David B Smith’s latest figures show the following shares of government expenditure in the economies of differing UK regions:( the characterisations are mine)
Very high spenders, low overall incomes and performance
Northern Ireland 80.9%
North East 73.5%
High spenders, better incomes and performance
North West 64.6%
Yorks and Humber 60.5%
East Midlands 53.9%
South West 52.8%
Lower spenders, higher incomes and world matching performance
(General government expenditure as a percentage of GDP at basic prices derived from HMT sources)
It is not surprising that the regions with the highest proportion of government spending to GDP are the poorer regions. They get more government subsidy because they are poorer. What is depressing is the order of the lists has remained very static over many years, despite the large extra sums routed into the poorer regions to try to make up the gap. Indeed, in the Labour years, London, the richest region receiving the least public money as a proportion increased its lead in average earnings and general prosperity substantially.
Regional policy needs to be thought through anew. Labour proved beyond doubt that hurling ever larger sums of taxpayers money at people, Councils and businesses in the poorer regions did not enable them to catch up with the more successful parts of the country. Meanwhile the areas starved of the public spending bonanza did well throughout the last decade apart from the 2008-9 period when the Credit Crunch did universal damage.
The aim must be to build bigger, stronger and more successful private sectors in those parts of the country that are still well behind London in income levels and growth. There is only so much the state can do. It can help educate people. It can ensure good communications and the supply of the planning permissions and permits to those who want to run businesses in those areas. It will then find that lower taxes and a sensible level of regulations make better recruiting sergeants than a fistful of subsidies.