been culled by regulation and taxes that are designed to export energy intensive businesses. (Removed a case where the company strongly disputes the claims of critics-ed)

    I note that the Grangemouth refinery and petrochemical complex(ex BP) is now owned by Ineos and Petrochina; Stanlow (ex Shell) by Essar; Teesside (ex ICI) has seen plants sold off to a variety of buyers (including Saudi SABIC and Korean Lotte, and Swiss Petroplus for the now closed refinery), with many of them now shut; Total is seeking a buyer for its Lindsey refinery. Many of these plants (I could list many more) are likely (to experience change-ed), as the traditional multinationals sell out in the face of regulation to buyers who can get carbon credits (or who find other places to carry out the work-ed). Others will simply close because of prohibitive energy costs. The risk is that we will have no industry, and end up importing instead. The point is that if we don’t make chemicals and metals, we won’t be making things with them either (these industries have highly integrated supply chains), so there is a large multiplier effect – we will end up not even having the capabilities to do research into processes that can be licensed. The green agenda is exporting jobs.

    If you wish to attract dynamic people to the North to re-establish a real economy, regulation and taxation must be tackled – but perhaps the simplest measure would be to open a new grammar school in every major Northern population centre.

    • Mark
      Posted July 1, 2011 at 11:38 pm | Permalink

      Is the carbon scam so controversial that this is still in moderation?

  18. John B
    Posted June 30, 2011 at 12:49 pm | Permalink

    It is mostly true to say that businesses get located near to where the boss lives. To attract business to the North, attract the bosses and the rich, the latter not least because they splash a lot of cash in the vicinity and this provides jobs.

    I am a son of the Durham coal field who got out as soon as I could in my late teens. The North was industrialised because it had coal, iron ore, lots of water and sheep, and plenty of low cost labour to work the mines, mills, heavy industries.

    Northerners became used to plenty of employment, literally in many cases almost on their doorsteps. They also became used to manual work and so an elementary education was enough. Children would know where they would work, many had a job waiting – with their dad, granda, brothers, uncles, mates in the pits, shipyards, forges, etc – when they left school, so no need to learn much or consider higher education.

    Work in these industries was hard, in a way that the likes of Brown and Cameron when they talk of ‘hard working’ do not know or understand, but the people were prepared for it and knew, if they worked hard, with overtime and bonuses, they made a decent living where the cost of living was relatively low and leisure time limited.

    All that went and left a population morose, blaming Thatcher instead of the advance of time, feeling cheated, who believed it was their hands, not their brains which should earn them a living, and they had a ‘right’ to a job within walking distance or short bus-ride away.

    Desirable areas attract, but to a point where they are saturated or too costly for those aspiring to live there. Inevitably these people get as close as possible and settle at the periphery where property is cheaper but amenities exist close by, and so the desirable area in effect expands.

    This is how some London areas, like Battersea gentrified as an ersatz Chelsea.

    Then need then is to coax business already located or looking to start up, increasingly into the Southern hinterland – in other words extend the South, North.

    Start with attracting the bosses. Instead of spending money on a useless rail link, spend it on decent international airports which will attract direct, regular international services from main line carriers as well as the cheap-and-nasty, and improve, already good, road infrastructure.

    Build amenities the ‘boss class’ will like, cultural, leisure, schools, housing. The North has terrific countryside and loads of potential for this and doing this provides jobs.

    Next allow local income, corporation tax and vat. A national flat-rate can be established with local authorities allowed to keep any add-on. Smart councils will use this effectively, like Ireland has, making it attractive from a business and personal tax prospective than the South. Use tax to attract business instead of play at social engineering. Workers will benefit too from low tax and more jobs.

    Northerners will have to lose the Class Warrior, us against the evil bosses mentality and they and politicians, local and national will have to welcome ‘the rich’.

    It is management that decides where business goes. Grants, labour play their part, but I can assure you that a very major concern is what is the living environment like for the top management. Will they, their partners and children be happy.

    Few will live in a dump of a place just becasue they get a business grant.

    Trust me. Attract the bosses, businesses and jobs will follow.

