EDINBURGH – Today, the United Kingdom is united in name only. With different regions and industries desperately trying to opt out of a “hard Brexit” from the European Union, and Scotland even considering independence, whatever ties bind the UK together are being severely strained.
This is no temporary or passing phenomenon. The vote to leave the European Union was fueled by deep-seated public anger about the huge structural inequalities between the UK’s north and the south – inequalities that, as UK Chancellor of the Exchequer Philip Hammond acknowledged this week, are the worst in Europe. Yet Brexit will only exacerbate Britain’s regional divide: as the more export-dependent north loses jobs faster than the south, post-referendum optimism will be cut short.
Since 2010, the northeast has comprised 4% of the UK population, contributed just 3% of the country’s gross value added (GVA), and accounted for only 2% of the economy’s new jobs. Those figures are 11%, 9%, and 7%, respectively, in the northwest; and 8%, 6.5%, and 6%, respectively, in Yorkshire and Humberside. By contrast, London and the southeast have accounted for 26.8% of population, 37.7% of GVA, and 39% of new jobs. In fact, since 2010, half of all new jobs were created in London, the southeast, and the east.
A 2016 study by University of Groningen economist Philip McCann found that the UK’s regional income gaps rival the worst in Europe. Average disposable household income in the Greater London area is 60% higher than in most other regions of England, Wales, and Northern Ireland.
Moreover, according to the latest Eurostat data, average per capita GDP (in terms of purchasing power parity) in the Welsh and Tees Valleys is, respectively, 69% and 74% lower than the EU average, placing them below Lithuania, Slovakia, and Slovenia. Overall, North England, Wales, and Northern Ireland’s per capita GDP levels are lower than Mississippi and West Virginia’s.
Regional economic policy used to be the tool for narrowing the divide. But the “Northern Powerhouse” initiative to revive cities in the UK’s north has obscured a reduction in regional aid, which over the last six years has fallen to just £2 billion ($2.5 billion) annually. That is one-third lower than the average annual installment during the first decade of this century.
Today, as much as three-quarters of public funding for research and development is spent in the southern third of the UK, while only 7% is spent in the north. And historic infrastructure-spending gaps continue to widen: by 2020 or 2021, annual per capita transportation-infrastructure spending will reach £1,900 in London, but will be less than £300 in the northeast.
McCann argues that London is decoupling from the rest of the country, because few benefits – such as new jobs, industries, or technologies – ever flow out of the capital to other regions. This means that policies that enhance London’s economy do little for the rest of the UK’s regional economies.
All of this points to a powerful conclusion: the UK’s centralist, Whitehall-dominated constitution – which evolved during the First Industrial Revolution, when London’s political power was matched by the north and Midlands’ greater economic power – is not suited to today’s world. The UK’s peripheral regions, with their high levels of long-term unemployment, are losing workers. A London-centric approach is no longer of benefit even to London, which struggles with congestion, economic overheating, and a housing crisis.
If the UK continues to centralize its decision-making, regional disparities will only deepen. The UK must adopt a more balanced approach that gives each region the power to develop its economic potential and bridges the divide between the core and periphery. To this end, it is critical to reframe the constitution to incorporate regional interests and recognize that the UK is a multinational state.
Such radical change – and, to match the scale of the crisis, it must be radical – will require a nationwide discussion, which could be conducted via a people’s constitutional convention. That convention should start by examining Brexit’s impact on regions.
We should ask, for example, whether it makes sense to repatriate powers and financial transfers from Brussels to Westminster, or if some powers and financing should instead be devolved to the regions and nations. Where possible, regional funds and policymaking powers – including environmental regulation and oversight of agriculture, fisheries, and local social programs – should be delegated to the appropriate regional authorities, such as the Scottish Parliament, the Welsh and Northern Irish Assemblies, city mayors, and local authorities.
The convention should also look at the broader case for building a more federal UK, for codifying a new division of powers between London and the regions, and for replacing the unelected House of Lords with an elected Senate of the Nations and Regions.
As a next step, the Labour opposition should ask Prime Minister Theresa May’s government to sponsor a convention. If the government does not respond – as happened with the Scottish Constitutional Convention in 1989 – Labour should lead the convention itself, and invite other political parties to participate. Constitutional reform is critical to develop institutions that meet the needs and aspirations of all parts of the UK. They cannot be delayed.
The UK’s north-south divide raises issues common to all Western economies where movements promising to “take back control” for the people are forming, and a new identity politics is challenging moderate forces. We now must ask what surging nationalism and protectionism in an increasingly interdependent world mean for the way governments are structured.
The intellectual challenge that Britain has consistently sidestepped is how to balance autonomy with cooperation. With too much integration and centralization, calls for local control will only grow louder. If there is too little cooperation, we cannot solve economic and social challenges that require a collective approach. Only by getting the balance right can we begin to build a fairer, more united UK.