A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Bachtler, John Book Part Regional disparities in the United Kingdom Provided in Cooperation with: ARL – Akademie für Raumentwicklung in der Leibniz-Gemeinschaft Suggested Citation: Bachtler, John (2004) : Regional disparities in the United Kingdom, In: Karl, Helmut Rollet, Philippe (Ed.): Employment and regional development policy: Market efficiency versus policy intervention, ISBN 3-88838-231-9, Verlag der ARL - Akademie für Raumforschung und Landesplanung, Hannover, pp. 36-49 This Version is available at: http://hdl.handle.net/10419/62294 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu Regional Disparities in the United Kingdom John Bachtler Regional Disparities in the United Kingdom Contents 1. Introduction 2. Historical Context 3. Trends in Regional Disparities 3.1 Regional Problems pre-1945 3.2 The Long Boom: 1945-1973 3.3 Deindustrialisation and Tertiarisation: 1973-1980s 4. Recent Trends: 1980s to 2000 4.1 Employment 4.2 Unemployment 4.3 Economic Trends 5. Conclusion References 1. Introduction In an EU context, the United Kingdom has the most extreme economic disparities of any current or new Member State. According to the Second Cohesion Report (CEC 2001) and more recent Eurostat data, the UK has the most prosperous NUTS II region in the EU, with a GDP per capita approaching three times the level of the EU-26 aver- age. At the other end of the scale, the UK has one of the poorest EU regions – Cornwall & the Isles of Scilly – which, even in an enlarged EU, would have Objective 1 status by virtue of its GDP per head being less than 75% of the EU-26 average. As an indicator of regional problems in an EU context, the UK receives almost five percent of Objective 1 funding and is one of the largest recipients of Objective 2 and 3 support in the EU. Within the UK, regional disparities have several key features. First, there are long- standing, deep-seated inequalities in prosperity and employment between regions, characterised by the dominance of south-east England (centred on London) over the rest of the UK. More generally, there are differences between southern regions (South East, South West, East Anglia, parts of the Midlands) and most other parts of the country – frequently termed a ‘north-south divide’. Second, industrial restructuring over the past 30 years has led to more complex intra-regional patterns of disparity, with greater localised differences in wealth and employment. It has been claimed that differences within regions are as great as differences between regions. Third, since the 1980s, the ‘regional problem’ has been partly eclipsed by the growing attention given to the problems of the inner city areas of the major conurbations – London, Liverpool, Manchester, Glasgow, Newcastle, Leeds. Of greatest concern are areas characterised by so-called ‘social exclusion’ – low rates of economic activity, generational unemployment, low levels of skills and qualifications, poverty, fragmented families, and high rates of crime, delinquency, alcoholism and drug dependency. Lastly, in recent 36 Regional Disparities in the United Kingdom years, the policy debate has focused on differences in the relative economic competitiveness of the regions and localities in the UK. This chapter reviews regional disparities in the UK, a country illustrative in many as- pects of regional dynamics in other parts of the EU. The chapter begins by reviewing the historical context and long-term trends in regional disparities, before examining cur- rent spatial patterns and contemporary policy debates on the regional problem. 2. Historical Context Economic historians and geographers have recognised a ‘dualism’ in the economic de- velopment of the UK – a divide between the northern and southern parts of the country - dating back over several centuries. The Industrial Revolution of the late 18th and 19th centuries began in the Midlands and North West of England. It was based initially on textiles and then other sectors such as coal-mining, iron and steel, heavy engineering and shipbuilding, with manufacturing coming to dominate the employment structure across much of Northern England, Western Scotland and South Wales. The south of England (with the exception of London) tended to be more reliant on agriculture, sub- ject to cyclical fluctuations in prices, and was generally less affluent. The industrial prosperity of the ‘north’ began to change markedly in the 1920s and 1930s. This was the start of a long-term decline in the fortunes of major manufacturing sectors, and a shift in location patterns to favour the Midlands and southern regions of the country among growing light industries and service sector firms. It was also during the 1930s that regional policy measures first began to be introduced with the ‘Special Areas Act’ providing assistance for the high-unemployment areas of South Wales, North East England and Western Scotland. In effect, there was a reversal of the relative prosperity of northern and southern regions of Britain which has persisted to the present day. However, there are two caveats to this picture (Martin 1988). 1. The leading position of London has dominated the economic geography of the country for over 500 years. The pre-eminent role of London originated in its role as the seat of the monarchy and national government, geographical proximity to Con- tinental Europe and, in particular from the 17th century, its importance as a finan- cial, trading and distribution centre. London was a pivotal location in the growth of Britain’s international trade, with an increasing concentration of service employ- ment, especially associated with banking and financial services. Even over the 1840-1920 period, when ‘northern’ prosperity was at its greatest, South East Eng- land was performing much better in terms of manufacturing employment growth (as well as growth in service sector jobs). 2. There were some important differences in employment trends among northern re- gions of the UK. It is possible to distinguish between the so-called ‘manufacturing heartland’ of the West Midlands, North West England and Yorkshire-Humberside, and a so-called ‘industrial periphery’ of Wales, Scotland and the North/North East England. Although there were significant increases in manufacturing employment in all regions (spectacularly so in the big cities), employment growth in the ‘indus- trial periphery’ was about half that of the ‘industrial heartland’, and indeed the pe- riphery actually experienced a relative decline in its share of manufacturing em- ployment dating back to the 1840s. 37 Regional Disparities in the United Kingdom A further historical factor of note is the degree of urbanisation of Britain. This origi- nated in a combination of ‘push’ factors associated with agriculture (technology, pri- ces), notably changes in landownership from the 17th to 19th centuries which led to the enclosure of land and the effective disappearance of a small-scale, land-owning class of farmers. The large population of landless labourers were therefore easily attracted by the huge demand for industrial work in the big cities. By the early 20th century, England and Scotland were the two most urbanised countries in the world, and agriculture ac- counted for a relatively small share of employment by comparison with other European countries. Historically, regional policy in the UK has been primarily associated with urban/industrial areas; with some exceptions, rural areas have featured much less pro- minently as a target of regional policy than in France or Germany, for example. 3. Trends in Regional Disparities A striking feature of UK regional problems is their persistence. In the 1960s, McCrone (1968) noted that regional policy had been in operation for over 30 years, yet the prob- lem regions were approximately the same ones as in 1934. More than two decades later, it could be argued that the United Kingdom was almost the only developed country where historical regional unemployment rates would serve as good predictors of con- temporary regional disparities (Bachtler 1994). 3.1 Regional Problems pre-1945 The analysis of UK regional problems frequently takes the 1930s as a starting point. The early part of the decade was a period of severe economic and social problems for the United Kingdom, notable for the high level of unemployment throughout the coun- try. Unemployment levels exceeded one million