People, Places and Politics: the Challenge of 'Levelling Up' the UK

CentrePiece Spring 2020

As has been much discussed since the election, economic performance varies widely among the towns, cities and regions of the UK. Henry Overman argues that policies to address these spatial disparities should be judged on whether they improve individual opportunities, not whether they narrow the gaps between different parts of the country. People, places and politics: the challenge of ‘levelling up’ the UK

Marlborough Marlow Marlow-on-Thames Martlock Louth Marylebone Lowestoft Matlock Newcastle-under-Lyme Ludlow ExmouthMawgan Porth Newick Lulworth Cove FakenhamMayfair Newmarket Luton FalmouthMelbourneStockport GoathlandNewnham Denton Lyme Regis FaringdonMelkshamStockton on TeesGolders GreenNew Forest Derby Leigh LymingtonSouthport FarnboroughMelton MowbrayStoke-on-Trent GomersalNewquay DerehamLeighton Buzzard Dunster Lymm Southsea Farnham Meriden Stone GooleNewton Aycliffe DevizesLeiston-cum-Sizewell DurhamLympshamSt Albans FavershamMevagisseyStonehouse GorlestonNorfolk TettenhallBroads Wood DewsburyLetchworth DuxfordLyndhurstSt Aubin FawkhamMiddlesbroughStourport on SevernGracechurchNorth ActonThame Didcot Lewes DymchurchLyntonSt Austell FelixstoweMidhurstStow-on-the-WoldGranthamNorth FerribyThetford Diss Shipton-under-WychwoodLeyburn EalingMacclesfieldSt Brelade's BayFerndownMildenhallStowmarket GrasmereNorth WalshamThirsk Ditchling LichfieldShoreditch Earls CourtMaidenheadSt Helier FinchleyMilford-on-SeaStratfield MortimerGravesendNorthallertonThrelkeld Doncaster LiftonShrewsburyEast CottingwithMaidstoneSt Issey Fleet MillStratford-upon-Avon Hill GraysNorthamptonTintagel Plymouth Dorchester-on-ThamesLincolnSittingbourneEast GrinsteadMalmesburySt Ives FolkestoneMilton KeynesStratford Great DunmowNorthwichTiverton Ormskirk Polesworth Dorchester Skegness East Horsley St James ParkFordingbridgeMineheadStreatham HillGreat TorringtonNorwichThompson Oswestry HeathfieldPolperro DorkingLightwaterSkelmersdaleEast MoleseyMaltonSt John's Wood Forest Stroud Great Yarmouth Tonbridge Wellingborough Helmsley Weymouth DorsingtonLincoln EastbourneMalvern Forest RowMinster Lovell GreenwichNotting Hill Hanwell Otley Penrith HelstonPolruan-by-Fowey 10 Liphook Skipton ManchesterSt Katharine's Marina ModburyStudland NottinghamTorquay OtterburnWakefield Penzance Wells Polzeath Whitby Douglas LiskeardSleaford EastleighManningtreeSt Lawrence FoweyMorecambeSunderland GrimsbyNuneatonTotland Bay Harleston Oundle Wallasey HassocksPerranporthWelwyn Helton PooleWhitchurch Dover LiverpoolSloane Gardens Eccles MansfieldSt Leonards-on-SeaFramlinghamMoreton-in-MarshSurbiton GuernseyOakamoorTotnes Harlow OutlaneWallingford HastingsPershoreWelwyn GardenHemel City HempsteadPorthlevenWhitehaven Downham MarketLolworthSloane Square EdenbridgeMarazionSt Martin FreshwaterMorpethSutton ColdfieldGuildfordOgbourne St GeorgeTrevone HarmondsworthOxford StreetWalsall HatfieldPeterboroughWembleyHemingford GreyPortlandWhitley Bay Droitwich London Slough Egham MargateSt Mawes FulhamMouseholeSutton-in-AshfieldGuiting PowerOkehamptonTrowbridge HarpendenOxfordWaltham ForestHathersagePetworthWeobleyHenley on ThamesPortsmouthWhitstable Droitwich SpaLooe Soho EllesmereMarket Port DraytonSt Pancras GatesheadMuch HadhamSwadlincote HailshamOld HarlowTruro HarrogatePaddingtonWandsworth Havant PickeringWest Bromwich HerefordPotters BarWidnes DudleyLostwithielSolihull EllingtonMarket HarboroughSt Peter PortGerrards MuchCross WenlockSwaffham Hale OldhamTunbridge Wells Harrow PadstowWantage HaverhillPiercebridge-on-TeesWestbury on SevernHertford Prenton Wigan Dukinfield South Benfleet Enfield St Saviour GillinghamMullion Swanage Halifax Two Bridges Hartington Ware HawksheadPimlicoWest Drayton HevershamPrescotWilmslow DulvertonLoughboroughSouth Brent Epping MarkfieldStafford Glaisdale Swindon Haltwhistle Tysoe Hartlepool Wareham Haydock West Ealing Hexham Wimbledon Dumbleton South Croydon Eskdale Stamford Glastonbury Tamworth Hammersmith Uckfield Harvington Warkworth Hayes West End Heywood Wimborne Dunmow South Kensington Euston Stanton Drew Glossop Taplow Hampstead Ullswater Harwich Warrington Hayle West Ham High Wycombe Winchcombe Dunstable South Littleton Evesham Steeple Aston Gloucester Tarporley Hampton Court Up Holland Haslemere Warwick Hayling Island Westcliff On SeaHighbridge Winchester South Ruislip Ewloe Stevenage Taunton Upminster Wasdale Westminster Hillingdon Windermere South Shields Exeter Stilton Tavistock Uppingham Washington Weston-Super-MareHinckley Windsor Southall Stockbridge Telford Upton upon Severn Watchet Wetherby Winnersh CentrePiece Spring 2020

