UK economy is being sucked into London and south-east, says TUC

The TUC has called on political parties to spell out plans to spread prosperity to all Britain’s regions after warning that economic activity is becoming ever more concentrated in London and the south-east.

On current trends, the TUC said, the two most prosperous regions would account for 40% of national output by the end of the next parliament in 2022.

Highlighting the big geographical shifts in the UK, the TUC said that in 1997 London and the south-east accounted for a third of national output. That had risen to 37.7% by 2015 – the last year for which data is available – and would continue rising to 40.1% by 2022.

London, in particular, has expanded rapidly over the last two decades, from 18.7% to 22.7% of GDP between 1997 and 2015 and with a further increase to 24.8% of GDP by 2022.

Other regions are expected to show relative decline. Yorkshire and Humberside is projected to see its share of GDP fall by 0.5 points to 6.1%, with the north-west and Scotland experiencing falls of 0.4 point falls. The West and east Midlands and the east of England will see small rises in their GDP share, the TUC said.

The Brexit vote last year highlighted the prosperity gap between the richer parts of Britain and struggling regions. Theresa May has said the government’s planned industrial strategy will help the “left behind” parts of the country, while Labour has also called for action to regenerate the regions.

The TUC general secretary, Frances O’Grady, said: “This analysis shows that, with London and the south-east dominating economic growth, too many people are missing out on the chance of a decent job just because of where they live.

“That’s not sustainable, and it’s why more than ever we need an industrial strategy that delivers good jobs where they’re needed most.

“Britain needs great jobs – and all the political parties must explain in their manifestos how they will deliver growth in every corner of the country, not just the capital.”

The TUC said a comprehensive industrial strategy was essential for rebalancing the economy and for bringing strong growth and decent jobs to all parts of the UK. It called on the parties to make manifesto commitments to:

• Boost spending to enable the UK to compete with other advanced economies. Digital and communications, transport, water and flood defences, and housebuilding all needed additional support.
  

• Use public procurement policy to improve jobs and pay, by sourcing goods and services from companies that give workers decent pay and conditions, and by ensuring that companies wishing to invest in skills and apprenticeships are not overlooked in favour of those seeking to compete on cost.

• Expand the UK’s green economy, by setting a robust target of 50% of the UK’s energy coming from renewables by 2030 and making sure new green jobs are delivered to areas that need them most.

• Target low-paid sectors of the economy, to find ways to improve productivity and raise skill requirements so workers have better pay and conditions.

• Give workers a stronger voice, by putting workers on company boards and giving worker representatives seats on industrial sector councils and bodies such as the Institute for Apprenticeships.

The Industrial Communities Alliance – an all-party body representing local authorities in the traditional industrial areas of England, Scotland and Wales – said it was vital to create a UK regional development fund worth at least £1.5bn a year to compensate for the loss of EU funds after Brexit.

Terry O’Neill, the alliance’s chairman, said: “The ways we go about regenerating our areas, and the sources of funding we draw on, all need rethinking. The government knows this, and it is one of the challenges they have to address over the next couple of years.”