Big Debate: Coalition breaks promise to close Britain’s gaping economic divide

New figures released by the Treasury this week show Yorkshire and the North of England are at risk of becoming the UK’s ‘squeezed middle’, as the Government pours money into both the booming South-East and into Scotland ahead of next year’s independence referendum.

In the last financial year, Ministers spent less than half the amount of money per head in Yorkshire on transport, housing and cultural services than they did in either London or Scotland.

The figures will add to fears that Britain is once again on the cusp of an unbalanced economic recovery, with some parts of the country motoring forward while others are left behind.

The Yorkshire Post today launches its latest ‘Big Debate’, this time focusing on how best the country should start to address this glaring North/South divide.

Senior politicians, business leaders and policy experts will give their views over the coming days on the long-standing and deep inequalities on issues such as spending, employment, health and education.

The release of detailed public spending breakdowns for 2012/13 put the issue back into the spotlight today, with the Government’s growing desire to show Scottish voters the benefits of remaining part of the UK only exacerbating the situation for hard-pressed Yorkshire.

Last year, the Treasury spent £246 per head on transport in Yorkshire, compared with £545 per head in London and £539 per head in Scotland.

It spent £110 per head on cultural services in Yorkshire, compared with £211 in London and £231 in Scotland. And it spent £134 per head on housing in Yorkshire, compared with £214 in London and £304 in Scotland.

“What these figures are really indicating is that this Government is not challenging the long-term behaviour that has been apparent on the part of the UK Government for decades now,” said Angela Smith, the Labour MP for Penistone and Stocksbridge and an Opposition frontbencher.

“That habit is one that reacts to economic activity rather than trying to stimulate it.

“When you’ve got one part of the country performing well, the money just follows. It is incumbent on any British Government to think carefully about how it can use its resources to actually help stimulate economic growth in areas like Yorkshire.”

The problem has been entrenched in Britain’s public spending patterns for years, and long predates the current administration. Separate data released by the Treasury in September showed public spending on infrastructure in Yorkshire was barely half that of London or Scotland in each of the previous five years.

Between 2007 and 2012, infrastructure investment averaged £644 per head in Yorkshire, compared with £1,161 in London and £1,039 in Scotland.

“We need greater parity in the public finances,” said Ed Cox, the director of the UK’s only Northern-based think-tank, IPPR North.

“Yes, the North receives more than its fair share of welfare payments, but equally London and the South-East receives vastly disproportionate public investment on those things that drive growth and lever in private investment.

“As a nation we spend twice as much per capita on economic affairs in London than we do in any other region.

“In order for the North to be more productive and less needy, this situation needs to be turned on its head. The Chancellor’s Autumn Statement in a couple of weeks’ time represents an opportunity to start this process.”

Speaking to the Yorkshire Post, Deputy Prime Minister Nick Clegg said the Government has made a concerted effort to start to address the divide, but accepted many of the measures will take years to have a real impact.

He highlighted the coalition Goverment’s ‘localism’ drive to give more powers to council and business leaders across the UK, and a huge investment programme in transport networks, as long-term measures that will help the North to grow.

“I’d always like to do more – not least as the most senior member of the Government representing a large Northern city,” he said. “But I’m very proud of what we’ve done, on a scale that no Government has done before.

“We have done more to give financial freedom to the North than any previous Government – not least through (allowing councils) the retention of 50 per cent of locally-raised business rates.

“We’ve done a huge amount to step up investment in the long-term infrastructure plans necessary to help the North. HS2 is a very powerful example, but there are many others as well – the Northern Hub, the electrification of the Midland mainline, the investment in trams and buses, the huge investment programme in resurfacing Sheffield’s roads.”

Unsurprisingly, coalition Ministers blame Labour’s failure to address the issue during its 13 years in power as a key reason why the North/South divide persists.

Mr Clegg said Labour’s approach had been to “subsidise” the North with hand-outs funded by the huge tax income from the booming City of London.

The Conservative Housing Minister and MP for Keighley and Ilkley, Kris Hopkins, added: “Tony Blair and Gordon Brown created an unbalanced and unsustainable economy before the financial crisis and they let people down across the country, especially in the North.”

But Ms Smith defended Labour’s record, pointing out the party invested enormously in schools an hospitals across the country and created regional development agencies (RDAs) such as Yorkshire Forward – since abolished by the Government – to drive investment in the North.

“The RDA made a significant contribution towards kick-starting growth,” she said. “You’ve only got to look at the advanced manufacturing park in Sheffield to see what we helped to achieve.”

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