patial disparities across the UK Union, living in different places – but are once again high on the agreeing on the same solution. Improving the public policy agenda. There are The other reason why individual economy in left- clear political motivations for mobility matters is because it means that Sthe ambition of ‘levelling up’ parts of the policies targeted at specific places don’t behind places country where economic performance necessarily end up benefitting the people requires increased has been weak and which have somehow that we hoped to help. For example, been ‘left behind’. But such disparities are transport improvements in a poorer area investment also intrinsically important because local won’t necessarily benefit poorer families and the reversal social and economic conditions affect if those improvements then lead to higher individual outcomes. For example, there are rents and house prices that see them priced of austerity substantial differences in social mobility at out of the neighbourhood. the local level: where you grow up makes Taken together, these two a difference to how much your family complications – the need to distinguish background affects your life chances. between people and place; and the fact employment, with cities in the Greater Spatial disparities also reflect individual that people move between places – mean South East performing better. Eight of the inequality. For example, if individual that it is important for us to understand ten cities with the highest unemployment inequality increases and poorer families what is causing spatial disparities and to are in the North of England or Scotland. are concentrated in particular areas, then think carefully about who will benefit from There is also substantial variation within spatial disparities will also increase. The link the different policies proposed to address those broad areas: some northern cities between individual and spatial disparities these disparities. (such as Manchester) are doing relatively is complicated by the fact that people can well and some southern cities (such as move around. This matters for thinking Disparities in the UK: Ipswich) are doing relatively badly. Despite about what spatial disparities can tell us it’s more than just a many policy initiatives by a series of about important policy issues. North-South divide governments, these disparities remain large For example, the geography of the There is a broad North-South pattern to and persistent. Brexit vote was highly uneven with some spatial disparities in the UK. According to Indeed, these disparities have widened places more likely to vote Leave and Cities Outlook, the most useful source of since the global financial crisis. Figure 1 others more likely to vote Remain. One detailed data on the economic performance shows a standard measure of the extent explanation is that the Leave vote reflects of UK cities, there is a very clear geography of spatial disparities calculated for the the ‘revenge’ of left-behind places – that is, in terms of both output per worker and (NUTS2) regions of the UK from 1980 to it is a story not about individuals, but about shared anger by those living in places left Figure 1: behind by globalisation and technological Spatial inequality in the UK change. The alternative is to think of this as a story about individuals, disaffected by social and economic changes, and where they live. The first way of thinking about this appears to be driving the current policy response. But the second is perhaps a more useful way of understanding why wealthy Sevenoaks and struggling Sunderland both voted Leave. Different kinds of people, with Marlborough very different concerns about the European

Marlow ritin Ceicient Marlow-on-Thames Martlock Louth Marylebone Lowestoft Matlock Newcastle-under-Lyme Ludlow ExmouthMawgan Porth Newick Fakenham Lulworth Cove Falmouth MayfairStockport GoathlandNewmarket Denton Luton FaringdonMelbourneStockton on TeesGolders GreenNewnham er Derby Lyme Regis FarnboroughMelksham GomersalNew Forest Leigh LymingtonSouthport Melton MowbrayStoke-on-Trent Newquay Source: Author’s own calculations based on Eurostat data for NUTS2 regions of the UK DerehamLeighton Buzzard Dunster Lymm Southsea Farnham Meriden Stone GooleNewton Aycliffe DevizesLeiston-cum-Sizewell DurhamLympshamSt Albans FavershamMevagisseyStonehouse GorlestonNorfolk TettenhallBroads Wood DewsburyLetchworth DuxfordLyndhurstSt Aubin FawkhamMiddlesbroughStourport on SevernGracechurchNorth ActonThame Didcot Lewes DymchurchLyntonSt Austell FelixstoweMidhurstStow-on-the-WoldGranthamNorth FerribyThetford Diss Shipton-under-WychwoodLeyburn EalingMacclesfieldSt Brelade's BayFerndownMildenhallStowmarket GrasmereNorth WalshamThirsk Ditchling LichfieldShoreditch Earls CourtMaidenheadSt Helier FinchleyMilford-on-SeaStratfield MortimerGravesendNorthallertonThrelkeld Doncaster LiftonShrewsburyEast CottingwithMaidstoneSt Issey Fleet MillStratford-upon-Avon Hill GraysNorthamptonTintagel Plymouth Dorchester-on-ThamesLincolnSittingbourneEast GrinsteadMalmesburySt Ives FolkestoneMilton KeynesStratford Great DunmowNorthwichTiverton Ormskirk Polesworth Dorchester Skegness East Horsley St James ParkFordingbridgeMineheadStreatham HillGreat TorringtonNorwichThompson Oswestry HeathfieldPolperro DorkingLightwaterSkelmersdaleEast MoleseyMaltonSt John's Wood Forest Stroud Great Yarmouth Tonbridge Wellingborough Helmsley Weymouth DorsingtonLincoln EastbourneMalvern Forest RowMinster Lovell GreenwichNotting Hill Hanwell Otley Penrith HelstonPolruan-by-Fowey Liphook Skipton ManchesterSt Katharine's Marina ModburyStudland NottinghamTorquay OtterburnWakefield Penzance Wells Polzeath11Whitby Douglas LiskeardSleaford EastleighManningtreeSt Lawrence FoweyMorecambeSunderland GrimsbyNuneatonTotland Bay Harleston Oundle Wallasey HassocksPerranporthWelwyn Helton PooleWhitchurch Dover LiverpoolSloane Gardens Eccles MansfieldSt Leonards-on-SeaFramlinghamMoreton-in-MarshSurbiton GuernseyOakamoorTotnes Harlow OutlaneWallingford HastingsPershoreWelwyn GardenHemel City HempsteadPorthlevenWhitehaven Downham MarketLolworthSloane Square EdenbridgeMarazionSt Martin FreshwaterMorpethSutton ColdfieldGuildfordOgbourne St GeorgeTrevone HarmondsworthOxford StreetWalsall HatfieldPeterboroughWembleyHemingford GreyPortlandWhitley Bay Droitwich London Slough Egham MargateSt Mawes FulhamMouseholeSutton-in-AshfieldGuiting PowerOkehamptonTrowbridge HarpendenOxfordWaltham ForestHathersagePetworthWeobleyHenley on ThamesPortsmouthWhitstable Droitwich SpaLooe Soho EllesmereMarket Port DraytonSt Pancras GatesheadMuch HadhamSwadlincote HailshamOld HarlowTruro HarrogatePaddingtonWandsworth Havant PickeringWest Bromwich HerefordPotters BarWidnes DudleyLostwithielSolihull EllingtonMarket HarboroughSt Peter PortGerrards MuchCross WenlockSwaffham Hale OldhamTunbridge Wells Harrow PadstowWantage HaverhillPiercebridge-on-TeesWestbury on SevernHertford Prenton Wigan Dukinfield South Benfleet Enfield St Saviour GillinghamMullion Swanage Halifax Two Bridges Hartington Ware HawksheadPimlicoWest Drayton HevershamPrescotWilmslow DulvertonLoughboroughSouth Brent Epping MarkfieldStafford Glaisdale Swindon Haltwhistle Tysoe Hartlepool Wareham Haydock West Ealing Hexham Wimbledon Dumbleton South Croydon Eskdale Stamford Glastonbury Tamworth Hammersmith Uckfield Harvington Warkworth Hayes West End Heywood Wimborne Dunmow South Kensington Euston Stanton Drew Glossop Taplow Hampstead Ullswater Harwich Warrington Hayle West Ham High Wycombe Winchcombe Dunstable South Littleton Evesham Steeple Aston Gloucester Tarporley Hampton Court Up Holland Haslemere Warwick Hayling Island Westcliff On SeaHighbridge Winchester South Ruislip Ewloe Stevenage Taunton Upminster Wasdale Westminster Hillingdon Windermere South Shields Exeter Stilton Tavistock Uppingham Washington Weston-Super-MareHinckley Windsor Southall Stockbridge Telford Upton upon Severn Watchet Wetherby Winnersh CentrePiece Spring 2020

