Tories’ committment to ending North-South divide ‘highly questionable’, says report

Chancellor George Osborne.
Chancellor George Osborne.
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The Government has been accused of failing to live up to its pledge to end the North-South divide after a new report revealed just how little of the country’s infrastructure investment is set to go outside London.

The capital is set to receive more funding for major projects that all the others English regions combined, and six times more per head of population than Yorkshire and the Humber, according to the Sheffield Political Economy Research Institute (SPERI).

Dr Craig Berry

Dr Craig Berry

Planned infrastructure spend in the Yorkshire region works out at £851 per head, better only than the North-East and a long way below the UK average of £3,192 per person and £5,305 for each member of London’s population.

In a speech in Shipley in May 2010, a few days after becoming Prime Minister, David Cameron pledged to “rebalance our economy, ensuring that success and prosperity are spread more evenly across regions and industries”.

Since then, the Government has approved plans for high-speed rail to Leeds and Sheffield as part of the controversial HS2 scheme and invested in super-fast broadband for many parts of the UK.

And earlier this year, Chancellor George Osborne unveiled the ‘Northern Powerhouse’ scheme to rebalance the UK economy by better connecting the towns and cities of the North while devolving decision making powers away from London.

Clive Betts

Clive Betts

But Dr Craig Berry, deputy director of SPERI and co-author of the report, said the latest figures showed that the Government’s commitment to re-balancing the UK’s economy was “highly questionable”.

He said: “The Chancellor talks about creating a more balanced, higher productivity economy but is so far failing to deliver it. These findings call into question the government’s commitment to economic rebalancing and to creating a Northern Powerhouse.”

The University of Sheffield research institute analysed figures from the Government’s National Infrastructure Pipeline, which includes investment projects in sectors such as energy, transport, waste and communications. For all the publicly-funded projects listed, 22 per cent of the funding is directly attributable to London while only 2.2 per cent is directly attributable to Yorkshire and the Humber.

The region’s total planned infrastructure spend includes plans to electrify the Trans-Pennine railway line, which was put on hold by the Government seven weeks after the General Election.

In Hull, delays to the long-awaited Castle Street road widening scheme prompted one MP to say recently that the Northern Powerhouse “is no more than a slogan for places such as Hull”. And the Leeds trolleybus scheme is yet to get the go-ahead despite plans being submitted in 2009.

The report’s authors also question the Government’s argument that public investment ‘crowds out’ private sector activity, meaning that infrastructure spending should be directed to where business activity is weakest to encourage a private-sector led recovery.

Its figures suggest that areas with lower level of infrastructure investment are those where the private sector is weakest. London has 470 businesses per 10,000 residents, while Yorkshire has only 292, meaning the three northern regions have fewer businesses per head than anywhere else in the country.

Dr Berry said: “Investing in infrastructure to improve our transport, digital and energy networks is a way of improving productivity and boosting the private sector.

“Our analysis suggests that the government is content to maintain the bias of investment towards London, because it seeks to support the strong business activity that already exists in the capital.

“This is clearly a much higher priority for George Osborne and his colleagues than increasing productivity and business activity in the Northern regions.

“The findings report also suggest that the crowding-out thesis is purely part of the rhetorical justification of austerity, and forms no part of the actual decisions on which regions should benefit from public sector infrastructure investment.

He added: “Continuing to disproportionately invest in infrastructure in London risks fuelling the regional imbalances in our economy, and in coming years this looks set to get worse.”

James Newman, chairman of the Sheffield city region local enterprise partnership, said: “This has been the case for a number of decades, London has always had at least ten times the amount we have had in the North.

“From the North’s point of view, the numbers are the numbers, what we are really interested in is not whether we should get as much as London but whether we get enough infrastructure spending to do the things we need to do, in order to create the Northern Powerhouse concept and make it a reality.”

He added: “We are not interested in whose pocket it comes out of. If the Chancellor can afford projects in London and what we need to do, that is fine. If he can’t, we are asking to be made a priority.”

Clive Betts, a Labour MP in Sheffield and chairman of the Communities and Local Government Committee, he said: “I am not surprised because I think we can all see the evidence for ourselves, particularly in transport where the spend in London is many times more than in the North.

“The Government has got a name, the Northern Powerhouse, but they have not so far demonstrated much action to make that into reality. Shortly after the announcement we learned the electrification of the rail lines in the North was going to be paused.”

He said the Government needed to break the cycle of London receiving more in infrastructure spending because it was growing faster than elsewhere in the country.

A Treasury spokesperson said: “We are determined to deliver the infrastructure Britain needs, creating a balanced, more healthy economy for working people across Britain.

“That’s why we’re building a Northern Powerhouse, and have set out over £410 billion of public and private infrastructure investment spread out across Britain.

“This includes projects such as HS2 and superfast broadband which will improve the lives of hard working people across many parts of the country.”