The North South divide could get worse

There was an interesting article in the Observer yesterday on the north south divide in the economy. In effect the piece by Ruth Sunderland was a damming indictment of the industrial policy of successive governments since Thatcher and the loss of jobs in the manufacturing sector.

In the same edition of the paper there was a major feature on Middlesborough and the likely impact on the end steel making on the town. But as Middlesborough the same applies to many communities in the country, Stoke included, which have been reliant on a couple of industries.

Some years ago I wrote sketches of Stoke during the decades from the 50s onwards. The decline in the industrial base is a well-known story but it is useful to give the account some statistical shape.

It was an area dominated by a few industries at the start of the 50s. Chief amongst them was the Pottery Industry, which employed over 70,000 people, approximately half the workforce. It was followed by mining which employed 20,000 people in the North Staffordshire Coalfield and then the iron and steel industry with 3,000 workers. However, these industries even before the war were in decline and the unique small scale industrial landscape of the area mentioned by the writer JB Priestley in 1936 in his book “English Journey” were already archaic. Companies such as the Michelin Tyre Company had been established by the 1920s offering higher rates of pay than the predominate industry of ceramics.

By the 90s the pottery industry was down to 20,000 jobs and steel making and the mining industries were finished in the area.

In short in a period of 50 years something like 100,000 jobs have been lost to the area.

Sunderland found that research from Manchester University indicated that despite a decade of growth in the economy the private sector had not generated the jobs to fill the gap from the loss of jobs in the traditional industries.

Instead jobs in the public sector and supported by the state accounted for over half the jobs created nationally with a higher proportion in the old industrial areas. Any glance of the Sentinel over the last decade will prove this assertion.

The article calculates that 1.3 million jobs have been lost in the manufacturing sector between 1990-2007. And the argument that the private sector would fill the gap with new high value jobs would fill the gap has not proved to be the case. The trickle down argument has proved to be false.

Ruth Sunderland points out that manufacturing jobs are crucial not only in terms of the money generated in exports but also because the local economy creates more jobs through the support given by other local industries through supply chains.

The expansion of the finance industry has not really had much of an impact on the north or the midlands. She cites the example of the north east where jobs in the financial sector only account for 2% of all jobs compared with 30% in the south east and those jobs generally exist in the low pay call centres jobs. In short the high value jobs are not being created.

The reliance on finance has plunged the country back to Victorian levels of wealth inequality where money is concentrated in the south east. The worst impact of this has been hidden by the slack taken up by the growth of jobs locally in health, education and social care. And of course it will be these jobs that are most under threat if spending cuts bite.

The article points out that many of the industrial areas such as Middlesborough, and the same applies to North Staffs, have never recovered from the recessions of the 1980s and 90s. In this area over 24% of the population are reliant on some form of benefit. There are areas of the country Middlesborough and Stoke included where a high proportion of the population is claiming incapacity benefit.

“What is needed on Teesside and elsewhere is an acknowledgement of the situation and a manufacturing strategy. The former industrial regions need support as they move from the old industries to the new green ones. Otherwise, the risk is that skilled workers will be lost, and whole areas consigned to the scrap heap.

Both the Conservatives and Labour are planning major public expenditure cuts, which will have a negative impact on employment. This will fall disproportionately on the already beleaguered regions. The moral is we should not simply see the debate about the inevitable cutting ““ to finance the bank bailouts ““ from the consumerist perspective of whether we will have the same services in health or education, or even what will happen to our personal tax rates. They should also be seen in a regional context, in that they could kick away the last props from areas like the north-east.

Teesside is making brave attempts to fight back, but what has become apparent now is the Thatcherite razing of industry was pain with no gain, and that tragically, Labour did not do enough to repair the damage”

However the point that she makes about the green sector is an important one and it is an argument that I will return to later.

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