Regional Inequality North South Unions 21 Diana Johnson MP

Picking bones with Owen Jones: regional inequality – Unions 21 conference

I write this post in a Starbucks, in the leafy metropolitan suburbs of Camden. This is quite ironic considering the subject matter, but there you go…

Just this Friday gone I was at Unions 21’s pre-election conference in Leeds. Its theme was re-balancing the economy, and the focus was a recent report, edited by Diana Johnson MP and including contributions from a range of political figures, on regional inequalities in the UK.

I worked on the report (downloadable here). It’s nothing ground-breaking, but it does make a few quite interesting findings.

I won’t revisit the whole report in-depth, but briefly: there is some revealing Survation polling there, which we commissioned, on voters’ attitudes to regional inequalities. It turns out a plurality of voters think Britain is more regionally-divided than it was 30 years’ ago – this becomes a majority when you ask northerners of Labour and UKIP voters. Some stats, notably on regional labour markets, do support this shift in perceptions.

There’s also the odd intriguing statistic in there – e.g. the regional differences in post-recession growth; and Tory vs. Labour spending on regional development – which offer useful counter-points to Osborne’s Wednesday budget. For briefer reads, Diana Johnson MP’s New Statesman and Left Foot Forward articles go into each of these two issues, respectively.

Getting to the point: is there a North/South divide?

Instead, I’m writing this post with a mind to going just a bit more deeply into one of the questions which came up time and again the conference: is there any point in talking about regional inequalities?

Surely all regional inequities are just manifestations of the fundamental, root inequities that really matter – those between rich and poor, skilled and unskilled, working class and upper class? That these problems are more acute in, say, the North East doesn’t mean that they are unique to the north. Nor, crucially, does it mean that being in the North East is a cause of these problems: very often, not only is this empirically proven not to be the case, but there is simply no way in which “region/location” could possibly cause these issues. And if you can’t even explain logically why one thing could cause another, you really shouldn’t be conducting statistical tests on these phenomena –  you’d be certain to report some statistically-significant findings, but only by chance (a Type 1 error, to use the jargon).

A similar point was made very passionately on the day by Megan Dobney, the TUC’s regional director for the northern powerhouses of London, the South-East and the East of England. But of course there’s also last May’s persuasive Guardian article on the topic by that pretend northerner Owen Jones (“The north-south divide is a myth – and a distraction”).

To be fair, the Unions 21 report is about regional inequality – not the north/south divide. Its focus is on how imbalanced growth, and an imbalanced economy skewed overwhelmingly in favour of the service sector is no good for anyone. It would benefit every region if growth, investment and opportunities were a bit more evenly spread across the country – not least impoverished Londoners bearing the brunt of the cost-of-living crisis: they may live in a bustling international city, but they’re not reaping the rewards. I’d agree that it’d be unwise for progressives to frame this in terms of a north/south divide – as John Denham said last May, it risks alienating voters in southern seats we need to win. Quite apart from whether there is any genuine regional difference, we have to be pragmatic.

Nevertheless, I do find this idea of the North South divide interesting from an academic point of view. Hence this post. In a nutshell: I think that Jones’s and Dobney’s argument certainly explains much of the regional difference – up to a point. But it’s still a gross over-simplification. Here’s why…

Picking bones with Owen Jones (and Megan Dobney, and John Denham, and a lot of other people whose surnames don’t rhyme with bones…)

To make his point, Jones points to statistics on various regions and localities, on a range of dimensions. I count about eight:

(1) Unemployment in North-East and inner London

(2) Proportion of London’s manufacturing industry lost from 1960-1990

(3) Educational qualifications of Londoners versus their labour market outcomes

(4) Proportion of children in income poverty

(5) Proportion of London’s children living in over-crowded homes.

(6) Proportion of London’s population (or households, not clear…) claiming housing benefit

(7) Proportion of London’s population who are rich vs. proportion who are poor.

(8) Proportion of parliamentary constituencies’ workers paid less than the living wage.

I don’t list these things because I’m a jobsworth, data-inputting monkey who revels in the kind of mind-numbingly monotonous tasks which normal people find tedious (though, for the record, I am).

I want you to think about all the root things Owen Jones is measuring in the above. I count four main ones: income, unemployment, manufacturing decline, skills. He makes the quite simple point that on all four of these broad measures,  there are poor-performers in the north just as there are poor performers in the south. Regional averages, as Megan Dobney said at the conference, disguise marked differences within regions.

Too true. But it’s not that simple: if you really want to get at the heart of whether there is a regional divide, you have to look deeper within these headline figures. Since the 1980s, a number of academic studies have tried to do exactly this.

They don’t just look at differences between individual regions at a particular point in time, as Owen Jones tends to. They also test questions like whether manufacturing in the north declined faster than manufacturing in the south; whether skilled people in the north are more likely to be unemployed than similarly-skilled people in the south; and whether employment in similar areas in the north grew/declined faster than similar areas in the south. They’ve made some very revealing findings.

For instance, even if you zone in and only look at the 1980s decline of manufacturing in northern manufacturing areas versus southern manufacturing areas, you find that manufacturing declined faster in manufacturing areas of the north.

Likewise, if you just look at the trends in employment for the least skilled 25% of the workforce in each region in the 1980s-1990s, you find that the lowest-skilled quartile were considerably more disadvantaged in some regions than others: despite having the same skills set, your long-term employment prospects were worse if you lived in Merseyside than if you lived in the South East.