  19. Robert K
    Posted June 30, 2011 at 1:53 pm | Permalink

    The best way to address the North/South divide, to the extent that it exists, is for the state to get out of the way. The main issue is to ease planning controls so that enterprises can establish themselves where they wish and homes can be built to accommodate their workforces. Subsidising areas whose economies have changed is myopic, pointless and wasteful.

  20. forthurst
    Posted June 30, 2011 at 2:12 pm | Permalink

    Why not declare the North a third world country? They could become free of carbon taxes; such taxes could be increased proportionately in the South to compensate: the BBC would be hit with a massive electricity bill. Instead of closing down our industry and subsidisng its transfer to third world countries like India, the North would become the beneficiary of such half-baked policies. Taxes for industry in the North could be further reduced by introducing compensating increased taxes for international fnancial spivs operating in the City: ‘activities of no social value’ turnover tax.

    The damaging effects of paying state beneficiaries, those employed by central and local government and those paid for not working for anybody, more than economic wage rates would be in the North, could attenuated by a permanent freeze on their incomes until the situation had been resolved through inflation.

    A particular problem for the North is that unlike the South with its longstanding infrastrucure of private schools, the North was always reliant on their excellent Grammar schools “in every town” which unfortunately were mainly destroyed by Comprehensivisation: thus William Hague speaks with the weazy Yorkshire collier’s accent rather than those of the cultured Grammar school educated Northerner of yore who became the ‘Northern Chemist’ of legend. So as a third world country, the North should re-adopt an education system based upon learning and elitism rather than the official standard Frankfurt School grooming with self-destructive beliefs and no knowledge whatsoever, with a focus on science and technology and a total deprecation of Social ‘Science’; the North has suffered a brain drain for decades and people will not move back if they think it will damage their own childrens’ life chances.

  21. Neil Craig
    Posted June 30, 2011 at 3:41 pm | Permalink

    Perhaps not the full economic answer but our electoral system does entrench the north/south divide since the smaal % of extra Labour voters oop north give them the vast majority of seats, which is bound to dominate the political and economic culture, and the reverse is true in the south.

    I would also suggest that improved transport would certainly help bring them together. However rail is not the optimum way to improve transport, at least until we have modern, automated, low weight vehicles. Unless that is on offer we should be putting the £34 billion and counting into road, airports (something which the north should be able to do more easily than the Home counties) and improved port facilities.

  22. Kenneth
    Posted June 30, 2011 at 3:53 pm | Permalink

    Perhaps we should ditch the single currency in the UK and have a north and south Pound!

  23. ferdinand
    Posted June 30, 2011 at 5:04 pm | Permalink

    The difference will become even wider if the HST to Birmingham and beyond happens. Why live up North when you can live down South and work in Manchester.

  24. lojolondon
    Posted June 30, 2011 at 5:46 pm | Permalink

    You are absolutely correct John, putting a fast(er) train link in will not make the NE richer, in fact, the slow train is already so expensive that people from the North all drive, so the whole idea is just plain stupid and a waste of money.

    I am disappointed the move of the BBC from London to Manchester has not been cancelled by the Tories / Coalition, as it is a total waste of billions of pounds. More importantly, it is an undisguised attempt by Labour to move their propaganda machine into their heartland, to the cost of all UK taxpayers, I cannot understand why we are paying for the BBC at all, and especially why the Tories are too scared to cancel this pointless waste of money.

    • Stuart Fairney
      Posted June 30, 2011 at 7:39 pm | Permalink

      Schadenfreude perhaps but the prospect of the luvvies having to move to Manchester is making me chuckle somewhat.

  25. StevenL
    Posted June 30, 2011 at 6:25 pm | Permalink

    I grew up in south east Northumberland, and a few commentators have it all wrong above. In the boom years it was easy to find work. But a lot of people were employed in property related disciplines like bricklaying for big housebuilders or selling fitted kitchens. When the bubble burst loads of them got thrown out of work or took big pay cuts.

    There is no housing shortage up there. You can buy a house for £40k again in the less desirable towns and the market is 25% – 50% down from peak in most places even without adjusting for currency. A lot of the employment there now is service sector, like call centres. The basic wages are low and in the good years the bonus is OK because people will jump ship for another £1 an hour.

