James Kirkup

James Kirkup is Director of the London-based Social Market Foundation


Inequality is arguably the most contentious issue of our time, alienating citizens from governments as well as from one another. The public debates place too much emphasis on disparities in income, to the exclusion of equally important forms of inequality. In this week’s series, our contributors explore some of the other inequalities tearing our society apart.

 

Among the vast, awful canon of positive-thinking, self-help slogans and truisms, there is a quote attributed to Ella Fitzgerald: “It isn’t where you came from, it’s where you’re going that counts.”

That sounds nice, but it’s not really true, especially in Britain. Where you come from has a huge influence over where you end up, physically and economically. Grow up poor in the wrong place and you’re not just more likely to live poor and die poor – you’ll die sooner too. People in the poorest places die a decade or more before people in rich places.

The unusually big and largely unjustifiable differences between places in the UK should be a much bigger part of the debate about inequality. Geography matters as least as much as economics, and matters an awful lot more than a lot of people in politics have acknowledged during the last couple of decades.

Indeed, I suspect that if more people in the Westminster village (I am one of them) had paid a bit more attention to economic geography and the people who study it, we’d have been a bit less surprised by the events of the last few years.

Let’s start at the beginning, with education. Where you grow up matters a lot to whether you acquire the basic skills needed to do anything but the worst-paid, least stable work.

A couple of years ago, the Social Market Foundation pointed out that there are significant differences between 16-year-olds across England. In 2016, over 60% of pupils in London achieved five good GCSEs including English and Maths. In the West and East Midlands, the figure was just 55%.

Those differences carry out through the education system. In 2017, almost 42% of 18-year-olds in London accepted a university place. In the south-west, the figure was less than 29% and Scotland managed only 26%.

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This pattern produces some extreme, eye-catching examples. I’m generally not a fan of using Oxbridge entry as a proxy for social mobility but sometimes the numbers speak volumes. In 2016, the number of children from the lowest-income homes from the north-east of England, Yorkshire and the Humber who got into Oxford or Cambridge was one. Yes, one.

So what sort of economy awaits the kids who leave school in the poorer parts of the UK? A dismal one.

Here, the best measure to look at is labour productivity, a count of how much valuable stuff, physical or otherwise, is produced by an hour of a person’s work. This, properly known as Gross Value Added, is arguably the most important data in British economics or politics, since it’s what helps to determine how much workers are paid. If it doesn’t rise, nor do wages. And we know how the politics of that play out.

At the level of big regions, the disparities in GVA per hour are stunning. Workers in London are 33% more productive than the UK average.

Measured in terms of everyday lives, these differences are striking. Average household incomes today in the Midlands, the north and Wales are roughly equivalent to household income in the South East during the 1990s. Large parts of the country are economically decades behind the richest places.

This leads to a vicious circle of under-capacity. Because much of England is short of high-skilled, high-paid jobs, people from those places with the skills to do such jobs have to move away to get them. And without them, underperforming places struggle to develop the businesses and productivity rates that would generate those jobs locally.

Maria Abreu, a Cambridge economist and part of the ESRC’s excellent Productivity Insights Network came to the SMF last year and produced a truly eye-opening figure. Six months after graduating, a quarter of all English graduates in work are working in London. A quarter.

Here, a note on London is needed. Quite a lot of political conversation about regional inequality plays into the “rich London, poor provinces” narrative. And at a superficial level, that’s fair enough: Londoners, in aggregate, earn more than people elsewhere, in aggregate.

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But they also spend more, especially on housing. And more importantly, they, like everyone else, don’t live in aggregate but as individuals. And a lot of individuals in London are poor: Trust for London calculates the capital’s poverty rate at 27%.

Yes, London as a whole is hugely wealthy, but Londoners are still more likely to be unemployed than people in north-west England, Yorkshire or Scotland. Even when they’ve got jobs, the typical London worker is actually worse off than the typical Brit. Once the capital’s enormous housing costs are met, London’s above-average salaries deliver below-average disposable incomes.

At the bottom of the scale, things are truly tough. Peabody, a big housing association, last year found that four in ten Peabody residents were cutting back when they buy food. More than one in ten were skipping meals to save money.

Here, a question should be asked: how unusual is this? Don’t all developed economies have big rich cities and poorer peripheries?

This is a relatively fraught area of analysis, but I’m reluctant to dispute the verdict of Professor Philip McCann. He’s a University of Sheffield professor, joint head of that Productivity Insights Network and one of the world’s most eminent scholars of economic geography.

He’s also high on my list of academics who people in politics and media really should listen to more. Paula Surridge, who studies public opinion at Bristol University is another. And he says that yes, interregional inequality in the UK is very high by international standards.

He also challenges the recent popular political story about “towns” and their plight:

“There are few, if any, major gaps in prosperity between urban and rural areas, or between cities and towns. Contrary to some of today’s popular narratives, the UK gaps between cities and towns and urban and rural areas are actually small by international standards.”

He adds: “In other words, the real geographical inequalities and imbalances within the UK are between regions; they are not between cities and towns or between urban areas and rural areas, and by international standards UK interregional inequality is very high.”

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What do we do about all this? There are a dozen policy areas that deserve more thought and attention. An even more active industrial strategy, regional devolution and much, much better transport connections should all be high on the political agenda for Brexit Britain, but most are largely ignored by a Westminster class that writes such things off as “too complicated” to just “boring”.

In a more sensible political realm, terms like “agglomeration effect” would be seen as commonplace, not abstract jargon, and people like Tom Forth would be setting the policy agenda.

After all, who wants to talk about bus timetables and bypasses when you could debate sovereignty or free trade, or announce big, sexy projects like HS2? It’s an open secret that some people involved in national politics got involved in national politics to get away from local politics, which involves a lot of talking about bus timetables and bypasses. And quite a lot of the people at the very top of national politics began their political careers in Parliament, never bothering with local government.

Among the less obvious responses to regional inequality, I’d point to education and the need to get the best teachers (and more educational resources) into the poorest places, to ensure that kids there at least start life with basic skills. That should start with coastal towns.

Hopefully, most people now understand that Britain’s coastal towns are among our most deprived, unfortunate places. But even if you know the story, a glance at the figures can still shock.

Five of the ten local authorities in Great Britain with the lowest average employee pay are in coastal communities. Ten of the 20 local authorities in England & Wales with the highest proportion of individuals in poor health are coastal communities.

These are places desperately in need of new industry, better transport links and infrastructure, but those things take time. More immediately, they need more and better public service professionals to deliver more and better education and healthcare. If that means the State paying better teachers much more to settle in poor places, helping them buy property there or wiping out student debt for people who take jobs there, so be it.

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Meanwhile, Dr Abreu’s work also strongly argues for much more focus on basic skills among the existing adult population. The blunt truth is that Britain, home of many of the world’s best universities, is also home of far too many people who struggle with basic numeracy and literacy.

That’s troubling enough, but worse is that they tend to be working in jobs that are at greatest risk of being lost to automation.

This ONS map shows why the UK urgently needs a much bigger, better offer on adult education and lifelong learning, targeted on lowest-skill workers in low-income areas. Because without significant change, technological progress will only widen the UK’s inequality of economic geography.

In short, Britain has a real and unusual problem with regional inequality. A problem that could get worse.

To read the rest of the Riven Britain series, click here.