Extract 2 – Correcting Spatial Imbalances

The data in Fig. 2.1 compares the level of regional inequality in selected economies. For example, the 90:10 figures denote the ratio between regional GDP per capita in the 90th percentile (the income level which only 10% of the country's regions exceed) to the 10th percentile (the level which only 10% of the country's regions earn less than).

Fig. 2.1 Measures of inequality in regional GDP per capita, by country

This data demonstrates the pressure for an active policy response by the UK government to close regional gaps. In late 2022, a £5.5 billion Regional Transformation Fund was implemented, focusing heavily on upskilling historically sidelined workforces and modernizing local public transport connections.

This fund's launch follows a policy paper by the National Institute of Economic and Social Research, which outlined several distinct interventions to combat severe regional disparities:

• Invest in regional high-speed green transit links: This addresses current imbalanced public spending on transit, which remains 3.1 times higher per capita in primary metropolitan hubs than in provincial regions.
• Subsidise digital infrastructure and high-tech hubs: This creates productive, knowledge-driven local business clusters in post-industrial and coastal towns, tackling the fact that tech infrastructure investment in dominant urban centers is currently 2.1 times higher per capita than elsewhere.
• Relocate civil service hubs and regulatory bodies: Move key administrative operations out of major metropolitan hubs into provincial cities to tackle the issue where 25% of all civil servants and over 60% of senior public sector executives are concentrated in the capital.
• Provide targeted structural renewal grants: Supply direct grants for distressed local authorities to rehabilitate declining high streets, invest in local cultural centers, and support adult education.

Determining the most suitable intervention is further complicated by structural shifts in the workforce. Transitioning to a net-zero carbon economy may lead to the rapid obsolescence of traditional industrial skills in manufacturing hubs already enduring long-term structural unemployment. Conversely, some economists argue that the growth of green industries could yield significant structural employment gains if regional workforces are appropriately prepared.