Ed Cox: If the UK economy is to flourish again, the North’s potential must be released

Added to that, IPPR North analysis has found that in some areas of the UK there are a staggering 20 job seekers chasing every job vacancy. West Dunbartonshire in Scotland is the worst affected area, closely followed by Clackmannanshire and Hartlepool.

In Yorkshire and Humber, Hull tops the table with 10 job seekers chasing every vacancy and in Bradford the number is eight. Leeds sits at the national average of four while, perhaps unsurprisingly, Harrogate and York are below the average with only two job seekers for each vacancy.

The Government is clearly under immense pressure to turn the tide and prove that their strategy is the right one. But they appear to be missing a fundamental piece of the puzzle: strong and sustainable economic performance in the North is essential to the success of the UK as a whole.

If we are to return to strong economic growth, addressing unemployment in places like Yorkshire would be a good place to start.

The 15 million people, 340 000 businesses, a diverse network of universities and natural and industrial assets in the North represent about a quarter of the national UK economy. Such an asset must be better exploited and IPPR North has long been arguing for a greater focus on the geographical aspects of the Government’s strategy to rebalance the economy.

So far, attention has been given to rebalancing sectors, mainly the over-reliance on the pre-eminent finance sector and rebalancing between the public and the private sector.

The regions outside London and the South East already contributed 55 per cent of the country’s net growth in the decade to 2007 and there is potential to enhance this contribution further, to boost the North, diversify the national economy and relieve pressures on London and the South East. Taking this opportunity, though, requires a number of key challenges to be addressed.

The first of these is the redressing of the balance of investment across the UK. For example, recent IPPR North research found that transport spending is skewed heavily towards London and the South East, with £2,700 spent per person in London compared with £201 per head in Yorkshire and Humber.

Even given the Olympics taking place in London, this kind of imbalance will mean that the North continues to lag behind while London grows ever bigger, at the cost of a reduced quality of life for people living there. Trans-Pennine rail electrification is a good start but links to the East and West Midlands, for example, could also stimulate further growth in the Yorkshire economy.

In addition, labour market performance needs further attention across the north of England. Levels of unemployment remain high, even outside hotspots, and many towns have yet to overcome the legacy of previous transitions. For those fortunate to find work, too many jobs are low quality and poorly paid reinforcing low productivity and in-work poverty.

The Government’s “youth contract” is a step in the right direction, but more needs to be done to help the areas of the UK where people are struggling to find work such as Bradford and Hull.

In the short-term, the Government should guarantee a job for everyone who has been unemployed for more than a year paid at the minimum wage, targeted at the worst affected areas first but then rolled out everywhere.

The guarantee should be matched by an obligation to take up the offer or to find an alternative that does not involve claiming JSA. But, if the scheme is unaffordable on a national basis, this guarantee could be applied on a targeted basis, via a targeted job guarantee for all people living in areas where the rate of long-term unemployment increases to, or the job density ratio falls below, an agreed threshold. Many of these areas would be in the North.

While the North is at any one time educating 580,000 students through its network of fantastic universities such as in Leeds and York, there are still skills mismatches in key sectors. This means the northern urban economies are not able to absorb and retain all the skills they generate, with many recent graduates leaving to find employment.

In the long term, though, there are bigger challenges to be addressed. The IPPR North Northern Economic Futures Commission will play a key role in helping to find solutions when the Commission’s final report is published in the autumn.

Until then, one thing is clear: if we want the UK economy to be firing on all cylinders, there needs to be a much greater focus on the potential in the North of England.