2015, the last date for which we have Figure 2: data. Disparities fell between 1980 and Shares of the UK population with tertiary education the mid-1990s, increased in the early days of the Labour government before falling ■ ■ again. The increase in disparities since the ■ recession has returned us to roughly the ■ ■ level of the 1980s. ■ ■ What are the economic forces polarising the UK?

Better educated workers are concentrated In 2018, around 65% of inner London residents had tertiary education, the highest percentage in Europe. This was up from around 54% in 2010. In contrast, the proportion of residents with tertiary education in Greater Manchester was around 39% in 2018, up from 31% in 2010 – see Figure 2. There is also a growing wage premium for graduates compared with people without degrees. In 1980, male graduates earned, on average, 46% more than their non-graduate counterparts; in 2017, this earnings uplift was 66% (Elliot Major and Machin, 2018). Given a strong and growing concentration of more educated workers and a large and increasing wage premium for graduates, it is not surprising that the spatial distribution of higher skilled workers explains up to 90% of area-level disparities in wages in the UK (Gibbons et al, 2013).

Bigger cities make firms and people more productive There is a great deal of empirical evidence of the ‘agglomeration economies’ that underpin the relationship between a city’s Having a better educated labour force is the most important driver of local economic performance

Exeter Hope Valley Lincoln Exmouth Hampton Court Horley Liphook Fakenham Hanwell Horncastle Liskeard Fowey Falmouth Harleston Cheadle Horrabridge LiverpoolFramlingham Faringdon Harlow Cheddar Horsham Lolworth Freshwater Farnborough HarmondsworthChelmsford Horsington London Fulham Farnham Isle of SheppeyHarpenden Chelsea Hounslow Deal Looe Gateshead Faversham BurnleyIsle of WightHarrogateCheltenham Cockermouth Hove Deddington LostwithielGerrards Cross Fawkham Burton-on-TrentIslington Harrow Cheshunt Helston Colchester Huddersfield Denton Knipton Enfield LoughboroughGillingham Oldham Felixstowe Bury JesmondHartington Chester Helton Coleshill Leigh Hull Derby Knowsley Epping Louth Glaisdale Ormskirk Ferndown GorlestonBury St EdmundsKeighleyHartlepoolChesterfield Hemel HempsteadCommondaleLeighton BuzzardHungerford Dereham Lymm Knutsford Eskdale LowestoftGlastonburyOswestry Finchley Bridport Gracechurch Buxton KempseyHarvington ChichesterKniptonHemingford GreyConistonLeiston-cum-SizewellHunstanton Devizes Lympsham Melksham Lacock Euston Ludlow Glossop Otley Fleet Brierley HillHounslowGrantham Camberley Kendal Harwich ChiddinglyKnowsleyHenley on ThamesCorby LetchworthHuntingdon Devon LyndhurstKempsey Melton MowbrayLambeth Evesham Lulworth CoveGloucesterOtterburn Folkestone Brigg 12 Hove Grasmere CambridgeKenilworthHaslemere Chinnor KnutsfordHereford Corfe CastleLewesHutton Le HoleDewsbury Lynton Kendal Meriden Lamorna Ewloe Newmarket Luton Goathland Oundle FramlinghamBrighstoneHuddersfieldGravesend CamdenKensingtonHassocks ChippenhamLacock HertfordCornhill on TweedLeyburn Hyde DidcotMacclesfieldKenilworth MevagisseyLancaster Exeter NewnhamLyme RegisGolders GreenOutlane Freshwater Brighton Hull Grays Canning TownKent HastingsChipping CampdenLambethHeversham CotswoldsLichfieldHyde Park Diss MaidenheadKensingtonDumbletonMiddlesbroughLancing ExmouthNew ForestLymington GomersalOxford Street Fulham Bristol HungerfordGreat DunmowCanterburyKeswick HatfieldChipping NortonLamorna Hexham Coulsdon Lifton Hythe DitchlingMaidstone Kent Dunmow Midhurst Larkfield FakenhamNewquay Lymm Goole Oxford Gateshead BrixhamHunstantonGreat TorringtonCarlisle KetteringHathersage Chiswick LancasterHeywoodCovent GardenLincoln Ifield DocklandsMalmesburyKeswick DunstableMildenhallLaunceston FalmouthNewton AycliffeLympsham GorlestonPaddington Gerrards CrossBroadstairsHuntingdonGreat YarmouthCastel Kew Havant Chorley LancingHigh WycombeCoventryLightwaterIlfracombe Doncaster Malton Kettering DunsterMilford-on-SeaLavenham FaringdonNorfolk BroadsLyndhurstGracechurchPadstow Gillingham BroadwayHutton Le HoleGreenwichCastle AshbyKidderminsterHaverhill ChristchurchLarkfieldHighbridgeCrackington HavenLincoln ImminghamDorchester-on-ThamesMalvern Kew Durham Mill HillLeamington SpaFarnboroughNorth ActonLynton GranthamPaignton GlaisdaleBrockenhurstHyde GrimsbyCastle CombeKings CrossHawksheadChurch StrettonLauncestonHillingdon Crawley Liphook Ingleton DorchesterManchesterKidderminsterDuxfordMilton KeynesLeatherhead FarnhamNorth FerribyMacclesfieldGrasmerePeak District GlastonburyBromboroughHyde ParkGuernseyCastle DoningtonKings LangleyHaydock CirencesterLavenham HinckleyCrawley DownLiskeard Ipswich DorkingManningtreeKings CrossDymchurchMinehead Ledbury FavershamNorth WalshamMaidenheadGravesend Penrith Glossop Bromley Hythe Guildford Catford Kings Lynn Hayes City of LondonLeamington SpaHilton Crewe LiverpoolIsle of ManDorsingtonMansfieldKings Langley EalingMinster LovellLeek FawkhamNorthallertonMaidstone Grays Penzance GloucesterBromsgrove IfieldGuiting PowerCattistockKingsbridge Hayle Clacton-on-SeaLeatherheadHitchin CrewkerneLolworthIsle of SheppeyDouglas MarazionKings LynnEarls CourtModbury Leeds FelixstoweNorthamptonMalmesburyGreat DunmowPerranporth Goathland BromyardIlfracombeHailshamChaddesleyKingston Corbett uponHayling Hull IslandClerkenwellLedbury Holborn CricklewoodLondonIsle of Wight Dover MargateKingsbridgeEast CottingwithMorecambeLeicester FerndownNorthwich MaltonGreat TorringtonPershore Golders GreenBuckfastleighImmingham Hale CharlburyKingston uponHaywards Thames HeathClifton-WithoutLeek Holsworthy Cromer Looe IslingtonDownham Market DraytonKingston uponEast Hull GrinsteadMuch WenlockLeicester SquareFinchley Norwich MalvernGreat YarmouthPeterborough Gomersal Buckland Ingleton Halifax CharlwoodKirkby LonsdaleHeathfield Clitheroe Leeds Honiton CrosthwaiteLostwithielJesmond DroitwichMarket HarboroughKingston upon ThamesEast HorsleyMullion Leigh Fleet Notting HillManchesterGreenwichPetworth Goole Bude IpswichHaltwhistle ChathamKirkby StephenHelmsley Clovelly Leicester Hook CrowthorneLoughboroughKeighleyDroitwich SpaMarkfieldKirkby LonsdaleEast MoleseyMuswellLeighton Hill BuzzardFolkestoneNottinghamManningtree Grimsby Pickering Isle of Man Knightsbridge Leicester Square Louth Marlborough Newark Nuneaton Piercebridge-on-Tees

