The geography of cuts
09 September 2010
The BBC are doing a ‘day of cuts’ (Thursday 9th September), and to highlight it they’ve released an index of resilience to economic shocks. The results are familiar: northern cities such as Middlesbrough, and those in the Midlands such as Stoke and Mansfield are vulnerable. Affluent commuter towns near London, such as Elmbridge in Surrey and St Albans have done well.
These results are similar to those we highlighted in July in our paper No City Left Behind. Our spin was different – the problem isn’t just about public sector cuts, it’s about a lack of potential for growth in the recovery.
And in 2008 my colleague Naomi Clayton found similar results in a prescient paper which divided cities into those where the public sector dominated (“Enterprise priorities”) and those which had strong, private sector led economies.
These are longstanding and entrenched problems, and the usual suspects tend to crop up time and again. A more important question is what should be done about it? We have a whole research programme, Cities 2020, devoted to this. We’re arguing that there needs to be a focus on the small number of high growth firms who create the majority of new jobs, that the current regional disparities in bank lending and finance need to be addressed, and that the new Local Enterprise Partnerships need to be strengthened in less successful cities.
Public spending cuts, while necessary, will make this harder, and the southern skew of the Coalition’s voter base adds further complexity. With the deficit looming large there will be a temptation for the government to make high-return investments in the productive areas of London and the South East, rather than those which may not do so well in the North. Initiatives such as the £1 billion Regional Growth Fund and tax breaks for new businesses in deprived areas are intended to help overcome some of these issues but seem insufficient to prevent a growing regional jobs divide. As ever, easy solutions remain elusive.