The south is on its way out of recession, but the north is stuck

Lewis Goodall is a research assistant at IPPR North

Yesterday’s unemployment figures were startling. 2.68 million of our fellow citizens are now unable to find employment, the greatest number for seventeen years. The prime minister is fond of reminding us that every redundancy is a tragedy; if so, this must be a three-month mega-run of Hamlet, King Lear and Macbeth on loop.

Treading the boards in this particular tragedy are the towns and cities outside of the greater south east.

The little spoken truth of this great recession is the hugely disproportionate impact the collapse of demand has had on the economy of our regions. The Office of National Statistics confirmed this yesterday.

The employment rate is currently highest in the east of England and the south east (74.2 per cent) and lowest in the north east (65.1 per cent). Likewise, the unemployment rate remains highest in the north east (11.7 per cent) and lowest in, you guessed it, the south east (6.1 per cent).

This chimes with other research recently published by IPPR North for our Northern Economic Futures Commission: it predicts that employment will not return to its 2008 peak until 2018 in the north west; 2019 in Yorkshire and Humber; and by 2020 the north east (and the West Midlands) still won’t have returned to 2008 employment levels.

By contrast, employment will return to its 2008 peak by 2014 in London, the south east and the East Midlands.

Even within the north, smaller towns most severely affected by the country’s malaise are often forgotten. The north of England is home to some of the UK’s best economic success stories. Even in tough times, our most dynamic cities are largely weathering the storm.

There are some places, however, that barely escaped the last one.

According to yesterday’s figures, Middlesbrough has an unemployment rate of 18.8 per cent. Blackley and Broughton, 19.9 per cent. One in five people out of a job: and those are the ones who still have the inclination to look. The list goes on: Bradford East: 18 per cent, Grimsby 13.5 per cent and Redcar 16 per cent. For these people, rebalancing is as remote a prospect as the government’s assurance that we are ‘all in this together.’

For those unemployed, it just isn’t good enough to be told there are 300,000 vacancies in the economy, the majority of which lie 200 miles away. IPPR North has urged the government to introduce a ‘northern job guarantee’.

The government should offer a guaranteed job, paid at the minimum wage or above, to anyone who has been unemployed and claiming jobseekers’ allowance (JSA) for more than 12 consecutive months. The guarantee should be matched by an obligation to take up the offer or to find an alternative that does not involve claiming JSA.

But, if the scheme is unaffordable on a national basis, this guarantee could be applied on a targeted basis, via a targeted job guarantee for all people living in areas where the rate of long-term unemployment increases to, or the job density ratio falls below, an agreed threshold. Many of these areas would be in the North.

This scheme would be especially valuable for our young people, many of whom have been abandoned to a decade of stagnation and worklessness.

Though there is always much talk of a “UK economy” it is, largely, a falsehood. Many of the wider iniquities that exist are seldom discussed. There is much that the north can do to help itself. To that end, IPPR North’s Northern Economic Futures Commission is currently considering a wide array of proposals to kick start northern growth and make the north one of the UK’s great success stories.

Nevertheless, in order to make a lasting difference, we need Whitehall to recognise that, for some people and places, this downturn is nothing short of a downright depression.

See also:

• Deal or no deal for England’s cities – Ed Cox, December 9th 2011

• Public sector jobs are growing in London and the South East; here’s why – Ed Cox & Will Cook, November 11th 2011

• Economic outlook getting bleaker and bleaker for the North, Wales and Scotland – Clare McNeil, September 13th 2011

• Beyond London and the East, the UK is suffering an ‘Osborne jobs deficit’ – Kevin Meagher, August 18th 2011

• Two nation Conservatism: VAT rise hits North harder than South – Chris Tarquini, December 6th 2010