IPPR North: This is a wake-up call

Key ‘State of the North 2020’ report holds ‘levelling up’ agenda to account

The leading think-tank for the North of England has issued an “urgent wakeup call” today, as it publishes research showing that the opportunity to live a good life is becoming increasingly unattainable for too many people in the North of England.

In its annual health-check of the economy of the North of England, the IPPR North report shows that the UK entered a global pandemic with deep, growing divides between and within our regions caused by decades of centralisation and 10 years of austerity, and that Covid-19 makes the challenge of reducing our regional inequalities even greater- and more urgent- than before:

• The North is experiencing levels of unemployment not seen since 1994- in October, 657,900 people claimed unemployment-related benefits in the North. This problem is especially concentrated in Northern cities and coastal towns with Blackpool, Middlesbrough and Hull, which are currently under tier 3 restrictions, among the worst affected.
• There are fewer job opportunities in the North compared to the rest of England- the number of jobs per working-age person is lower in the North (0.7 jobs per person) than the English average (0.74 jobs per person).
• Work isn’t working for too many people in the North and median wages are lower than England as a whole- 1.5 million Northern workers are paid less than the real living wage.
• Gender and ethnicity pay gaps are wider in the North than elsewhere in the UK- in fact, 40 percent of women who work in the North are paid less than the real living wage.
• Rates of child poverty are higher in the North than across England - even before the pandemic, our analysis shows that around 1 in 3 Northern children lived in poverty. This is about 5 per cent higher than the rate for the rest of England excluding London- this gap has opened up within the last decade.
• Healthy life expectancy is below the English average in the majority of Northern areas and has even fallen in some places- over the past decade, about one-third of local authority areas in the North saw a fall in healthy life expectancy for men and just under 60 per cent saw a fall for women.
• Too few people in the North have qualifications at NVQ level 4 (equivalent to a BTEC professional award or certificate of higher education)or above – just 37 per cent of the working age population in the North, compared with 45 per cent across England. In fact, 8.2 per cent of the working age population in the North have no qualifications at all. This impacts earnings and productivity in the region.

Researchers say that these findings must act as a “wake up call” to government to deliver on its promise to ‘level up’ by putting real power and resource into the North- which has the potential, local understanding, agility and determination to ‘power up’, ‘level up’ and ‘rise up’ for itself. Today’s report sets out a set of key tests to measure the progress of any initiative to ‘level up’ England. Progress will be being made when people are able to experience:

1. A fairer North: A productive, low carbon economy that raises living standards for all.
2. Better work, health, and pay: Decent work and wages for people in the North which keep pace with the cost of living, and healthier, longer lives.
3. A jobs-led recovery: Low unemployment, greater access to employment opportunities, and a reduction in child poverty.
4. And an empowered North: Better democratic participation, representation, and trust in local and national decision-making.

Director of IPPR North, Sarah Longlands said:

“The government was elected on a promise to ‘level up’ places like the North. But one year on, they don’t have a plan to reduce inequalities between and within regions in England, and the inadequate, centrally controlled, competitive ‘levelling up fund’ announced in the spending review simply won’t cut it.

”Our regional divides are severe and growing, we face a climate emergency, and Brexit is just around the corner, so a recovery from Covid-19 that simply restores the status-quo- which has failed so many Northerners- would be unacceptable. We need to challenge old, reductive assumptions about our economy because they’ve failed to create the conditions for a good life for everyone in the North. In particular, we have to stop assuming that the centre knows best and commit once and for all to a clear programme of regional devolution in England. We cannot afford to repeat the mistakes of the past.

“If we are to build a better future, we need to focus on people, asking ‘who benefits?’ from policy decisions. From our research we can see that many people, particularly those in work and children, are not benefitting from them. Here in the North we can and will power up, level up, rise up together- but every moment that we don’t have the power and resources we need to do this, peoples’ lives are affected. This is a wake-up call. Is the Government listening?”

ENDS

Contact: Rosie Lockwood, Media and Campaigns Manager for IPPR North, on 07585772633 or r.lockwood@ippr.org.

