Tackling regional inequalities is the latest to be resurrected from the archives

Every now and again, a policy rises back up the agenda. One minute, it’s boosting productivity. The next, it’s restoring our manufacturing heritage.

Often it is hard not to feel a sense of déjà vu. New strategies are launched, littered with the latest jargon, but with an evidence base and policy agenda that are remarkably familiar to yesteryear.

Tackling regional inequalities is the latest to be resurrected from the archives.

The UK has significant regional disparities. Growth in London and the South East consistently outstrips growth in the rest of the country. Output per head in London is 2½ times that of the North East of England.

Here in Scotland, the gaps between our strongest and weakest regions are stark too. 

The reasons for regional inequalities are not always well understood. Yes, they reflect decades of government investment decisions and policy choices, but they are also the result of systemic structural and population change.

Emboldened by votes from December’s election, the Chancellor has vowed to ‘level-up’ the UK.  

It is hard to disagree that an economy will be stronger if every part of the country fulfils its potential. But history is littered with well-intentioned – but ill-fated – attempts to narrow the gap between regions.

Donald Dewar talked of ensuring that “all regions of Scotland contribute and benefit”. In 2007, the SNP put ‘cohesion’ as a core objective of their economic strategy. Since 2016, the talk has been of ‘regional inclusive growth’.

But if anything, disparities are widening. In 2007, the Scottish Government’s target was to narrow the employment rate gap between local authorities. The gap is now larger.   

Over the last 20 years, this is one policy area where the only outcome we can reassure ourselves of is that we have all become 20 years older.

This time it’s supposedly different.

But policymakers regularly over-estimate their ability to have an impact. Many of the challenges that some of our communities face are deep-rooted and long-lasting.  

Back in the 1970s, manufacturing accounted for around 30% of economic activity in Scotland. Now it’s 10%. That shift lies behind the relative decline of many regions across the country from the Borders through to Ayrshire and Inverclyde.

The loss of ‘anchor’ institutions – large local employers – has weakened the resilience of many communities to cope with economic change.

At the same time, generations of outmigration from areas left-behind to more prosperous cities has accelerated that decline. The median age in Dumfries and Galloway is nearly 50. In Glasgow it’s in the mid-30s.  

Tackling regional disparities will require investment at scale and not on token gestures.

Regional Growth Deals are welcome, but are a drop in the ocean particularly given the hollowing out of local government budgets.

But beyond rhetoric and new strategies, are policymakers really willing to make the changes and investment required?

Tight budgets require tough decisions, with choices about where to invest often coming with significant political risk. Will government be willing to shift resources from areas of national economic success – like cities and growth sectors – to areas lagging behind?

And are they willing to do everything they can to deliver this agenda?

The UK Government is supposedly considering plans to shift civil servant jobs out of London. Here, the Scottish Government employs nearly 6,000 staff. 65% of them earn above the average full-time Scottish wage; over 1,200 earn more than £50,000. Imagine the boost to Irvine, Glenrothes or Coatbridge if just a few hundred of these jobs were relocated?

If policymakers are serious about tackling regional inequalities, they are going to have put their money – and their footprint – where their mouth is.

Authors

Director of the Fraser of Allander Institute.

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