Transcript Slide 1

Regional Inequalities: an economic
perspective
Ed Cox
New Economy Breakfast Briefing
18 June 2014
Household wealth: the regional dimension
• HEADLINE: Richest 1%
have as much wealth as
the poorest 55% but
income inequality has
fallen since 1986 BUT …
• Average wealth in South
East £309,000 (+31%)
• Average wealth in North
East £143,000 (-10%)
ONS: Wealth in Great Britain
2010-2012
Percentage change of household total wealth
between 2006/081 and 2010/12, by region (ONS)
North East
-10
North West
11
Yorkshire & the Humber
12
East Midlands
0
West Midlands
1
East of England
12
London
31
South East
13
South West
12
England
Main causes:
Pensions &
property
11
Wales
4
Scotland
11
Great Britain
11
-20
-10
0
10
Change (%)
20
30
40
Inequalities within regions
Ward-level polarisation within city regions
Regional inequality as a function of
economic growth …
Classic North – South Divide
CONTEXT – GEOGRAPHICAL INEQUALITY IN THE UK
Impact of the recession on workforce jobs (2008Q1=100)
106
104
102
100
98
96
94
92
Q1
Q2
Q3
2008
Q4
Q1
Q2
Q3
2009
GDP
Q4
Q1
Q2
Q3
Q4
Q1
2010
JOBS IN THE NORTH
Q2
Q3
Q4
Q1
2011
Q2
Q3
2012
Q4
Q1
Q2
2013
JOBS IN L&SE
Source: IPPR calculations of ONS, Regional Labour Market (2013); ONS, GDP (2013)
CONTEXT – GEOGRAPHICAL INEQUALITY IN THE UK
Expenditure on unemployment and tax credits per head compared to UK average (£779; £860)
-200
-150
-100
-50
0
50
100
150
200
NE
NW
YH
EM
WM
EE
LO
SE
SW
WA
SC
2007/08
2011/12
Source: HM Treasury, PESA (2012)
So why has this pattern emerged?
CONTEXT – GEOGRAPHICAL INEQUALITY IN THE UK
Productivity (GVA per hour worked) compared to UK average (£22.30; £27.30)
-10
-8
-6
-4
-2
0
2
4
6
8
10
NE
NW
YH
EM
WM
EE
LO
SE
SW
WA
SC
2004
2011
Source: ONS, Regional Productivity (2012)
CONTEXT – GEOGRAPHICAL INEQUALITY IN THE UK
Expenditure on economic affairs & skills per head compared to UK average (£872; £750)
-600
-400
-200
0
200
400
600
NE
NW
YH
EM
WM
EE
LO
SE
SW
WA
SC
2007/08
2011/12
Source: HM Treasury, PESA (2012)
How this breaks down …
… nothing new!
Government spending on R&D 2011 (£m)
Impact of Spending Review 2013 (£m)
NE
NW
YH
EM
WM
EA
LD
SE
SW
0
-200
-400
-357.7
-478.5
-600
-617.5
-578.1
-596.3
-638.5
-800
-868.7
-895.1
-1,000
-1,200
CURRENT
CAPITAL
-1,280.9
-1,400
Source: IPPR estimates using available data from HM Treasury, 2013
Departmental spatial impact – % of GVA
NE
NW
YH
EM
WM
EA
LD
SE
-0.39%
-0.39%
SW
0.00%
-0.10%
-0.20%
-0.30%
-0.40%
-0.44%
-0.50%
-0.51%
-0.60%
-0.60%
-0.52%
-0.59%
-0.64%
-0.70%
-0.80%
-0.77%
-0.90%
Source: IPPR analysis of HM Treasury, 2013
So what?
A mandate for decentralisation and
fiscal rebalancing?
Northern drivers of growth (OECD / NEFC)
How to rebalance economic spending and re-gear the system
Spending on economic affairs and skills & unemployment and tax credits (£m)
12,000
9,800
10,000
7,991
8,000
7,017
6,252
5,447
6,000
5,515
5,091
4,048
4,000
3,943
5,171
4,207
3,721
4,520
3,543
3,157
2,099
4,067
2,589
2,000
0
NE
NW
YH
EM
ECONOMIC AFFAIRS AND SKILLS
WM
EE
LO
SE
SW
UNEMPLOYMENT AND TAX CREDITS
Source: HM Treasury (2013)
Solution 1:
Spending on economic affairs and skills – if the same as spending on unemployment and tax
credits (cost=£5.8bn) - £m
12,000
10,000
7,991
8,000
7,017
6,252
6,000
5,515
5,091
4,520
3,943
4,000
2,000
4,067
2,589
1,569
490
1,795
1,043
786
1,081
313
523
0
-2,000
-1,808
-4,000
NE
NW
YH
1:1 RATIO
EM
WM
EE
LO
SE
SW
DIFFERENCE
Source: IPPR North analysis of HM Treasury (2013)
Solution 2:
Spending on economic affairs and skills – if the same proportion as London currently receives
(cost=£16.4bn) - £m
12,000
9,800
10,000
8,604
7,666
8,000
6,763
6,243
6,000
4,000
3,175
3,157
4,987
3,042
2,195
2,000
5,543
4,836
1,076
1,678
2,496
1,444
1,336
0
0
-2,000
-4,000
NE
NW
YH
EM
CURRENT LONDON RATIO
WM
EE
LO
SE
SW
DIFFERENCE
Source: IPPR North analysis of HM Treasury (2013)
A price worth paying for a more
equal economy and society?
Ed Cox
[email protected]
@edcox_ippr