April 09 ,2015 | by Hari Sri

Bridging the economic North/South divide in the UK

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Steps could be taken to narrow the gap between the economies of the North and the South of England.

The divide between the North and the South is not an exact line, but one that was once based largely in cultural differences. In more recent times, a lot of attention has been paid to the gap between the economies of these two different regions, which dramatically widened over the past decade.

In fact, for every 12 jobs created in cities of the South since 2004, there was only one job created in other cities, according to a report from the Centre for Cities. The thinktank’s eighth edition of Cities Outlook highlighted that the gap continued to widen in the last ten years, despite the launching of many policy initiatives designed to bridge this divide.

“The North/South divide provides a continuing challenge to central government to ensure that the proceeds of growth benefit every region,” said Lord Andrew Adonis, shadow infrastructure minister, in the report.

“[The] devolution of power and resources from Westminster and Whitehall to city regions across the country is vital to creating a sustainable and strong economic recovery nationwide,” he added.

Devolution

It seems that pledges from both the previous Labour government and the Coalition to ‘bridge the north-south divide’ or to ‘rebalance the economy’ have yet to be fulfilled, and the situation has actually worsened. The Cities Outlook report calls for greater devolution of powers and responsibilities to the regions and to the cities themselves if the gap is to be narrowed.

If cities had the power and freedom to respond to their challenges by tailoring their own policies, it would allow them to plan strategically for the future over longer timescales than the current system.

Such changes are already taking place, such as the agreement that will see greater powers devolved to Greater Manchester and a directly-elected Mayor for the area.

This initiative has already resulted in groundbreaking plans, which include the plan to combine health and social care funding from NHS England and Greater Manchester, which will amount to a combined sum of £6 billion.

Funding in Northern tech

The recent budget from chancellor George Osborne contained an £11 million pledge to support new technology companies in the north of England, including places like Manchester, Leeds, and Sheffield, which have seen huge rates of growth in the technology sector. This new round of government funding will be used for tech incubators, providing the space and funding for start-ups to collaborate with each other and receive support.

It builds upon the TechNorth initiative revealed last year that aims to promote the growth of tech companies in the north of England, as cities of the North are increasingly playing a critical role in the development of the UK’s digital economy.

Funding is also pouring in from private companies too, in the form of programmes such as Entrepreneurial Spark, that is opening business accelerators across the UK, including in the North and in Scotland. This initiative is being run in conjunction with NatWest and has also received financial support from RBS, showing that it’s not just the government that is recognising the need to fuel business growth outside of London.

“Our commitment to start-up businesses is highlighted in our multi-million pound investment and continued support of Entrepreneurial Spark,” said Gordon Merrylees, head of entrepreneurship at NatWest.

Tourism and infrastructure

One area that could be key to revitalising the North is to build upon its natural attractions to attract overseas visitors. However, tearing the tourists away from London will be tricky.

Data from the Office for National Statistics showed that only nine per cent of international visitors came to the North of England, while London’s visitors accounted for 54 per cent.

The recently announced £10 million fund to boost tourism in the North of England will help promote the stunning countryside, history, and culture the North has to offer, according to Deputy Prime Minister Nick Clegg.

 “This funding will help bring together existing work being done to boost tourism right across the north, showcasing major events such as the Tour de Yorkshire whilst creating a single vision for showing off the jewels of the north for all to see,” he said.

But in order to cope with an increase in tourism, funding should also be directed to the North’s ailing train infrastructure, which has suffered at the hands of decades of funding cuts, said a report published by the Campaign for Better Transport.

The Stepping Stones report highlighted that major investment would be needed to update the rail network in the North in order to help close the economic gap between the North and the South.

Hari Sri

Hari is the LSBF Blog's News Editor. He manages the editorial content on the blog and writes about current affairs, SME, entrepreneurship, energy, education and emerging market news.

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