    Then, the big call centres would be recruiting endlessly, they don’t call it the ‘call centre circuit’ for nothing. Now they are hardly ever recruiting because peope are hanging onto their jobs. The employers can get away wth paying a small, if any bonus too now. The whole economy is depressed up there.

    Parts of the north have suffered more like an Irish or Spanish style bust basically, whereas London has suffered a New York style bust. It’s not like there aren’t any welfare claimants in London, and it probably takes the income tax of 20 geordies to house one family of them in SW3 or W14.

  26. rose
    Posted June 30, 2011 at 7:10 pm | Permalink

    I have watched local Labour spreading areas of deprivation right across our city, as if it were official policy. It probably is: the more deprivation you can demonstrate, the more money you get from central government and the EU. Bad schools with nearly everyone on free school meals are an advantage not an embarrassment. As Eli Kedourie said: “the Poor are a goldmine.” Poverty means jobs and expanding empires for the wrong sort of people, and guess what they and their dependants all vote. This is what drove Gordon Brown. Get everyone either working for the governement or dependent on it, and they will vote Labour for ever. Bring in millions of people from abroad on low wages topped up by the government and they and their families will vote Labour too. That is why the Conservatives couldn’t win an outright majority, despite his appalling record. Just as all through the 18th and early nineteenth centuries there were more whigs than tories voting, so the conservatives rarely won, so it is now, but this time it is far more insidious and corrupting. There are just more people with a vested interest in poverty and deprivation than in enterprise. It takes a Mrs Thatcher to turn a country round on something as fundamental as that, and a lot of bad blood along the way. Has anyone in government got the stomach for it now? And what about all those politically appointed civil servants who believe in the Brown way of managing a country?

  27. Bazman
    Posted June 30, 2011 at 7:10 pm | Permalink

    The north south divide is a lot about geography being close to the capital city and near to Europe. If the country was turned upside down you would see a similar outcome. In a very geographically isolated place like Barrow-in -Furness on the end of a peninsula this effect is profound and like many areas previous governments policies have not helped. With the biggest employer in the town being a navel shipyard, the shipyard had its commercial side run down and discouraged over the years with now broken promises of large navel contracts to be had instead.
    The shipyard and steel workers adapted to the job losses and went to work in call centres the call centres have now gone and the supermarkets can only employ so many and often applications are just ignored. There is a glut of taxi drivers.
    This cutting of the benefits and abolition of the minimum wage assuming they can even get a job is just making desperate people more desperate. A race to the bottom. The idea of local wages and people living a simple peasant life is a fantasy. Who would stand for this? A huge swath of the population living in poverty. Peoples life expectations are now much higher and would not tolerate this divide. Even the East Europeans who accept this idea a little more would not come for a long time.
    Any tax breaks given to private companies are used up and the company then leaves. In some parts of the north east the employees pay special rates of tax due to the economic hardship of the area. I have seen their payslips they call it ‘red tax’. Just like expecting companies to go to these area without subsidies is another fantasy. Why be in the middle of nowhere when you could be near major road/rail/sea link and near your customers? You will either subsidise the lifestyle of a poor northern resident by subsidy to industry or by benefits to the idividual.

  28. BobE
    Posted June 30, 2011 at 7:32 pm | Permalink

    Labour is bound to win in 3.7 years time anyway. It only matters that this lot organise themselves some well paid non jobs in the euro gravy train.

    • lifelogic
      Posted July 1, 2011 at 7:33 am | Permalink

      It certainly look like this is Cameron’s plan but why he is he so lacking in vision?

  29. Electro-Kevin
    Posted June 30, 2011 at 9:44 pm | Permalink

    Actually people in the South West are often much poorer than those in the North. Being half Geordie myself I know what an affluent town that is.

    The North South divide is an old leftie favourite – and in many cases a fiction because it is so outdated.

    The BBC insist on pronouncing Newcastle ‘New-cassel.’ They patronise leftie favourites this way. They will never refer to London as ‘Larnden’ nor Exeter as ‘Zecketer.’ People in these regions will never be viewed as similarly deprived.

