South gets the lion’s share of feelgood factor

Despite the determination of Ministers to close the economic gulf between the South East and the rest of the country, the big increases in employment levels are in the South, analysis of official statistics shows.

Government Ministers have heralded the creation of tens of thousands of jobs in recent months as evidence their tough medicine for the economy can work – but the number of people in work in Yorkshire has actually fallen over the past year.

While an extra 109,000 people are in work in London compared with a year ago, in Yorkshire there are 20,000 fewer people in work.

The North East and West Midlands are the only other regions where employment is down – by 15,000 and 7,000 respectively – while Eastern England, the South East and East Midlands have all seen significant increases. Scotland and Wales also have tens of thousands more people in work.

The figures – which come despite unemployment officially falling in Yorkshire at the same time – will raise concerns that Ministers’ promises to tackle the North-South divide will have little impact in the short-term.

The Government is offering new businesses in regions outside London, the South East and East of England a National Insurance holiday for their first 10 employees, a £1.4bn Regional Growth Fund has been established to fund job-creating projects outside London and the South East over the next three years, and council and business-led Local Enterprise Partnerships are replacing Regional Development Agencies in a drive to boost the private sector.

But a recent report into the North-South divide by the Smith Institute think-tank warned: “In the current economic climate the gap between and within regions is likely to widen, with serious economic and social consequences.”

Richard Kendall, policy director at Hull and Humber Chambers of Commerce, also warned the gap may grow without “positive action” from the Government. “It’s not about asking for large cheques it’s about Government throwing all of its weight behind us when the really big opportunities for growth come along,” he said.

Employment Minister Chris Grayling admitted there were “significant” challenges and said more measures to help vulnerable regions may be unveiled by the Government in the coming months. But he warned that rebalancing the economy “is not a short-term process”.

“There are some significant regional differences and that does represent a significant challenge for us,” he said. “That’s why we brought forward measures like the Regional Growth Fund. We’re clear this is not a short-term process. The task of rebalancing the economy, of reinvigorating the private sector in those parts of the country where it’s weaker, cannot and will not happen overnight.

“But I would be surprised if the Chancellor had not more measures to support those regions in the rest of the Parliament.”

Gary Williamson, chief executive of Leeds, York and North Yorkshire Chambers of Commerce, said he was not surprised to see the South East recovering first but said the “feel good factor” was also returning to Yorkshire. He said Government policies should be given time to work.

He also said it was time to stop seeing Government as the solution to every problem so the North was not seen as constantly seeking grants and funding.