Commission warns parts of the UK are ‘decoupling’

A ‘huge gulf’ exists between some of Britain’s wealthiest and poorest regions, which is costing the economy around £40bn, a new report has warned.

The report by the independent UK2070 Commission warns that the UK is falling short in its ambitions to become an equal and inclusive economy, and that gaps between some parts of the country are set to grow even further with half of all future job growth limited to London and the South East if urgent action is not taken.

The commission, which is chaired by the former head of the British civil service, Lord Bob Kerslake, also warns that London is ‘decoupling’ from the rest of the country.

It adds that ‘moving south’ for a better standard of life is ‘no longer an option for most people’, with areas like London and the South East constrained by a lack of affordable housing.

‘Rents and house prices are simply too high, while overcrowding and excessive commuting distances are imposing further costs and strain on individuals and their families,’ the report states.

It also warns of a ‘longer-term environmental price being paid by us all’ as water supplies in the South of England come under increased pressure.

Instead, the commission calls for the creation of a £250bn UK Renewal Fund to help rebalance the UK, based on the strategies originally put in place to help reunite Germany.

‘Aufbau Öst, formalised by two solidarity pacts, has provided close to €1.5tn public funding by 2014,’ the report states.

‘Approximately €500bn was spent on infrastructure and regeneration, and €40bn on Transport Projects of German Unity. We believe a UK equivalent is needed. A fund which could be implemented by processes similar to the EU’s European Regional Development Funds would create ambition, scale, and coherence.’

The report also calls for much greater devolution of powers and funding, including the creation of four new ‘super regional’ economic development agencies and a spatial plan to guide the future development of the whole of the UK.

Earlier this month, the Institute for Fiscal Studies (IFS) warned rising inequalities in Britain are making a ‘mockery of democracy’.

An IFS report said there are ‘stark’ geographical inequalities in the UK, with average weekly earnings in London two thirds (66%) higher than those in the North East.

And it adds men in the most affluent areas can expect to live nearly 10 years longer than those in the most deprived areas, and this gap is widening.

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