The project has been sponsored by the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School; the Department of Political Economy, King’s College London; and the Gatsby Foundation; and is proceeding with the cooperation of HM Treasury.
Background
Slow productivity growth and persistent regional inequality over the past decade have characterised many developed countries, including the US and the UK, with challenging economic and political consequences.
Internationally, the UK comes near the top on a wide range of indicators of regional inequality, lending it the label of “most unequal large industrial country”. While inequalities of consumption are much lower than inequalities of productivity, they are still larger than peer countries. This is primarily a “South East v the Rest” story, but with persistent city-town divides in every UK region.
While significant powers have been devolved to Scotland and Wales over the past twenty years, England has one of the most highly centralised governments in Europe with decisions and decision-makers focused in Whitehall. This is also true of UK governance in non-devolved issues. New city-region mayors have been established in some areas of England over the past decade, but Institute for Government analysis of English devolution highlights success in creating vibrant sub-national political structures but relatively little actual policy divergence.
Economic divides have been accompanied by growing political divergence. The pro-Brexit vote, driven by a complex set of economic, social and cultural drivers was concentrated outside urban centres in towns and rural areas, with many northern leave-voting seats then switching from Labour to the Conservatives at the 2019 General Election. Scotland has swung towards greater representation for the Scottish Nationalists since the 2014 and 2016 referendums, with polls suggesting growing support for independence.
This project therefore reviews the policy levers and institutional arrangements necessary to support U.K. economic growth; close regional divides; and satisfy growing pressure for greater devolution across the U.K.
Scope
The project has two parallel strands:
- A quantitative, econometric study of the drivers of regional and sub-regional growth and inequality
We use international and historic data to examine the drivers of regional and sub-regional growth in the UK. We examine the range of plausible contributors towards regional growth, demonstrating that low graduate skills or limited access to finance are no longer the central impediments to growth in the UK’s lagging regions. Instead, to boost productivity, regional policy should focus on expanding STEM skills, on transforming transport networks in the UK’s major non-London cities, and on redressing regional public R&D spending imbalances.
- A historical survey of UK growth and regional policy, 1979-2015
Drawing on interviews with over ninety top level political and official policymakers in the UK (spanning six decades of experience), we identify past efforts at addressing regional policy and summarise practitioners’ views on the lessons we can learn.
We take these two positive strands of analysis to produce a third, normative paper with a set of policy recommendations.
Research team
The project team consists of:
Ed Balls, Professor of Policy Economy in the Department of Political Economy at King’s College, London and Research Fellow at the Harvard Kennedy School Mossavar-Rahmani Center for Business and Government
Anna Stansbury, Assistant Professor, Sloan School, MIT
Dan Turner, Harvard Kennedy School MPP 2022
Nyasha Weinberg, Harvard Kennedy School MPP 2017
Esme Elsden, University College London PhD candidate