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


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.

David Young
Show Hide image

The Tories are the zombie party: with an ageing, falling membership, still they stagger on to victory

One Labour MP in Brighton spotted a baby in a red Babygro and said to me: “There’s our next [Labour] prime minister.”

All football clubs have “ultras” – and, increasingly, political parties do, too: although, in the case of political parties, their loudest and angriest supporters are mostly found on the internet. The SNP got there first: in the early days of email, journalists at the Scotsman used to receive bilious missives complaining about its coverage – or, on occasion, lack of coverage – of what the Scottish National Party was up to. The rest soon followed, with Ukip, the Labour Party and even the crushed Liberal Democrats now boasting a furious electronic horde.

The exception is the Conservative Party. Britain’s table-topping team might have its first majority in 18 years and is widely expected in Westminster to remain in power for another decade. But it doesn’t have any fans. The party’s conference in Manchester, like Labour’s in Brighton, will be full to bursting. But where the Labour shindig is chock-full of members, trade unionists and hangers-on from the charitable sector, the Conservative gathering is a more corporate affair: at the fringes I attended last year, lobbyists outnumbered members by four to one. At one, the journalist Peter Oborne demanded to know how many people in the room were party members. It was standing room only – but just four people put their hands up.

During Grant Shapps’s stint at Conservative headquarters, serious attempts were made to revive membership. Shapps, a figure who is underrated because of his online blunders, and his co-chair Andrew Feldman were able to reverse some of the decline, but they were running just to stand still. Some of the biggest increases in membership came in urban centres where the Tories are not in contention to win a seat.

All this made the 2015 election win the triumph of a husk. A party with a membership in long-term and perhaps irreversible decline, which in many seats had no activists at all, delivered crushing defeats to its opponents across England and Wales.

Like José Mourinho’s sides, which, he once boasted, won “without the ball”, the Conservatives won without members. In Cumbria the party had no ground campaign and two paper candidates. But letters written by the Defence Secretary, Michael Fallon, were posted to every household where someone was employed making Trident submarines, warning that their jobs would be under threat under a Labour government. This helped the Tories come close to taking out both Labour MPs, John Woodcock in Barrow and Furness and Jamie Reed in Copeland. It was no small feat: Labour has held Barrow since 1992 and has won Copeland at every election it has fought.

The Tories have become the zombies of British politics: still moving though dead from the neck down. And not only moving, but thriving. One Labour MP in Brighton spotted a baby in a red Babygro and said to me: “There’s our next [Labour] prime minister.” His Conservative counterparts also believe that their rivals are out of power for at least a decade.

Yet there are more threats to the zombie Tories than commonly believed. The European referendum will cause endless trouble for their whips over the coming years. And for all there’s a spring in the Conservative step at the moment, the party has a majority of only 12 in the Commons. Parliamentary defeats could easily become commonplace. But now that Labour has elected Jeremy Corbyn – either a more consensual or a more chaotic leader than his predecessors, depending on your perspective – division within parties will become a feature, rather than a quirk, at Westminster. There will be “splits” aplenty on both sides of the House.

The bigger threat to Tory hegemony is the spending cuts to come, and the still vulnerable state of the British economy. In the last parliament, George Osborne’s cuts fell predominantly on the poorest and those working in the public sector. They were accompanied by an extravagant outlay to affluent retirees. As my colleague Helen Lewis wrote last week, over the next five years, cuts will fall on the sharp-elbowed middle classes, not just the vulnerable. Reductions in tax credits, so popular among voters in the abstract, may prove just as toxic as the poll tax and the abolition of the 10p bottom income-tax rate – both of which were popular until they were actually implemented.

Added to that, the British economy has what the economist Stephen King calls “the Titanic problem”: a surplus of icebergs, a deficit of lifeboats. Many of the levers used by Gordon Brown and Mervyn King in the last recession are not available to David Cameron and the chief of the Bank of England, Mark Carney: debt-funded fiscal stimulus is off the table because the public finances are already in the red. Interest rates are already at rock bottom.

Yet against that grim backdrop, the Conservatives retain the two trump cards that allowed them to win in May: questions about Labour’s economic competence, and the personal allure of David Cameron. The public is still convinced that the cuts are the result of “the mess” left by Labour, however unfair that charge may be. If a second crisis strikes, it could still be the Tories who feel the benefit, if they can convince voters that the poor state of the finances is still the result of New Labour excess rather than Cameroon failure.

As for Cameron, in 2015 it was his lead over Ed Miliband as Britons’ preferred prime minister that helped the Conservatives over the line. This time, it is his withdrawal from politics which could hand the Tories a victory even if the economy tanks or cuts become widely unpopular. He could absorb the hatred for the failures and the U-turns, and then hand over to a fresher face. Nicky Morgan or a Sajid Javid, say, could yet repeat John Major’s trick in 1992, breathing life into a seemingly doomed Conservative project. For Labour, the Tory zombie remains frustratingly lively. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.

This article first appeared in the 01 October 2015 issue of the New Statesman, The Tory tide