The Spending Review will widen the north-south divide

Squeezing disproportionate amounts of public spending out of the regions will leave the country fiscally unbalanced and with regional disparities on the scale of most developing nations.

At Budget time we are now familiar with tables setting out the impact of announcements – particularly tax and benefit changes – on different household types. The Treasury Green Book now publishes a familiar bar chart showing the net effect of each Budget on different household deciles in order that we can judge how progressive its measures have been.

But what is less common is any analysis of how big fiscal decisions affect different areas of the country. At the last Budget, the Financial Times created an ‘Austerity Map’ of Britain showing how benefit changes were affecting different local authority areas but it is possible to go further than this and to map how changes across nearly all aspects of government spending affect different regions.

As part of a wider piece of work on government spending, IPPR North has carried out an analysis of yesterday's Spending Round announcements. Assuming that broad spending patterns in 2015/16 are similar to those today, in aggregate, departmental cuts will reduce public expenditure in the North East by £57 per person and in the North West and Yorkshire and Humber by £50 per person, compared with £43 per person in London and £39 per person in the South East.

Perhaps most significantly, though, when we look at the impact of departmental cuts as a proportion of the size of the regional economy (as measured by gross value added) the Northern regions are – once again - hardest hit with the North East suffering three times as much as London. 

Consider this alongside announcements concerning capital spending and the picture is compounded further with spending in London more than ten times that of the North East. As a nation we are already spending more than 500 times as much on transport infrastructure in London than we are in the North East, 25 times more than in the North West, but with the announcement of a government commitment to a further £9bn for Crossrail 2, it is likely that the capital city will swallow up more than 90% of all regional transport infrastructure investment in the coming decade.

Government will argue that its commitment to local growth comes in the form of the Single Local Growth Fund – the pot of unringfenced funding which will be bid for by business-led Local Enterprise Partnerships (LEPs). But given that Michael Heseltine proposed a £49bn fund over four years, the announcement is less than one-fifth of what LEPs might have hoped for, only going to prove once again how hard Whitehall finds putting the rhetoric of decentralisation into practice.

If government is serious about rebalanced growth then it must recognise that national prosperity depends upon regional prosperity. Squeezing disproportionate amounts of public spending out of the regions may well have a political and ideological logic to it, but it will leave the country fiscally unbalanced and with regional disparities on the scale of most developing nations. Mercifully, this is only a single year Spending Round, but it is beholden upon any incoming government to reverse this shocking pattern of public expenditure and ensure that northern prosperity is national prosperity once again.

Ed Cox is Director of IPPR North

@edcox_ippr

The Angel of the North sculpture overlooks the match between Gateshead and Esh Winning on May 2, 2013 in Gateshead. Photograph: Getty Images.

Ed Cox is Director at IPPR North. He tweets @edcox_ippr.

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Leader: Trump's dangerous nation

From North Korea to Virginia, the US increasingly resembles a rogue state.

When Donald Trump was elected as US president, some optimistically suggested that the White House would have a civilising effect on the erratic tycoon. Under the influence of his more experienced colleagues, they argued, he would gradually absorb the norms of international diplomacy.

After seven months, these hopes have been exposed as delusional. On 8 August, he responded to North Korea’s increasing nuclear capabilities by threatening “fire and fury like the world has never seen”. Three days later, he casually floated possible military action against Venezuela. Finally, on 12 August, he responded to a white supremacist rally in Virginia by condemning violence on “many sides” (only criticising the far right specifically after two days of outrage).

Even by Mr Trump’s low standards, it was an embarrassing week. Rather than normalising the president, elected office has merely inflated his self-regard. The consequences for the US and the world could be momentous.

North Korea’s reported acquisition of a nuclear warhead small enough to fit on an intercontinental missile (and potentially reach the US) demanded a serious response. Mr Trump’s apocalyptic rhetoric was not it. His off-the-cuff remarks implied that the US could launch a pre-emptive strike against North Korea, leading various officials to “clarify” the US position. Kim Jong-un’s regime is rational enough to avoid a pre-emptive strike that would invite a devastating retaliation. However, there remains a risk that it misreads Mr Trump’s intentions and rushes to action.

Although the US should uphold the principle of nuclear deterrence, it must also, in good faith, pursue a diplomatic solution. The week before Mr Trump’s remarks, the US secretary of state, Rex Tillerson, rightly ruled out “regime change” and held out the possibility of “a dialogue”.

The North Korean regime is typically depicted as crazed, but its pursuit of nuclear weapons rests on rational foundations. The project is designed to guarantee its survival and to strengthen its bargaining hand. As such, it must be given incentives to pursue a different path.

Mr Trump’s bellicose language overshadowed the successful agreement of new UN sanctions against North Korea (targeting a third of its $3bn exports). Should these prove insufficient, the US should resume the six-party talks of the mid-2000s and even consider direct negotiations.

A failure of diplomacy could be fatal. In his recent book Destined for War, the Harvard historian Graham Allison warns that the US and China could fall prey to “Thucydides’s trap”. According to this rule, dating from the clash between Athens and Sparta, war typically results when a dominant power is challenged by an ascendent rival. North Korea, Mr Bew writes, could provide the spark for a new “great power conflict” between the US and China.

Nuclear standoffs require immense patience, resourcefulness and tact – all qualities in which Mr Trump is lacking. Though the thought likely never passed his mind, his threats to North Korea and Venezuela provide those countries with a new justification for internal repression.

Under Mr Trump’s leadership, the US is becoming an ever more fraught, polarised nation. It was no accident that the violent events in Charlottesville, Virginia, culminating in the death of the 32-year-old Heather Heyer, took place under his presidency. Mr Trump’s victory empowered every racist, misogynist and bigot in the land. It was doubtless this intimate connection that prevented him from immediately condemning the white supremacists. To denounce them is, in effect, to denounce himself.

The US hardly has an unblemished history. It has been guilty of reckless, immoral interventions in Vietnam, Latin America and Iraq. But never has it been led by a man so heedless of international and domestic norms. Those Republicans who enabled Mr Trump’s rise and preserve him in office must do so no longer. There is a heightened responsibility, too, on the US’s allies to challenge, rather than to indulge, the president. The Brexiteers have allowed dreams of a future US-UK trade deal to impair their morality.

Under Mr Trump, the US increasingly resembles a breed it once denounced: a rogue state. His former rival Hillary Clinton’s past warning that “a man you can bait with a tweet is not a man we can trust with nuclear weapons” now appears alarmingly prescient.

This article first appeared in the 17 August 2017 issue of the New Statesman, Trump goes nuclear