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The Progressive Policy Think Tank

North ‘£6 billion a year underfunded compared to London’, investigation finds

  • As government u-turns on the promised electrification of key rail lines while today announcing support from Crossrail 2, power to raise investment for regional infrastructure is needed to make the North's £300bn economy once again realise its potential.

  • All parties must embrace federal UK and reverse the centralised approach to the economy and infrastructure investment.

  • North and other English regions need powers to raise money for infrastructure from private sector as well as fairer share of public purse.

Shock figures reveal the North of England would have seen £59 billion more over the last decade, if it had received the same per person for infrastructure as London, an independent think-tank analysis finds.

IPPR North analysis shows that if the North had received the UK average spending per head each year for the past ten years, it would have received £10 billion more, and if it had received the same per head as London, it would have received £59 billion more.

The news comes following a string of London-centric announcements from the government:

  • last Thursday, the Department for Transport said it would not electrify the Midlands line

  • last Friday, it said Osborne's plans to connect Manchester and Leeds and upgrade Manchester Piccadilly are unlikely to proceed.

  • and today said it will press on with Crossrail 2, following intensive lobbying from London businesses.

The investigation into a decade of government ONS data, conducted by researchers at IPPR North, uncovers a ‘scandal’ of chronic government under-investment in the UK’s regions.

For context, £59 billion over this ten years would have been enough to fill a billion potholes or develop a new high-speed east-west crossing, IPPR North say.

On today's infrastructure it is quicker to travel from London to Paris, in around 2 hours and 23 minutes by Eurostar, than east-west from Liverpool to Hull, which takes around 3 hours and 20 minutes.

The think-tank slams the economic model of successive governments, which has prioritised the use of infrastructure spending to prop up the City of London, rather than underpinning other vital sectors such as the North's advanced manufacturing, pharmaceuticals and green energy sectors.

IPPR North says this regional imbalance fuelled the Brexit vote, and a sense that the rest of the UK is left-behind the capital's success.

Considering the findings, IPPR North issued a landmark challenge to all parties to put their money where their mouth is and commit fresh billions to rebalancing the UK economy in light of the Brexit vote.

Researchers also urge the business secretary Greg Clark to put regional government in England at the heart of its modern industrial strategy, as part of a federal UK.

The news comes as the government u-turned on its promised electrification of key transport lines in the Midlands, the North and Wales, and as Mayor Sadiq Khan defended London getting more transport money than the rest of the country put together.

The investigation finds:

  • The government's own data [see notes] shows that public spending is on average is £1 billion less each year in the North than if it had invested on a per head basis across the UK. This is before accounting for the private investment often leveraged in by the public sector.

  • Public spending was on average £282 per head in the North compared to the national average of £345 per head. This is dramatically skewed by overspend in London, which received on average £680 per head over the last ten years, and to a lesser extent spend in Scotland (£536 per head).

  • And this picture looks set to get worse: figures IPPR North published earlier in this year show that £1,900 per head of public and public/private transport investment will be spent in London from 2016/17 onward — £1,500 per head more than the North of England.

To address the issue, IPPR North calls for northern businesses to make the case for ‘HS3’ in the same way in which London businesses have lobbied for the capital’s cash: it's not a question of either London or the North, but a matter of modernising Britain's outdated centralised approach to public funding.

It adds public investment is critical in attracting additional private business cash too to unlock schemes, as London has with Crossrail.

IPPR North also suggests that HM Treasury and the Department for Transport ensure Transport for the North is "souped-up" with TfL-style powers to undertake sensible borrowing for long-term infrastructure projects which would finance themselves over time.
 

Luke Raikes, IPPR North senior research fellow, called for a 'New North' in a new federal UK post-Brexit. He said:

“This is a national scandal.

“In most other advanced countries, decisions about transport investment are made locally or regionally, where people really in the know about local problems decide exactly what’s needed.

“But in Britain, our Whitehall-knows-best attitude leads to the capital being the government’s default option for more funding.

“Devolving funding for regional infrastructure would help fix Britain’s broken economy by closing the regional productivity gap and helping the country to catch up with our competitors overseas.

“If we are ever going to have an economy that works for everyone, we need a federal UK and regional government with teeth, such as a Council of the North, working with a souped-up Transport for the North, businesses and residents. 

"That means doing what Whitehall has failed to do for decades, and invest in transport so the whole country can benefit from the realised potential of a New North: northern prosperity is national prosperity.”

ends
 

What could we have done with £59 billion?

  • Filled a billion potholes on Northern roads.

  • Introduced a new East-West ultra-quick rail line, comparable in scale to HS2.

  • Developed a series of middle-ranking projects linking smaller towns and cities, upgrading to full electrification of train lines and investing in green public transport and the roll-out of electric cars.


Contact:

Ash Singleton, a.singleton@ippr.org, 07887 422 789.

Notes:

IPPR North is the progressive think-tank for the North of England, developing bold ideas for a stronger economy and great public services to really take back control in the North.

Methodology:

To calculate the figures, IPPR North researchers analysed the Office for National Statistics ‘Country and regional public sector finances expenditure' tables, which present historic transport spending by region. Spending was divided by population and then the spending per head for London or the UK respectively were used to show what would have been spent in total in other regions if it were spent on the same basis. 

For more information on the investigation's methodology please contact Luke Raikes on l.raikes@ippr.org.