Job losses and weakened Northern economy will deepen North-South divide

In response to the government's Spending Review announced today, Ed Cox, Director of ippr north said:

'The severity and speed of the cuts threatens the recovery in Northern England which was hardest hit by the recession and is still struggling to recover.

'With so many jobs in the North reliant on the public sector, fast and deep cuts risk a sudden surge in unemployment and a leap in the welfare bill.

'ippr's alternative plan - eliminating the deficit over six years rather than four, with scope for adjustment along the way - would offer better hope that private sector recovery in the North could absorb public sector job losses.'

On capital spending, Ed Cox said:

'While the cuts to capital spending are not as deep as many had predicted, which shows that the government has been listening, the Department for Communities and Local Government will still see its budget for spending on things such green energy, housing and transport cut by 74 per cent.

'Over the past decade, Northern cities have made great strides as a result of regeneration expenditure which has also levered in significant private investment. But today's announcement shows a gulf in capital investment between North and South. While there is good news on the Tyne and Wear Metro, the Manchester rail hub and M62 widening for example, these sums are dwarfed by the cost of the Crossrail project in London. Significant projects such as the A1 widening have also been overlooked.

'All of the announcements about the science budget appear to favour the south with no mention of places such as the Daresbury campus in Cheshire. This could lower the potential growth rate of the Northern economy and widen the North-South divide.'

On more power for local councils, Ed Cox said:

'We welcome devolutionary measures such as removing the ringfencing of departmental budgets, localisation of council tax benefit and tax increment financing as initial steps in the right direction, but the overall level of spending is still being set by a small elite in London.

'If the Coalition is genuinely concerned about passing more power to communities then local councils should be given more control over financial decision-making. Given the radical nature of today's review, ippr north would like to see a greater proportion of taxation raised locally.'

Contact:

Tamsin Crimmens, Media Officer, 0191 233 9051 / 07800 742 262 / t.crimmens@ippr.org