Britain’s north-south divide

The gap between the poor north and the prosperous south is turning into a chasm, according to experts. What can be done to close it? Simon Wilson reports.

Is there a divide?

Britain's north-south divide has existed in some form or another for more than 1,000 years. For example, today's calls for a regional government to promote economic prosperity and effective government in the north of England are a direct echo of the 15th century, when centuries of war and economic depression in the north had caused a critical north-south divide that threatened to split England. King Edward IV set up the Council of the North in 1472 (his brother Richard III became its first Lord President) and the body continued to govern a large swathe of northern England until 1641, when the Long Parliament abolished it as posing too great a threat to rule from London.

And more recently?

Since the start of the 20th century, the north's decline has gathered pace, as Britain gradually lost its industrial primacy. Like many politicians before and since, Harold Macmillan warned in 1962 of the dangers of Britain splitting into a poor north and a "rich, overcrowded south". But like the others, he could do nothing to reverse the long-term trend. Between 1918 and 1962, the proportion of the population living in northern England fell from 35% to 30%. Today that figure is just 25%. Margaret Thatcher boldly told the Commons in 1989 that "the north-south divide is gone... businesses are flourishing, businessmen are optimistic, unemployment is falling". Yet the gap in output between north and south continued to widen both under Thatcher and during the 13 years of New Labour, due in large part to London's stellar growth in financial and other services.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

How has the recession affected things?

According to Professor Danny Dorling, a leading economic geographer of north-south differences, the split has become a "chasm" since the financial crisis and subsequent recession and on some indicators is now growing faster than at any time since World War II. London's economy is bouncing back strongly (growing 12% overall since 2008), whereas those of Yorkshire or the East Midlands are up only 3%-4%. On a disturbing range of indicators everything from poverty, health and life expectancy, to educational attainment, to economic output, incomes and growth the differences between north and south are growing, not shrinking.

According to the latest figures from the Office for National Statistics, 15% of households in the southeast of England have wealth (including equity in their home, savings, and pension funds) of more than £1m. That's twice as many as in northern England, Wales or Scotland. About 25% of households in the north of England have wealth of less than £50,000. That proportion drops to 15% in the southeast. Regional differences are particularly marked when it comes to pensioners. Some 44% of pensioners in the southeast have household net wealth of more than £500,000, compared to just 21% in the northeast.

Advertisement - Article continues below

What is the government doing?

The Coalition came to power explicitly committed to tackling the divide. Taking his cue from Benjamin Disraeli, David Cameron argued that action was needed to unite the "two nations", and that "for too long we have seen a dangerous imbalance". Such an imbalance is "dangerous" for economic reasons: recent research from the OECD, a rich-country think tank, confirmed that economies become more successful where wealth is spread more evenly across a country, rather than concentrated in one centre.

An ever-widening divide also undermines social cohesion and national unity. In practice, though, the Coalition has done little to address the issue. While the north has its regional development agencies scrapped and invests in a few extended railway electrification projects and platform extensions, the London Mayor has been given more powers (under the 2011 Localism Act) over housing and the economy and is intensively lobbying for a new airport hub costing £60bn.

So what can be done?

A bigger private sector in the north (including Wales and Northern Ireland) would help. This would be the work of many decades, and implies preferential investment policies, looser planning regimes and investment in infrastructure and education. But perhaps the first step is to learn from Edward IV. Britain's first-past-the-post system and fragmented economic geography has led to a political culture in which particular parties dominate given regions. That, too, is potentially dangerous in terms of unbalancing the country: new ideas may be needed that encourage parties to remain truly national, such as electing some MPs on the basis of proportional representation by region. London, Wales and Scotland all have their own assemblies and governments. Four centuries on, it may be time to revive the Council of the North.

Where is the dividing line?

By "north-south divide" people usually mean northern England and Wales versus the southeast. (Some include Scotland, although it is more prosperous than northern England.) The most detailed recent attempt to track the exact "border" is by Danny Dorling. According to Professor Dorling, the north-south divide incorporating a range of economic, social and political factors runs diagonally from the Severn to the Humber, cutting the country into a well-off southeast (which includes the southwest of England and East Anglia) and poorer northwest including Wales, Scotland, and the whole of England north of, roughly speaking, Gloucestershire, Warwickshire, Leicestershire and Lincolnshire.





Beyond the Brexit talk, the British economy isn’t doing too badly

The political Brexit pantomime aside, Britain is in pretty good shape. With near-record employment, strong wage growth and modest inflation, there is …
17 Oct 2019
UK Economy

Britain has a new chancellor – get ready for a major spending splurge

The departure of Sajid Javid as chancellor and the appointment of Rishi Sunak marks a change in the style of our politics. John Stepek explains what's…
14 Feb 2020

Will Britain close its doors to immigrants post-Brexit?

Details have not yet been forthcoming, but Britain will soon have a new immigration policy. What will that mean for businesses and investors?
8 Feb 2020
House prices

Is the jump in house prices just a Brexit bounce, or is it more durable?

UK house prices rose sharply in January. Some of that is down to the end of Brexit uncertainty – but not all. There is a real risk that prices will ke…
7 Feb 2020

Most Popular

UK Economy

Britain has a new chancellor – get ready for a major spending splurge

The departure of Sajid Javid as chancellor and the appointment of Rishi Sunak marks a change in the style of our politics. John Stepek explains what's…
14 Feb 2020

Money Minute Friday 14 February: The latest from RBS, Britain's state-owned bank

Today's Money Minute previews results from RBS – Britain’s state-owned bank – and from pharma giant AstraZeneca.
14 Feb 2020
Silver and other precious metals

You should all own some silver. Just don’t expect it to make you rich

Silver is cool, beautiful and immensely useful. But for investors it's the most frustrating of metals. Dominic Frisby explains why you should own some…
12 Feb 2020

Is 2020 the year for European small-cap stocks?

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, on why he believes European small-cap stocks are performing well.
12 Feb 2019