The North is suffering – how do we release the potential of the Northern economy?

Dalton Philips, the boss of supermarket chain Morrisons, has said that the double dip recession has hit the North so hard that it is increasingly a ‘different country’ to the South.

This is the sort of ‘grim up North’ headline that often makes Northerners want to throw things at the TV.  We know that our towns and cities have huge potential and many skilled and dedicated people live here.  Nonetheless, Dalton Philips’ observation that the North is being affected more than the South by the economic downturn is clearly accurate.  After all, the latest batch of unemployment figures published today by ONS make for pretty grim reading.

At present nearly ¾ million people are unemployed in the North of England, almost 100,000 more than this time last year.  The overall unemployment rate across the North is 10% while in the Greater South East it is 7%, compared to a national average of 8%.  Most worrying remains the rising number of people who have been out of work for a year or more, and the large number of young people unable to find work.

But rather than simply observing that economic circumstances are difficult up North, what we need is action to support the large numbers of people out of work and release the potential of the Northern economy.

The government has taken a small step towards acknowledging the need to provide more intensive support to areas that are hardest hit by refocusing its youth contract scheme on places that are unemployment hotspots. This scheme offer a wage subsidy to employers to take on young people who have been unemployed for six months.  Outside of these hotspots young people are not eligible unless they’ve been out of work for nine months.  This is an important acknowledgement that the impact of unemployment is not felt evenly across the country, but the offer if only available to 160,000 young people, while Labour is arguing for a ‘real’ jobs guarantee for all long term unemployed young people, funded by a tax on bankers bonuses.

While clearly young people should be a major concern, IPPR North has argued that long term unemployment has a scarring effect on people of all ages, and a targeted jobs guarantee should be offered to all long term unemployed people in unemployment hotspots.

But it is not simply the immediate effects of rising unemployment that need to be addressed in the North.  What the North of England really needs is the tools to design and deliver its own regional industrial strategy.  This is not an outdated idea that means backing lame ducks.  A 21^st century industrial strategy should mean identifying which sectors and industries offer the greatest potential for economic growth and good quality jobs, then having the ability to put in place a strategy to support these industries and sectors to flourish, and ensure people have the skills and capacities to respond to the opportunities created.  IPPR North’s Northern Economic Futures Commission, due to report in the autumn, is currently considering what this might look like in practice.

It is only with bold plans to rebalance private and public investment towards the north and decentralise key economic drivers such as skills and innovation policy that we will finally see the back of headlines that say it’s grim up North.  But such changes take time: we need to be laying the foundations now.

Katie Schmuecker is an Associate Director at IPPR North