Northerners are more pessimistic about their economic future compared to people in London, according to new research being published by IPPR North this weekend.
So why the downbeat attitude? There are many reasons we could point to – not least the fact that the government’s public sector cuts are resulting in the public sector in the north shedding jobs considerably faster than the private sector can create them. The result is the north’s unemployment rate accelerating at levels not seen for 16 years.
A frustration for policy makers in the north is the limited tools at their disposal to tackle these challenges. People have a tendency to compare themselves to their neighbours, and looking north to Scotland, with its powers to shape economic development policy, it’s no wonder the north feels it’s not keeping up with the Joneses.
This sense of an uneven playing field is accentuated by the prospect of further powers for Scotland in the future. Already the Scotland Bill is set to deliver greater income tax powers to Scotland, and the Scottish government is pushing hard for corporation tax powers to be devolved at the same time. This is a scenario that fills some Northerners with trepidation.
It’s not an unfounded fear. North Tyneside recently lost out on 900 jobs when Amazon chose to locate in Scotland rather than north-east England. One factor that is said to have influenced their decision is the hope that Scotland will receive corporation tax powers in due course (and cut rates).
The possibility of Scotland continuing to accumulate powers crept nearer recently, when Alex Salmond confirmed that the referendum on Scottish independence could include the option of ‘devolution max’. While the precise details of ‘devolution max’ are still to be fleshed out, the general idea is that power over everything bar foreign affairs and monetary policy is devolved.
The north’s fear is that this will result in more companies following Amazon’s lead and locate in Scotland – or worse still, relocate to Scotland.
But it’s not just about the near neighbours. The north struggles to get its voice heard over and above the voracious demands of the economy of London and the surrounding area. This part of the country has been a disproportionate recipient of public investment for years, a position strengthened by the powerful voice of the Mayor of London. Despite the austerity drive, the Mayor has been successful in arguing for continued capital investment in London’s transport infrastructure. He has also gained the powers of the London Development Agency while their equivalents in other parts of England are abolished.
Whichever way it looks the north of England trails other parts of the country in terms of the power and influence to shape its economic future.
This should not be read as an argument against devolution of powers to Scotland and London. Rather it should be the basis for a rallying cry for greater devolution within England. The government is currently consulting on what powers future directly elected city mayors in England should have. The answer has to be powers comparable to those of the Mayor of London at the very least. Otherwise, the government’s aspiration to rebalance the economy away from overreliance on the south east will not move from rhetoric to reality.
Katie Schmuecker is a Senior Research Fellow at IPPR North