Rising inequality is bad for long term growth

The UK has the worst regional inequality of advanced OECD economies. The London region is the richest in Europe, but six out of Europe's poorest regions are in the UK. This sharply differentiated pattern is deepening. On current trends, well over half of new jobs over the next 60 years will be in London and its south eastern catchment. Unsurprising really, given that this is where 52% of R&D expenditure goes today.

These are the starting points for the UK2070 Commission's final report launched last week. Its analysis highlighted differing patterns of inequality in Northern Ireland, Scotland, Wales and England. Last year, I was asked to look at the emerging evidence and suggest what might be done in transport terms to address this picture of savage spatial inequality. With a 50-year time horizon, any tendency to duck the wider issues such as climate change were eliminated.

With colleagues at Greengauge 21, we had already looked at the relationship between social mobility scores and economic productivity at a detailed level. The patterns are both familiar and surprising. Familiar, because poor local scores on educational achievement, life expectancy and claimant levels are found in post-industrial areas, and in peripheral areas – deep rural areas in Northern Ireland and the coastal towns of England, for example. Surprising, because as much as there is a north-south divide, there is also an east-west divide. Out of the 40 worst scoring local authorities for social mobility, 28 are dotted along a broad east coast corridor. The six worst scores in Scotland all lie on the east coast too.

We looked at access to the place that 'has it all' (London) and found that (rail) journey times to the capital were poor all along the east coast: Lowestoft 2h32; Skegness 2h48; Hartlepool 2h55. Not so much a question of how far north, but how far east. This pattern of peripherality is something that until now EU funding has been able to address. Along the east coast and in the East Midlands, the impacts of tighter immigration controls and adoption of the next wave of digital technology is going to hit economies especially hard.

The UK2070 report has a 10-point action plan, and at its launch it became clear that devolution of powers and responsibilities and funding was the uppermost concern. Local politicians – city mayors and the rest – are seen as accountable; national (Westminster) politicians aren't. Mervyn Rees, mayor of Bristol (and head of its City Council), speaking in terms more of local governance than local government, explained how it was only at a local level that it was possible to bring together the business community, health and social services, the voluntary sector and service providers so that real progress can be made. It's a good thought, because in transport as in other sectors, reliance on inter-departmental collaborative efforts at Westminster has proven illusory.

The second of the UK2070 Commission's ten actions centres on transport – 'delivering a connectivity revolution'. We examined how to address the needs of areas that are never prioritised for attention using appraisal techniques that turn a blind eye to distributional consequences. With a need to focus on sustainable, potentially zero carbon transport, the focus has to be on electric power and for equality reasons, on public transport. The call to establish transport as a basic human right resonates strongly in disadvantaged areas: to get to places of higher education, cities with good job prospects, regional health facilities.

The needs of coastal communities are an interesting example. Here, transport infrastructure tends to be sparse. The few rail lines are wastefully not seen as part of the same system as bus networks. This negligent disregard for network coherence damages connectivity. Continuing reluctance to even contemplate new rail estuarial crossings (the Thames, of course, being a major exception) keeps towns cut off economically from their nearest neighbours. Local growth prospects are confounded by catchments that are unnecessarily limited. The Greengauge 21 work showed how the broad eastern corridor could be transformed by an integrated network of interurban bus and some new rail links, and taken on its own, this performed well in land use-transport interaction modelling tests.

The UK2070 Report (titled: 'Make no Little Plans') recommends that the UK Government works with the Scottish and Welsh (and I would add: Northern Ireland) Governments to plan, fund and deliver the desired Connectivity Revolution over the next 25 years. It seeks:

• A network of connected cities
• Sustainable mass transit systems within all major urban areas
• Enhanced connectivity beyond, to marginalised communities, with the re-opening/upgrading of 3000 km of railway lines.

The economic prize is huge: the overall annual cost of poverty is estimated at £78bn. The challenge is to get agreement to improvements in neglected places with weak demand and less congestion.


Jim Steer is a Director at Steer