Notes:

IPPR North is the leading think-tank for the north of England, developing bold ideas for a stronger economy and prosperous places and people. It has recently been shortlisted in two categories for this Prospect’s ‘think tank of the year awards’. For more information, visit ippr.org/north.

The new tests, and metrics for ‘levelling up are as follows:

Test 1 – A fairer North: A productive, low carbon economy that raises living standards for all. We will know we are making progress when the following benchmarks have been met.

• A reduction in the productivity gap (as measured by GVA per hour worked) between the North and the English average with the aim of achieving parity. Ideally, the strongest growth should be in local economies nearer the bottom of the current distribution to help narrow economic inequalities more quickly.

• A stronger link between growth in productivity and growth in real median wages, ie between the economic outputs of work and the reward felt by the workers who produce these outputs. The share of income that goes to workers (the ‘wage share of income’) should grow consistently in the next five-10 years at a faster rate than overall GVA growth, heading towards 60 percent of economic outputs.

• A reduction in carbon intensity (as measured by ktCO2 per £ of GVA) in all three regions in the North, and a shared commitment to achieving a net zero correlation by 2050 at the latest. All economic interventions should consider and appraise their environmental impact.

Test 2 – Better work, health, and pay: Decent work and wages for people in the North which keep pace with the cost of living and healthier, longer lives. We will know we are making progress when the following benchmarks have been met.

• A higher average wage where everyone in the North is paid at least the level of the real living wage per hour.

• A reduction in the difference between the median wage level in different places. Specifically, the gap between the median wage levels in the three northern regions and the English median wage level should be reduced by at least 50 per cent over the next business cycle. As with test 1 above, the fastest wage growth should be in the local economies which currently have the lowest median wage levels.

• A reduction in the gender pay gap in the North to the national rate across all major occupational groups, and a halving of the ethnicity pay gap in all parts of the North.

• An increase in long-term real wage growth, with wages increases that are greater than the rate of inflation. Wage growth should also exceed overall growth in regional and national economic output, as measured by total GVA.

• An increase in healthy life expectancy (HLE) by 3.9 per cent or more in all northern local authority areas (this is the equivalent of a 2.5 year increase in each area HLE rate).

Test 3 – A jobs-led recovery: Low unemployment, greater access to employment opportunities, and a reduction in child poverty We will know we are making progress when the following benchmarks have been met.

• A substantial reduction in unemployment as the economy recovers post pandemic. This reduction should be felt evenly around the North, with the regional rate stabilising at a level equal to the English one. Total unemployment should fall below 5 per cent by the end of this parliament.

• Particularly harsh impacts of the Covid-19 crisis on the employment rates of particular places, demographic groups and/or sectors (‘scarring’) should not be observable in the longer term.

• An increase in jobs density across the North, with more people in employment and better access to employment opportunities. The jobs density rate in the North should be equal to that for England as a whole by the end of this parliament, and inequalities in jobs density rates should fall year on year within the region.

• A rise in the rate of qualification at NVQ level 3 and above so that rates in the North match those for the rest of England outside London by the end of this parliament.

• A narrowing of the gap between the percentage of children living in relative poverty after housing costs in the north of England and the rest of England outside London to one percentage point, and a reversal of the trend of rising child poverty that has taken place since 2013.

Test 4 – An empowered North: Better democratic participation, representation, and trust in local and national decision-making.

• An increase in voter turnout in the North to match or exceed the English average, and an increased turnout in local and mayoral elections to match the trends towards higher turnout in London.

• The implementation of a devolution settlement for all parts of the North and the formal inclusion of participatory democracy tools to inform the work of combined authorities. This should be underpinned by a clear framework for English devolution in the forthcoming devolution and recovery white paper.

• By 2030, at least 80 per cent of councils in the North should have achieved a 50:50 gender balance among councillors, and half of candidates for metro mayoral positions should be women.

• The forthcoming shared prosperity fund should be devolved to combined and local authorities.

• An end to the policy of austerity and the development of a fair funding formula to fund the work of local authorities.

Last year’s State of the North report can be found online here.