Shipton-under-Wychwood St Brelade's Bay Stratfield Mortimer Tiverton Wareham Whitley Bay Worcester Shoreditch St Helier Stratford-upon-Avon Thompson Warkworth Whitstable Workington Shrewsbury St Issey Stratford Tonbridge Warrington Widnes Worksop Sittingbourne St Ives Streatham Hill Torquay Warwick Wigan Worth Skegness St James Park Stroud Totland Bay Wasdale Wilmslow Worthing Skelmersdale St John's Wood Studland Totnes Washington Wimbledon Wotton-under-Edge Skipton St Katharine's Marina Sunderland Trevone Watchet Wimborne Wrantage Sleaford St Lawrence Surbiton Trowbridge Waterloo Winchcombe Wrotham Heath Sloane Gardens St Leonards-on-Sea Sutton Coldfield Truro Watford Winchester Wroxall Sloane Square St Martin Sutton-in-Ashfield Tunbridge Wells Wellingborough Windermere Wroxham Slough St Mawes Swadlincote Two Bridges Wells Windsor Yarmouth Soho St Pancras Swaffham Tysoe Welwyn Winnersh Yelverton Solihull St Peter Port Swanage Uckfield Welwyn Garden City Winscombe Yeovil South Benfleet St Saviour Swindon Ullswater Wembley Winterbourne Stoke York South Brent Stafford Tamworth Up Holland Weobley Winterslow South Croydon Stamford Taplow Upminster West Bromwich Wirral South Kensington Stanton Drew Tarporley Uppingham Westbury on Severn Wisbech South Littleton Steeple Aston Taunton Upton upon Severn West Drayton Wishaw South Ruislip Stevenage Tavistock Uxbridge West Ealing Witney South Shields Stilton Telford Ventnor West End Woking Southall Stockbridge Temple Sowerby Wadebridge West Ham Wokingham Southam Stockport Tenterden Wakefield Westcliff On Sea Wolverhampton Southampton Stockton on Tees Tetbury Wallasey Westminster Woodbridge Southend-on-Sea Stoke-on-Trent Tettenhall Wood Wallingford Weston-Super-Mare Woodford Bridge Southport Stone Thame Walsall Wetherby Woodford Green Southsea Stonehouse Thetford Waltham Forest Weymouth Woodstock St Albans Stourport on Severn Thirsk Wandsworth Whitby Wool St Aubin Stow-on-the-Wold Threlkeld Wantage Whitchurch Woolacombe St Austell Stowmarket Tintagel Ware Whitehaven Wooler CentrePiece Spring 2020

