North and South: Why so Divided?

by Stephen Fisher

There have long been anxieties about regional inequalities in Britain. In 1962, prime minister Harold Macmillan wanted to “prevent two nations developing geographically, a poor north and a rich and overcrowded south.”

But there has nevertheless been movement in that direction since. Most notably in the 1980s Margaret Thatcher’s neo-liberal economic policies exacerbated decline in northern industrial production while facilitating expansion of the southern service sector. Since the 1990s economic growth has been sluggish in most regions, but London has further extended its lead in economic output.

Regional divergence has not only been an economic phenomenon, but a social and political one too. There have been changing regional inequalities in various outcomes, including life expectancy, life satisfaction, and political outcomes too. The 1980s were characterised by the widening divide between the Labour voting north and the Conservative south. That development mirrored the corresponding economic divergence. Similarly, and more recently, London’s distinctive economic success is an important part of the reason why it was the only region in England that voted for the UK to remain in the EU in 2016.

A new project, led by myself and Alex Betts, as part of the Social Macroeconomics hub of Rebuilding Macroeconomics, seeks to quantify and understand how economic, social and political differences between regions have changed over time and how those changes relate to each other. So far as possible, we hope to understand how social and political factors are causes and/or consequences of economic divisions.

The nature of the links between regional economic divergence and socio-political disparities is complex and not well understood so far. While economic prosperity often goes hand in hand with better social outcomes, this does not hold for the variation across regions in the UK. For instance, despite being the richest region, London has the lowest level of life-satisfaction. Meanwhile Northern Ireland has the highest average life-satisfaction scores despite being one of the poorest regions.

Not only does regional prosperity not translate into regional happiness, but the social foundations of regional economic success do not seem to be quite the same as those in studies of cross-national variation. Trust and trustworthiness are key bases of social-cooperation, including economic co-operation. Various studies have shown that GDP per capita is typically higher in countries where more people consider their fellow citizens trustworthy. As a rich country with relatively high levels of such generalized trust, the UK fits the international pattern well. But within the UK, regions with higher levels of trust are not necessarily better off economically. Most strikingly, Londoners are much less likely than those in other regions to think that people are generally trustworthy, but somehow they sustain tremendously high levels of lucrative economic activity.

What is the cause – consequence relation between economic, social and political divergence?

Regional economic divergence potentially generates negative social and political outcomes, and vice versa. The success of London appears to have contributed to the decline of other regions. Provincial towns and cities have suffered loss of heavy industry, declining investment and brain drain. These developments have been accompanied by rising levels of depression, disability, disaffection and political alienation in provincial England.

So one key issue we will address is how regional economic divergence affect socio-political outcomes and disparities. It may be that regional divergence might be good for socio-political outcomes in economically successful regions, but bad elsewhere. Social cohesion and political alienation might deteriorate if economic circumstances decline, but they might do so all the more in a region that is falling behind.

Analysis of regional developments should also help us understand national ones: economic, social and political. The widening north-south divide in the 1980s clearly fostered resentment in the north against Thatcher and the Conservative party that has not been forgotten. The regional structure of the UK economy may have contributed to the slow recovery after the financial crisis, and so the victory for Leave at the Brexit referendum.

Despite many northern constituencies voting to Leave the EU in 2016, they refrained from supporting Theresa May’s plea for a larger majority to deliver on the result of the referendum. Leave voters in the north were much less willing to vote Conservative in 2017 than were Leave voters in the south. Perhaps then the travails of Theresa May’s minority government and the Brexit impasse were in part the long legacy of the widening of the social, political and economic north-south divide.