For every extra £100 spent by the government in the North in the decade to 2023, London and the South East got an additional £2.52. This may seem small, but it adds up to an accelerating divide. It means that, by 2023, people in London and the South East received £672.21 more per person in total public spending than those in the North.
This not only represents spending on public services but also investment in other critical enablers of economic growth, such as transport, skills provision, research and innovation, and homes. How public finances are spent influences all of this.
This matters for fairness and prosperity. It is a basic unfairness in the UK that where you are born and live dictates so much – how much wealth you can expect to accrue in your life; whether you can find a well-paid, secure job; or even how long you can expect to live in good health. Boys born today in Blackpool can expect to live more than 10 years fewer than boys born in Hampshire.
It matters for growth, because far too many places are locked out of contributing their potential. How many people’s talents, creativity and contributions are written off because they are not living in a growing place? The numbers are in the millions.
This failed model – pursuing growth in one corner of the country and leaving social security to deal with the consequences in communities left in the cold – overlooks the potential of those places and people and the contributions they could make with the right backing. We are driving the British economy with the handbrake on.
We face the same storms nationally, but many of our communities lack seaworthy boats to ride them out. Our experience of cuts from 2011-2024 eroded the resilience of places and hit the most vulnerable.
Recent choices risk repeating that mistake. These fiscal choices were driven by surging national debt interest, a challenging fiscal context and a reluctance to use the revenue-raising options available. Many households face a double bind – fiscal choices are shrinking social security, but longstanding economic choices have locked those communities out of the economic opportunities needed to sustain a good life. They are exposed to fiscal winds with little resilience.
It is time to junk that model in favour of a better one, and a zero-based Spending Review provides such an opportunity. We should aim for an economic model that delivers prosperous, resilient and sustainable regional economies that offer good lives, broad-based high living standards and access to fulfilling opportunities.
The Spending Review can start to deliver that kind of good growth in all corners of the country, ending this fundamental injustice.
This would look like getting investment up and an explicit attempt to fund Britain fairly; maybe even a Barnett formula for investment in England’s regions. It means backing the big-bet projects to patch up our crumbling economic foundations, such as Northern Powerhouse Rail, and enabling local leaders to drive national renewal locally, with new powers such as visitor levies.
Our regions are rich in potential. They always have been. They can drive national prosperity. But an engine needs fuel to move forwards.