I’m not saying that these factors prove that regions “cause” these divides (whatever that means). What I’m saying is that by Jones’s own measures, there is a north/south divide. This should at least offer some food for thought.

There are actually some pretty common sense reasons why we might see different outcomes for similar people in different regions. Take housing wealth. You surely can’t say that an educationally disadvantaged person in London sitting on a house with a value at least a few times higher than someone in the North East, and who bought their home under Right to Buy, won’t have a slightly different life course because of this. Likewise, for the kids of a middle-class family in a middling job who could just about scrape a mortgage when the prices were lower (and, crucially, less regionally-divergent), the very experience of having family in London does carry some labour market advantage. You can volunteer and do unpaid internships in the capital – a north-easterner can’t do that. Being at least vaguely proximate to these opportunities can potentially carry a small advantage.

Academics have also looked at some of the underlying trends behind headline “unemployment” – what about inactivity, what about the number of vacancies each unemployed person is chasing? Again, the regional divide becomes magnified. Headline unemployment stats, at least up to the 2000s (I’m in the process of analysing later trends for my MSc dissertation), tend to mask regional differences. This is potentially in part because whilst the experience of losing one’s job was pretty ubiquitous across north and south, replacement labour was more regionally-skewed: northerners have less jobs, more long-term unemployment and consequently more people giving up looking and falling into inactivity. No surprises that although the regional unemployment rates narrowed into the 1990s, the inactivity rates didn’t. The experience of unemployment between the regions is very different.

Some caveats, and another factually baseless suggestion that Owen Jones isn’t actually northern…

To repeat: I’m not saying there is a North/South divide. I’m trying my very best to keep to a much more moderate, conservative tone than Owen Jones, no doubt trying to compensate for his lack of northern-nes by trying to be gutsy – just like real northerners (like me).

However there are some interesting regional differences which hold even when you account for some conventional explanations. I’m afraid southern leftists can’t dispel the myth of a north/south inequity just by some flippant reference to historical changes in the structure of manufacturing or of the level of unemployment between areas. On the basis of these measures alone, there has genuinely been a different historical evolution between many areas in the north and south.

I also remain skeptical about what exactly a “regional divide” actually is: how (if at all) does it actually cause the problems we’re seeing? It may be that if we just measure for more factors, we explain away these differences and find that whilst the north/south divide is more magnified than we first thought, we are still looking at factors which are apparent across regions – none of them are unique to the north. At the moment we risk attributing “regional inequality” to anything we can’t measure (that’s error (“ε”), to return to the statistical jargon).

The evolution of research on health inequalities is instructive here. The 2010 Marmot Review into UK health inequity contained an interesting graph showing that manual workers in North East England had a lower life expectancy than manual workers in the South East. This sounds all very interesting, except that when a more recent study measured differences at a more localised level, and threw a load more variables into a regression model, it found these other factors – none of them specifically to do with “north/south” – accounted for most of these regional differences (quite possibly all, when you consider the type 1 error point I make in paragraph 6). Maybe this is the shape of things to come.

Two more caveats, then I’m off. First, Owen Jones also devotes a  lot of column inches comparing London to the rest of the UK. He has a point: on a lot of measures, London comes out as bad as the northern regions – you really could lump it with the north. This is certainly the case with respect to life expectancy, as well as some labour market outcomes. Sometimes it’s the South East which comes out top in the regional league tables, sometimes – notably on house prices – it’s London. I think people who portray London as the pinnacle of a North/South hierarchy muddy the picture. Our capital is an interesting, unique case in a lot of ways – for instance, it had the most NEETs of any region in the mid-2000s, now it has the least. Let’s not over-simplify.

Second, later in his piece he talks about how the rich are similar across different regions – there’s just less of them in other areas. Certainly in terms of the labour market outcomes for people with the highest skills, there’s some truth here – at least according to one study I read. Quite remarkably, outcomes for the most skilled 25% have been broadly consistent (and broadly good) across regions. It’s only when you look at the bottom 25% that a marked regional divide emerges.

Concluding remarks

That same study also looked at international differences in outcomes for the bottom 25% in 1996. It compared Britain with three other countries. Are labour market outcomes for Britain’s bottom 25% in different regions, it asked, more divided than Germany’s, America’s, or France’s?

If you’re ever stuck for an argument for why we should keep talking about regional inequalities, look no further than that study. Because Britain came out bottom of the league table.

I’m not fussed about us coming out worse than France. Nor indeed the US. Perhaps surprisingly, it’s Germany that bothers me.

Just six years previously, the Berlin Wall had fallen down. East Germans, after four decades of communism, were finally re-united with their fellow countrymen. Two completely different economic systems were fused together, and the consequences were dire. Germany still feels the scars of this separation in the form of a marked east/west divide. The wounds were even fresher in 1996.

Britain, by contrast, had enjoyed relative post-war stability. We remained the same people, in the same economy. Indeed in the early post-war period, our regions were converging economically. For sure, the cracks were showing before 1979, but it was only in Thatcher’s premiership that regional economies were really torn asunder – both economically and, it transpired, politically too.

In 1996, the gulf that divided our least advantaged workers in our regions, after eighteen years of Thatcherism, was greater than that which divided Germany’s, after 45 years of separation.

That’s a pretty remarkable achievement for any peacetime democracy. Certainly, all this talk is politically unpalatable and my head sides squarely with the Jones’s and the Denhams’s. But when the facts are presented from this perspective,  I can’t for a second blame working class northerners for still banging on about the north/south divide.

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