size and the productivity of its inhabitants. Figure 3: Graham and Gibbons (2018) summarise GDP per capita against city size results from 47 studies estimating these agglomeration economies, 12 of which are from the UK. The consensus estimate suggests that once we allow for the unequal spatial distribution of higher-skilled workers, the elasticity of productivity with respect to size is around 0.02 to 0.03. This means that doubling city size increases people’s productivity by 2-3%. While these productivity effects are important, when it comes to GDP per capita, they can easily be swamped by n P er cti spatial disparities in the share of skilled workers. This happens in the UK where (if we exclude London) the overall relationship between city size and GDP per capita isn’t very strong – as Figure 3 shows. Our cities still benefit from agglomeration economies – someone with a degree moving from Blackpool to n Ptin Manchester would be more productive – but this isn’t enough to encourage the sorting of highly skilled workers into some of our bigger cities outside London. places. A small, rich town, with limited Under-investment in the North Cities versus towns housing supply can easily have housing Because London and the South East are Because both skills and size matter, and costs that offset any productivity benefits rich and our tax system is progressive, skills matter much more than size, it’s not for households. Similarly, a large poorer there is a lot of redistribution from the very helpful to distinguish between cities city, such as Liverpool, may have housing South to the North. But on some measures, and towns. Smaller towns can do very costs that help to offset some of the London receives a disproportionate share well if they have lots of highly skilled productivity advantages that workers of investment in infrastructure. residents. Bigger cities may struggle if would gain by moving. A more equal distribution of they have lots of low-skilled residents, Amenities matter too and we need infrastructure investment would slow even if they may still do better than their to think about the three-way trade-off growth in London. Whether it would surrounding regions. between differences in productivity, the increase growth elsewhere would depend The cost of living also matters, with cost of living and amenities if we want to on how the money was spent because the housing supply a key determinant of understand who lives where and what are economic returns to infrastructure vary a differences in the cost of living across the implications for individual disparities. lot across places. Rather than focusing on London’s dominance, we should ask why other cities and towns do not offer similar opportunities

Exeter Hope Valley Lincoln Exmouth Hampton Court Horley Liphook Fakenham Hanwell Horncastle Liskeard Fowey Falmouth Harleston Cheadle Horrabridge LiverpoolFramlingham Faringdon Harlow Cheddar Horsham Lolworth Freshwater Farnborough HarmondsworthChelmsford Horsington London Fulham Farnham Isle of SheppeyHarpenden Chelsea Hounslow Deal Looe Gateshead Faversham BurnleyIsle of WightHarrogateCheltenham Cockermouth Hove Deddington LostwithielGerrards Cross Fawkham Burton-on-TrentIslington Harrow Cheshunt Helston Colchester Huddersfield Denton Knipton Enfield LoughboroughGillingham Oldham Felixstowe Bury JesmondHartington Chester Helton Coleshill Leigh Hull Derby Knowsley Epping Louth Glaisdale Ormskirk Ferndown GorlestonBury St EdmundsKeighleyHartlepoolChesterfield Hemel HempsteadCommondaleLeighton BuzzardHungerford Dereham Lymm Knutsford Eskdale LowestoftGlastonburyOswestry Finchley Bridport Gracechurch Buxton KempseyHarvington ChichesterKniptonHemingford GreyConistonLeiston-cum-SizewellHunstanton Devizes Lympsham Melksham Lacock Euston Ludlow Glossop Otley Fleet Brierley HillHounslowGrantham Camberley Kendal Harwich ChiddinglyKnowsleyHenley on ThamesCorby LetchworthHuntingdon Devon LyndhurstKempsey Melton MowbrayLambeth Evesham Lulworth CoveGloucesterOtterburn Folkestone Brigg Hove Grasmere CambridgeKenilworthHaslemere Chinnor KnutsfordHereford Corfe CastleLewesHutton Le HoleDewsbury Lynton Kendal Meriden Lamorna Ewloe Newmarket Luton13 Goathland Oundle FramlinghamBrighstoneHuddersfieldGravesend CamdenKensingtonHassocks ChippenhamLacock HertfordCornhill on TweedLeyburn Hyde DidcotMacclesfieldKenilworth MevagisseyLancaster Exeter NewnhamLyme RegisGolders GreenOutlane Freshwater Brighton Hull Grays Canning TownKent HastingsChipping CampdenLambethHeversham CotswoldsLichfieldHyde Park Diss MaidenheadKensingtonDumbletonMiddlesbroughLancing ExmouthNew ForestLymington GomersalOxford Street Fulham Bristol HungerfordGreat DunmowCanterburyKeswick HatfieldChipping NortonLamorna Hexham Coulsdon Lifton Hythe DitchlingMaidstone Kent Dunmow Midhurst Larkfield FakenhamNewquay Lymm Goole Oxford Gateshead BrixhamHunstantonGreat TorringtonCarlisle KetteringHathersage Chiswick LancasterHeywoodCovent GardenLincoln Ifield DocklandsMalmesburyKeswick DunstableMildenhallLaunceston FalmouthNewton AycliffeLympsham GorlestonPaddington Gerrards CrossBroadstairsHuntingdonGreat YarmouthCastel Kew Havant Chorley LancingHigh WycombeCoventryLightwaterIlfracombe Doncaster Malton Kettering DunsterMilford-on-SeaLavenham FaringdonNorfolk BroadsLyndhurstGracechurchPadstow Gillingham BroadwayHutton Le HoleGreenwichCastle AshbyKidderminsterHaverhill ChristchurchLarkfieldHighbridgeCrackington HavenLincoln ImminghamDorchester-on-ThamesMalvern Kew Durham Mill HillLeamington SpaFarnboroughNorth ActonLynton GranthamPaignton GlaisdaleBrockenhurstHyde GrimsbyCastle CombeKings CrossHawksheadChurch StrettonLauncestonHillingdon Crawley Liphook Ingleton DorchesterManchesterKidderminsterDuxfordMilton KeynesLeatherhead FarnhamNorth FerribyMacclesfieldGrasmerePeak District GlastonburyBromboroughHyde ParkGuernseyCastle DoningtonKings LangleyHaydock CirencesterLavenham HinckleyCrawley DownLiskeard Ipswich DorkingManningtreeKings CrossDymchurchMinehead Ledbury FavershamNorth WalshamMaidenheadGravesend Penrith Glossop Bromley Hythe Guildford Catford Kings Lynn Hayes City of LondonLeamington SpaHilton Crewe LiverpoolIsle of ManDorsingtonMansfieldKings Langley EalingMinster LovellLeek FawkhamNorthallertonMaidstone Grays Penzance GloucesterBromsgrove IfieldGuiting PowerCattistockKingsbridge Hayle Clacton-on-SeaLeatherheadHitchin CrewkerneLolworthIsle of SheppeyDouglas MarazionKings LynnEarls CourtModbury Leeds FelixstoweNorthamptonMalmesburyGreat DunmowPerranporth Goathland BromyardIlfracombeHailshamChaddesleyKingston Corbett uponHayling Hull IslandClerkenwellLedbury Holborn CricklewoodLondonIsle of Wight Dover MargateKingsbridgeEast CottingwithMorecambeLeicester FerndownNorthwich MaltonGreat TorringtonPershore Golders GreenBuckfastleighImmingham Hale CharlburyKingston uponHaywards Thames HeathClifton-WithoutLeek Holsworthy Cromer Looe IslingtonDownham Market DraytonKingston uponEast Hull GrinsteadMuch WenlockLeicester SquareFinchley Norwich MalvernGreat YarmouthPeterborough Gomersal Buckland Ingleton Halifax CharlwoodKirkby LonsdaleHeathfield Clitheroe Leeds Honiton CrosthwaiteLostwithielJesmond DroitwichMarket HarboroughKingston upon ThamesEast HorsleyMullion Leigh Fleet Notting HillManchesterGreenwichPetworth Goole Bude IpswichHaltwhistle ChathamKirkby StephenHelmsley Clovelly Leicester Hook CrowthorneLoughboroughKeighleyDroitwich SpaMarkfieldKirkby LonsdaleEast MoleseyMuswellLeighton Hill BuzzardFolkestoneNottinghamManningtree Grimsby Pickering Isle of Man Knightsbridge Leicester Square Louth Marlborough Newark Nuneaton Piercebridge-on-Tees

