Landmark report points to North-South divide

Lord Kerslake is pulling no punches. He believes 50 years of bias towards London has left the UK a deeply divided country.

And those divisions now run so deep that a national renewal fund along the lines of Germany’s East-West reunification strategy is needed.

That was the headline-making call from a new report by the UK2070 Commission, run by the former head of the civil service, who was Sheffield City Council’s chief executive in the late nineties.

Launching the independent inquiry’s report at the end of last month, he declared: “Much of what has been done to date to tackle the inequalities across the UK has been in the form of underpowered ‘pea shooter’ and ‘sticking plaster’ policies – too little and too short-lived.”

Lord Kerslake said the need for action to bridge the gap between the capital and the rest of us was made even more pressing by the potential impact of Brexit, which he said “most economic commentators expect to widen our economic divisions, especially if it happens without an agreed deal.”

The former Whitehall chief, who was appointed as chair of the board of governors at Sheffield Hallam University in 2016, also described the UK as one of the most regionally unbalanced countries in the industrialised world.

And he said: “The uncomfortable reality is that despite the government initiatives that have been taken, the economic disparities, particularly between London and the wider south east and the rest of the UK have grown.”
According to Lord Kerslake, the impact of these acute and growing economic disparities is threefold.

He said: “It means that we are not taking full advantage of the economic potential that all parts of the UK have to offer. It creates an imbalance of wealth and opportunity that in turn creates division.

“And it creates enormous pressures in terms of population growth, housing affordability and an overloaded infrastructure in the economically high performing parts of the country – with big costs for both individuals and government. In short, nobody wins.”

The productivity gap in the English regions in particular is estimated to cost the economy around £40bn, according to his report.

To tackle regional inequality, the UK2070 Commission proposes:
• Much greater devolution of powers and funding, including the creation of four new ‘super regional’ economic development agencies
• A spatial plan to guide the future development of the whole of the UK
• Action to harness new technologies and strengthen local economies
• Long-term investment through a new £10bn a year ‘National Renewal Fund’ which would rebalance the economy over a 25-year period

Lord Kerslake added: “Whilst the focus of this report is economic and spatial, we are acutely aware that it sits within a wider political context of how to bring the UK back together again after one of the most divisive periods of its history.

“In other words, there is a political as well as an economic imperative to addressing the issues that this report highlights.

“Much public investment has worked in the opposite direction. If we are really to shift the dial on spatial inequalities, what we require for the future will need to be structural, generational, interlocking and at scale.”