HBC: New report shows that North/South divide has widened

A new Hyndburn Borough Council report requested by Council Leader Cllr Miles Parkinson considers if the renewed economic growth is benefitting all parts of Great Britain or if its widening the North / South Divide.

The focus for the North is on ‘older industrial Britain’ which the report defines as 96 districts that cover part but not necessarily the whole of the North including Wales and Scotland. The South is defined as London and the South East. North and South are used in the summary below as shorthand for these two definitions.

Compared to 2009 over half a million more jobs were created in the South by the end of 2013 compared to 70,000 fewer jobs in the North. By the same measure Hyndburn had  900 fewer jobs. Decline in jobs in the North would have been significantly worse had it not been for the ‘northern powerhouses’ of Manchester and Leeds.

The reduction in public sector funding and resultant job losses has had a greater impact in the North where public sector jobs accounted for a greater proportion of total jobs and the private sector job market is weaker.

Between 2009 and 2013 for every 1  new Private Sector job created in the North (50,000) there have been 12 created in the South (600,000).

In the South virtually all job growth has been in full time employment whereas almost 20% of job growth in the North has been part time jobs. Again Manchester and Leeds distort this figure because they alone account for 31% of the growth in full time jobs in the North.

Between 2010 and 2014 there has been an increase in the number of people classed as self-employed. In the North there was 12% increase compared to a 16% increase in the South. However in the South the increase tends to be in professional and higher skill occupations whereas it is elementary or low skill occupations in the rest of the country.

Despite a higher growth in earnings in the North – 4.9% compared to 2.3% - average earnings in the North remain far behind those in the South – the gap is around £110 per week.

The number of zero-hours contracts has increased across the Country but reliable numbers are difficult to determine. 37% of people on zero-hours contracts are aged between 16 and 24. The average hours given to people on zero-hours contracts appears  to have reduced from 30 hours to 20 hours.

Unemployment levels in the North remain higher than the South. Between 2010 and 2014 the out-of-work benefit claimant rate fell across Britain but at least a part of the fall reflects the impact of Welfare Reforms.

The report concludes that the gap between North and South is widening and the recovery is benefitting the South more than the North. The authors suggest a number of policy measures to turn this situation around but recognise it isn’t a short term fix. These policy measures are:

• Keep the UK economy growing – easier to promote jobs and investment in less prosperous areas when the national economy is growing
• Rebalance towards industry and regions – move away from the over reliance on Financial Services in London
• Use public sector procurement as a tool to drive local growth - create training opportunities, support local economies and small local businesses
• Invest in infrastructure to support the regions
• Deliver effective administrative structures to support businesses and industry
• Make the most of European funding
• Keep financing aid to businesses
• Beef up the Enterprise Zone initiative
• Introduce a targeted job creation programme
• Cut unemployment and low pay to reduce the spending on welfare benefits