The overall effect on regional inequalities would be limited since Addressing spatial disparities relative to the concentration of skilled requires an approach to workers, differences in infrastructure play a relatively small role in driving long-term policy that allows for different disparities. The only way for infrastructure responses in different places to have a big effect on spatial disparities is if it leads to the relocation of large numbers of skilled workers across the UK, away from London. Improving economic performance at work. Equal outcomes across places outside the capital would require places to have similar skill The financial crisis and austerity Rather than focusing on London’s compositions and to be of similar sizes. London and the South East were initially dominance, we should ask why other cities As with the previous strategy, this is not hard hit by the recession, but they have and towns do not offer similar economic economically feasible, nor socially or recovered more quickly. Adjustment opportunities and what can be done politically acceptable. elsewhere has been slower and, as a result, about it? Given what we know about the London’s strong economic performance spatial disparities have widened. Local economic forces driving polarisation, there plays a large part in explaining widening government in England has borne the are two key questions: disparities. Providing an effective counter- biggest burden of austerity and cities in the balance to London may require some North of England have been much harder n In which places could greater investment to be more spatially focused hit than those elsewhere. investment and other government support – for example, by identifying a number of Given that austerity reduced be used to increase productivity and help places, spread across the UK, that are doing redistribution, it is partly responsible for to create jobs? relatively well and focusing infrastructure widening disparities. The resulting cuts to n How do we make sure that people investment on achieving productivity and public services may mean that austerity can access these opportunities? jobs growth in those areas. hindered adjustment to the financial crisis and that the adverse effects on disparities Evidence suggests that around 50% of Access to opportunity could persist in the medium to long run. people only ever work while living in the Policy then needs to make sure that local labour market where they were people can access the opportunities What’s the appropriate policy born (Bosquet and Overman, 2019). This generated. The current debate often response? suggests that the policy response needs interprets this far too narrowly as being What should be the objective of policy? to be realistic about how far people are about ‘better transport’. In fact, we need On the implications for overall economic willing to move for work, particularly for to address multiple barriers that prevent growth, the debate is polarised. For some, less educated workers (the figure rises to individuals from being able to access these it is obvious that spreading growth across 60% for those without a degree). Having opportunities – for example, through the UK would make use of underused ‘everyone’ move to London and the South investment in education, in childcare, and resources. For others, London and the East is not economically feasible, nor in mental and physical health services. South East are key, and we should focus on socially or politically acceptable. Barking and Dagenham have very making sure they continue to perform well. The same is true for the other good transport links to one of the largest extreme: achieving a level playing field concentrations of employment in the Planning restrictions where productivity is equalised and jobs world, but this is not enough to prevent There is no evidence of large benefits from are generated ‘everywhere’. We need bad social and economic outcomes for spatial redistribution, and much evidence to be realistic about the market forces households who live there. to show that very restrictive planning in London and the South East has been harmful. Hence, artificially restraining London’s growth does not seem like a desirable policy.