    • Electro-Kevin
      Posted June 30, 2011 at 10:29 pm | Permalink

      PS, The situation will not get better if today’s birth rate figures are anything to go by. Certain sections of the establishment are lauding the increased birth rate brought through Labour’s benefits system because those children will contribute taxes when they grow up. Dream on .

      The people who should be breeding and who would make excellent parents simply cannot afford to because they work too hard and (incredibly) earn too much. Sadly their work ethic will not be passed on.

      There is so much I despair about. This country seems to have a death wish.

    • rose
      Posted June 30, 2011 at 10:32 pm | Permalink

      Yes, Kevin, a city like Gloucester which is not in the North, and not Irish, Scottish, or Welsh, has really missed out on the spending bonanza.

    • Caterpillar
      Posted June 30, 2011 at 10:49 pm | Permalink

      Do you have data in the southwest? I think outside the public sector in Devon and Cornwall that incomes are low but many people are wealthy. When people leave London and sell their one bedroom flat they still have change after buying a four bedroom house. A four bed terrace for £150-200K in quite good parts of Plymouth is like a £3m-£6m in Westminster. It is the young in the area that suffer.

      • Electro-Kevin
        Posted July 1, 2011 at 10:25 am | Permalink

        Caterpiller – My point is that deprivation exists everywhere in Britain. Many poor people in London live in far worse conditions than poor people in the North. Why do we make a big issue of the North/South divide ?

        I would say this is because it goes back to Labour party origins and that they like to love to perpetuate the imagery of their ‘true’ supporters – the heroic, hard pressed industrial workers. The Tories have been suckered into dealing with this fictional divided and pandering to the Labour heartlands rather than their own natural supporters. This is one of the reasons why the political spectrum has been dragged so far over to the left that few of us recognise or like the modern Tory party – this is why so many politicians even tone down their home county accents

        The wealth divide is far more complex than all that.

        As for the figures you quote about selling a flat in London and profitting by moving to the South West they don’t quite stack up. I know this because I’ve done exactly that. The same applies for a Londoner making a similar move to a Northern city by the way – I don’t quite understand why you’ve been so particular about this mechanism applying to Plymouth.

        I made that move to Devon 7 years ago. I sold a three bed for £250k and the cost of a similar house where I could find work in Devon was £250k. I have a mortgage bigger than the one I had in London because of the drop in pay.

        In fact it’s well known that the disparity between average wages and house prices in the South West is the largest in the country. Socialising is among the most expensive and water rates most definitely the most expensive – by at least 100% compared to many areas.

        I’m not griping about conditions in the South West (though many have a right to) I’m griping about the seeming monopoly some sections of our society are allowed to have on pleading poverty.

  30. David John Wilson
    Posted June 30, 2011 at 11:42 pm | Permalink

    More positive action is needed by the government to reduce the north/south divide. Taking the new railway as an example. Why isn’t the Leeds/Manchester link being constructed first?
    There is a need to identify the areas in the north where high employment already exists and then improve ccommunication links between them and nearby areas of high unemployment. High employement and technology based industries tend to develop in clusters. Where such clusters exist in the north action needs to be taken to expand and support them. Simply throwing money at areas of high unemployment doesn’t usually work. Instead existing centres of excelence need to be nurtured.

