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Almost half of net jobs growth in England since 2010 has been in London and the South East, a report by a leading think-tank has found, citing centralisation, short-termism and chronic low investment outside the capital.
Just 2 per cent of employment growth was in the North East, according to an 18-month study by the left-leaning Fabian Society released on Wednesday, compared to 46 per cent in London and the South East.
The society’s report on regional inequality and poverty, chaired by former Newcastle council leader Nick Forbes, also identified twin regional crises in the economy — low growth outside the South East and high levels of poverty in London owing to the city’s housing market overheating.
It recommended devolution of economic development and Jobcentre support to mayors, as well as more housebuilding on the greenbelt and public control of bus services across England.
Free childcare access also needed to be expanded for low-income families, it said, with responsibility for its provision given to local authorities.
The findings echoed other analyses in pointing to regional inequality “without parallel in the developed world”, identifying the biggest disparity in regional productivity of any leading developed country.
They found England had the highest regional inequality in disposable income per head — a gap that has widened “significantly” since 2010 — and a large divide in net jobs growth, which was “getting worse”.
But the report also stressed that despite the capital’s high productivity, housing costs meant a million Londoners were living in poverty, “forcing” people to choose between living in “a low-growth area, where prospects are poor” or in “an overheating area, where living costs are high”.
In a critique of the government’s “levelling up” programme for addressing regional divides, launched under Boris Johnson’s premiership, the report referred to recent “bullish, optimistic rhetoric about regions outside of London”.
“But behind the scenes, many retain a long-held belief that only London and the South East can generate economic growth and that other regions can only ever be their dependants,” it added, warning that view is “profoundly mistaken”.
“All regions can create good jobs, as they do in other countries, and that focusing only on London comes at a huge cost to Londoners themselves.”
Pointing to the historic centralisation of UK economic policy, the report said “no other country” has a single department comparable to the Treasury, in that it raises tax, sets and monitors departmental budgets, regulates financial markets and undertakes economic development.
Such a concentration of responsibility leaves the finance ministry “spread too thin” and prone to short-termism, it argued.
The report adds to a growing debate about the merits of fiscal devolution in England, also raised recently in reports by the Ditchley Foundation think-tank and the Northern Powerhouse Partnership lobby group.
The Department for Levelling Up, Housing and Communities said it was determined to spread opportunity everywhere, including providing bespoke funding packages for areas in greatest need.
“Levelling up is a long-term programme of reform that sits at the heart of our ambition to radically transform the UK and reverse this country’s regional inequalities,” a spokesperson said.