Market Harborough Hemingford Grey Cirencester Markfield PadstowHenley on Thames City of London Marlborough Harlow Paignton Hereford Castle Ashby Clacton-on-Sea Marlow Harmondsworth Peak DistrictHertford LiverpoolCastle CombeSt Albans Clerkenwell Marlow-on-ThamesCrosthwaiteStow-on-the-Wold Egham NuneatonHarpenden Ware PenrithHeversham LolworthCastle DoningtonSt Aubin Clifton-Without MartlockCrowthorneStowmarket Tamworth Ellesmere Port Goole UllswaterOakamoorHarrogate WarehamPenzance Hexham London CatfordSt Austell ClitheroeSt Saviour MaryleboneCroydeStratfield MortimerMill HillDownham MarketTaplow Newark Ellington Gorleston Up HollandOgbourne St GeorgeHarrow WarkworthPerranporthHeywood Looe CattistockSt Brelade's Bay Clovelly Stafford Matlock CroydonStratford-upon-AvonMilton KeynesDroitwich Tarporley Newbury Enfield Tiverton GracechurchUpminsterOkehamptonHartington WarringtonPershoreHigh Wycombe LostwithielChaddesley CorbettSt Helier Maidenhead Clun StamfordMawgan PorthCuckfieldStratford MineheadDroitwich SpaTauntonNewcastle-upon-TyneEpping Thompson Grantham UppinghamOld HarlowHartlepool WarwickPeterboroughHighbridge LoughboroughCharlburySt Issey MaidstoneCoalvilleStanton Drew Mayfair DanbyStreatham HillMinster LovellDudley TavistockNewcastle-under-LymeEskdale Tonbridge GrasmereUpton upon SevernOldhamHarvington Wasdale PetworthHillingdon Louth Charlwood14St Ives MalmesburyCockermouthSteeple AstonMelbourneDarlington Stroud ModburyDukinfield Telford Newick Euston Torquay Gravesend Uxbridge Ormskirk Harwich WashingtonPickering Hinckley LowestoftChathamSt James Park Malton ColchesterStevenage MelkshamDartford Studland MorecambeDulvertonTemple SowerbyNewmarketEvesham Totland Bay Grays Ventnor OswestryHaslemere WatchetPiercebridge-on-TeesHilton Ludlow CheadleSt John's Wood Malvern Coleshill StiltonMelton MowbrayDartmoorSunderlandMoreton-in-MarshDumbletonTenterden Newnham Ewloe TotnesNorth WalshamGreat DunmowWadebridge Otley Hassocks Waterloo Pimlico Hitchin Lulworth CoveCheddarSt Katharine's MarinaManchesterCommondaleStockbridge MeridenDartmouthSurbiton Morpeth Dunmow Tetbury New Forest Exeter TrevoneNorthallertonGreat TorringtonWakefieldOtterburnHastings Watford Plymouth Holborn Luton ChelmsfordSt LawrenceManningtreeConistonStockport MevagisseyDaventrySutton ColdfieldMouseholeDunstableTettenhall WoodNewquay Exmouth TrowbridgeNorthamptonGreat YarmouthWallasey Oundle HatfieldWellingboroughPolesworthHolsworthy Lyme RegisChelseaSt Leonards-on-SeaMansfield CorbyStockton on TeesMiddlesbroughDawlishSutton-in-AshfieldMuch HadhamDunster ThameNewton AycliffeFakenham Truro NorthwichGreenwichWallingfordOutlaneHathersage Wells Polperro Honiton LymingtonCheltenhamSt Martin MarazionCorfe CastleStoke-on-TrentMidhurst Deal SwadlincoteMuch WenlockDurham ThetfordNorfolk BroadsFalmouthTunbridge WellsNorwich Grimsby WalsallOxford StreetHavant WelwynPolruan-by-FoweyHook Lymm CheshuntSt Mawes MargateCornhill on TweedStone MildenhallDeddingtonSwaffham Mullion Duxford Thirsk North ActonFaringdonTwo BridgesNotting HillGuernseyWaltham ForestOxford HaverhillWelwyn GardenPolzeath City Hope Valley Lympsham ChesterSt PancrasMarket DraytonCotswoldsStonehouseMilford-on-SeaDenton Swanage Muswell HillDymchurchThrelkeldNorth FerribyFarnborough Tysoe NottinghamGuildford WandsworthPaddingtonHawkshead Wembley Poole Horley ChesterfieldSt Peter Port CoulsdonStourport on Severn Derby Swindon Ealing Tintagel Farnham Uckfield Guiting PowerWantage Haydock Weobley Horncastle Chichester Covent Garden Dereham Earls Court Faversham Hailsham Hayes Horrabridge Chiddingly Coventry Devizes East Cottingwith Fawkham Hale Hayle Horsham Chinnor Crackington Haven Devon East Grinstead Felixstowe Halifax Hayling Island Horsington Chippenham Crawley Dewsbury East Horsley Ferndown Haltwhistle Haywards Heath Hounslow Chipping Campden Crawley Down Didcot East Molesey Finchley Hammersmith Heathfield Hove Chipping Norton Crewe Diss Eastbourne Fleet Hampstead Helmsley Huddersfield Chiswick Crewkerne Ditchling Eastleigh Folkestone Hampton Court Helston Hull Chorley Cricklewood Docklands Eccles Fordingbridge Hanwell Helton Hungerford Christchurch Cromer Doncaster Edenbridge Forest Harleston Hemel Hempstead Hunstanton CentrePiece Spring 2020

Housing costs Devolution Henry Overman is professor of economic We also need to address concerns over Discussion around the systems through geography at LSE and research director high housing costs in our more successful which urban and regional economic of CEP. areas, as well as thinking about ways to policy is delivered often distracts attention encourage increased mobility. For example, from more fundamental questions An earlier version of this article appeared how do we widen the horizons of young about the effectiveness of particular in CEP’s 2019 Election Analysis series as people growing up in disadvantaged areas policy interventions. There is a growing ‘People, Places and Politics: Policy Challenges to ensure that they are willing to commute recognition that greater local control may of the UK’s Uneven Economic Geography’ or move to access opportunities offered in be needed to improve policy effectiveness, (http://cep.lse.ac.uk/pubs/download/ the broader local area? although there is disagreement about the ea047.pdf). form that this devolution should take. Left-behind places Whatever happens, it is important that An effective policy response will require policies that have wide-scale impacts (such Further reading increased investment (LSE Growth as transport and housing) are coordinated Commission, 2013) and the reversal of across local areas and that the right kind of Clément Bosquet and Henry Overman (2019) austerity. Left-behind places have high policies are targeted at different areas. ‘Why Does Birthplace Matter so Much?’, proportions of vulnerable people with Differentiating the response in this Journal of Urban Economics 110: 26-34. complex needs and low levels of economic way is controversial and difficult for activity. This compounds their problems, constituency-based politicians (in both Lee Elliot Major and Stephen Machin (2018) as long-term unemployment, poverty, central and local government). The Social Mobility and Its Enemies, Pelican. mental illness and poor health often go traditional policy mix – central government hand-in-hand. investments in local growth projects, Steve Gibbons, Henry Overman and CEP research suggests that small transport and other infrastructure, funding Panu Pelkonen (2013) ‘Area Disparities in tinkering and minor tweaks of existing for business support and access to finance, Britain: Understanding the Contribution policies will not be enough to tackle the and a host of other interventions – has of People vs. Place Through Variance multiple barriers to social mobility faced not properly addressed this challenge Decompositions’, Oxford Bulletin of Economics in these places. and has therefore been ineffective in and Statistics 76(5). It is also important to be clear that narrowing disparities. spending in left-behind places does Daniel Graham and Steve Gibbons (2018) not always need to be justified based Conclusion ‘Quantifying Wide Economic Impacts of on economic performance. There are Spatial disparities in the UK are profound Agglomeration for Transport Appraisal: important public good arguments that and persistent. Improving economic Existing Evidence and Future Directions’, could justify increased expenditure across performance and helping to tackle the CEP Discussion Paper No 1561 (http://cep.lse. a wide range of policy areas. For example, problems of left-behind places are both ac.uk/pubs/download/dp1561.pdf). it is possible to argue for subsidising important policy objectives. Addressing rural broadband as a public good while these challenges requires a new approach LSE Growth Commission (2013) Investing recognising that its economic impacts are to policy, one that allows for different for Prosperity: A Manifesto for Growth. likely to be limited. responses in different places. Distributional arguments can also Such variation makes many people be used to support intervention. nervous. But it is important to remember For example, reversing austerity cuts to that we should care more about the effect welfare benefits would disproportionately of policies on people than on places. benefit areas with high concentrations Policies should be judged on the extent We should care of disadvantaged households. But it is to which they improve individual important to be realistic about the likely opportunities and on who benefits, more about the economic impact of these policies so that rather than whether they narrow the effect of policies we properly consider sustainable sources of gap between particular places. government revenue to fund this on people increased public expenditure. than on places