  31. Bernard Otway
    Posted July 1, 2011 at 1:35 am | Permalink

    Copy the USA or Canada or Australia or New Zealand.
    In the USA Microsoft is in Seatle,as is Boeing,Amazon in Portland,silicon valley is near San Francisco,Walmart the worlds largest company is headquartered in Bentonville Arkansas,
    Cessna is in Wichita kansas,etc etc etc etc.The fastest growing states are where LIFESTYLE
    is best,especially self employed working from home computer users.The states offer incentives to companies and people to move there including LIFESTYLE,most of my American friends
    wouldn,t live in New York for love nor money,they think it is foreign.I have a friend who was an investment manager for a large firm in NY handling private peoples money for more than ten years ,about 12 years ago he left to set up on his own doing the same thing
    he moved to Idaho Falls 2000 miles away [say from London to east of Moscow],Why
    Quality of Life, he sold a 2 bed apt in manhattan and with the money bought a 40 acre smallholding with a 5 bed western cabin style house,he runs his business from home 25 of his previous clients moved with him and he now has 50 and limits himself to that number.
    His kids grew up in a fabulous way once moving ,all 3 have graduated and are working out there one for him so he is now taking on more clients,ask him what the best thing he has ever done is,the answer is obvious.My own 43 yrs old daughter is a professor of environmental law living in Texas,yet takes environmental cases a lot of times in same NY
    BUT runs Fast back to Texas,WHY ? LIFESTYLE.She earns $150,000 pa you should see the house she owns,you could fit 5 NY apartments in it with room to spare.
    Australia has 5 major population centres Each has it’s own advantages plus many other fast growing towns,Canada and New Zealand the same.All these countries are OUR offspring but we don’t imitate them WHY .I am 66 today and am moving to the north soon
    WHY ? Quality of life,London is foreign to me but inland from Newcastle is not,PLUS a lot cheaper. The non london parts of the UK have a lot to offer under the right conditions which
    include all of what other posters have said.

  32. Fox in sox
    Posted July 2, 2011 at 9:58 am | Permalink

    The north/south divide is a very simplistic one, though with an element of truth. The reality is more complex and diverse. Parts of Essex and east london resemble sheffield or Plymouth more than they resemble Surrey or Berkshire. Cheshire and Warwickshire are more like Surrey than they are like Oldham or Dudley. The delightful town of Hexam could easily attract employers, the Midlands town of Market Harborough has some of the lowest unemployment stats in the country.

    Upthread a comment was that in order to attract jobs you need to attract employers. Quite so! Rather than HS2, Birmingham needs good commuting links, so employers can live in delightful Leamington, and run a business providing jobs either in Birmingham, or for commuters from Birmingham. It’s local transport links that are needed, so good local rail services and easy parking. Punitive parking costs in our cities, and threats of congestion charging means fewer jobs in cities where the unemployed live.

    Rather than HS2

  33. Stephen Gash
    Posted July 5, 2011 at 1:20 pm | Permalink

    With respect, this article is atypically disingenuous.

    I live in Carlisle the most deprived part of the UK. The real North-South divide is the Anglo-Scottish border. Scots enjoy a miriad of benefits we in the north of England are actively denied.

    Convoys of ambulances from Scotland are regularly parked outside Carlisle hospital conveying Scottish patients to health services people in Carlisle are i all liklihood denied. Carlisle hospital is £25 million in the red, but finding out whether the Scottish Health Service as paid its bill is near impossible. Bear in mind the Welsh Health Service owes Hereford and Shrewsbury hospitals millions.

    So, can we please have less of the North-South UK divide, unless we are talking about the Anglo-Scottish border?

    Where is the Green Bank going to be situated? By rights it should go to Leeds, the second largest financial centre in the UK, London being the largest. However, it is likely to go to bank-busting Scotland, either Edinburgh or Glasgow, for no good reason.

    What are Leeds Tory MPs Stuart Andrew and Alec Shelbrooke doing to get the bank in Leeds? Ed balls won’t be doing anything, that’s for sure.

    Let’s have the Green Bank in Leeds and get the train network up and running to Leeds as planned. Then extend the line to Carlisle.

  34. uanime5
    Posted July 5, 2011 at 6:06 pm | Permalink

    “The highlighted areas of low incomes and high joblessness fit well with a political map showing Labour’s seats. Our politics is not healthy where one party represents most of the low income areas, and the other two parties represent the more successful areas. ”

    That’s because the poor and unemployed have realised that Labour is the only party that tries to help them, as opposed to the Conservatives who bully anyone on benefits. Also why is it unhealthy to have a party that represents the poorest in society? Are you saying that the poor shouldn’t have right to vote?

    “It encourages a Labour mentality that spending more in the public sector is the only answer, despite the evidence of the last decade that it did not reverse the growing gap or create enough jobs to solve the problem.”

    What about when the Coalition fired hundreds of thousands of public sector workers and hoped the private sector would create enough jobs. I seem to recall that didn’t working either.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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