Market Harborough Hemingford Grey Cirencester Markfield PadstowHenley on Thames City of London Marlborough Harlow Paignton Hereford Castle Ashby Clacton-on-Sea Marlow Harmondsworth Peak DistrictHertford LiverpoolCastle CombeSt Albans Clerkenwell Marlow-on-ThamesCrosthwaiteStow-on-the-Wold Egham NuneatonHarpenden Ware PenrithHeversham LolworthCastle DoningtonSt Aubin Clifton-Without MartlockCrowthorneStowmarket Tamworth Ellesmere Port Goole UllswaterOakamoorHarrogate WarehamPenzance Hexham London CatfordSt Austell ClitheroeSt Saviour MaryleboneCroydeStratfield MortimerMill HillDownham MarketTaplow Newark Ellington Gorleston Up HollandOgbourne St GeorgeHarrow WarkworthPerranporthHeywood Looe CattistockSt Brelade's Bay Clovelly Stafford Matlock CroydonStratford-upon-AvonMilton KeynesDroitwich Tarporley Newbury Enfield Tiverton GracechurchUpminsterOkehamptonHartington WarringtonPershoreHigh Wycombe LostwithielChaddesley CorbettSt Helier Maidenhead Clun StamfordMawgan PorthCuckfieldStratford MineheadDroitwich SpaTauntonNewcastle-upon-TyneEpping Thompson Grantham UppinghamOld HarlowHartlepool WarwickPeterboroughHighbridge LoughboroughCharlburySt Issey MaidstoneCoalvilleStanton Drew Mayfair DanbyStreatham HillMinster LovellDudley TavistockNewcastle-under-LymeEskdale Tonbridge GrasmereUpton upon SevernOldhamHarvington Wasdale PetworthHillingdon Louth CharlwoodSt Ives MalmesburyCockermouthSteeple AstonMelbourneDarlington Stroud ModburyDukinfield Telford Newick Euston Torquay Gravesend Uxbridge Ormskirk Harwich WashingtonPickering15 Hinckley LowestoftChathamSt James Park Malton ColchesterStevenage MelkshamDartford Studland MorecambeDulvertonTemple SowerbyNewmarketEvesham Totland Bay Grays Ventnor OswestryHaslemere WatchetPiercebridge-on-TeesHilton Ludlow CheadleSt John's Wood Malvern Coleshill StiltonMelton MowbrayDartmoorSunderlandMoreton-in-MarshDumbletonTenterden Newnham Ewloe TotnesNorth WalshamGreat DunmowWadebridge Otley Hassocks Waterloo Pimlico Hitchin Lulworth CoveCheddarSt Katharine's MarinaManchesterCommondaleStockbridge MeridenDartmouthSurbiton Morpeth Dunmow Tetbury New Forest Exeter TrevoneNorthallertonGreat TorringtonWakefieldOtterburnHastings Watford Plymouth Holborn Luton ChelmsfordSt LawrenceManningtreeConistonStockport MevagisseyDaventrySutton ColdfieldMouseholeDunstableTettenhall WoodNewquay Exmouth TrowbridgeNorthamptonGreat YarmouthWallasey Oundle HatfieldWellingboroughPolesworthHolsworthy Lyme RegisChelseaSt Leonards-on-SeaMansfield CorbyStockton on TeesMiddlesbroughDawlishSutton-in-AshfieldMuch HadhamDunster ThameNewton AycliffeFakenham Truro NorthwichGreenwichWallingfordOutlaneHathersage Wells Polperro Honiton LymingtonCheltenhamSt Martin MarazionCorfe CastleStoke-on-TrentMidhurst Deal SwadlincoteMuch WenlockDurham ThetfordNorfolk BroadsFalmouthTunbridge WellsNorwich Grimsby WalsallOxford StreetHavant WelwynPolruan-by-FoweyHook Lymm CheshuntSt Mawes MargateCornhill on TweedStone MildenhallDeddingtonSwaffham Mullion Duxford Thirsk North ActonFaringdonTwo BridgesNotting HillGuernseyWaltham ForestOxford HaverhillWelwyn GardenPolzeath City Hope Valley Lympsham ChesterSt PancrasMarket DraytonCotswoldsStonehouseMilford-on-SeaDenton Swanage Muswell HillDymchurchThrelkeldNorth FerribyFarnborough Tysoe NottinghamGuildford WandsworthPaddingtonHawkshead Wembley Poole Horley ChesterfieldSt Peter Port CoulsdonStourport on Severn Derby Swindon Ealing Tintagel Farnham Uckfield Guiting PowerWantage Haydock Weobley Horncastle Chichester Covent Garden Dereham Earls Court Faversham Hailsham Hayes Horrabridge Chiddingly Coventry Devizes East Cottingwith Fawkham Hale Hayle Horsham Chinnor Crackington Haven Devon East Grinstead Felixstowe Halifax Hayling Island Horsington Chippenham Crawley Dewsbury East Horsley Ferndown Haltwhistle Haywards Heath Hounslow Chipping Campden Crawley Down Didcot East Molesey Finchley Hammersmith Heathfield Hove Chipping Norton Crewe Diss Eastbourne Fleet Hampstead Helmsley Huddersfield Chiswick Crewkerne Ditchling Eastleigh Folkestone Hampton Court Helston Hull Chorley Cricklewood Docklands Eccles Fordingbridge Hanwell Helton Hungerford Christchurch Cromer Doncaster Edenbridge Forest Harleston Hemel Hempstead Hunstanton