Northern ‘poorhouse’

Last summer, chancellor George Osborne pledged that his government would create a “higher wage, lower tax, lower welfare” country; that the vaunted ‘Northern Powerhouse’ would, over the next few years, finally become a reality.

 
But the Conservative government’s track record shows that, if anything, the very opposite of their pledges is being realised.

 
A new report from the Centre for Cities published yesterday (January 25) has found that more than half of UK cities are, in fact, classed as “low-wage, high-welfare” economies. The vast majority of these cities are in the north or in the Midlands, while only four cities with below average wages and above average welfare spend are in the south.

 
Over the last decade, 90 per cent of job growth came from cities in the south of England – for every 12 new jobs created in the region between 2004 and 2013, only one job was created in the rest of the UK.
The analysis of UK cities’ economic health looked at welfare spending by taking together Jobseekers’ Allowance, housing benefit, disability benefit, tax credits, child benefit, and council tax, among other government benefits.

 
Housing benefit, tax credits and other forms of in-work income support represented the largest proportion of welfare spend across the board. This indicates that joblessness alone is not what’s plaguing northern cities – it’s chronically low wages, as highly skilled jobs, such as in the steel industry, disappear and low-wage, insecure jobs come in to take their place.

Affordability crisis
While the outlook for northern cities was bleak, the south of England, too, is staring at its own crisis – one of affordability – which threatens to derail its success. The Centre for Cities found that relative economic health in cities such as London, where wages are high and welfare spend is relatively low, is at risk as housing costs continue to spiral out of control.

 
For example, in Oxford, which the report found to be the least affordable city, house prices were 16.2 times more than average salaries, compared to the most affordable city, Burnley, where house prices were 4.3 times average salaries.

 
One fact from the Cities Outlook report was clear – across the UK, the creation of new jobs did not translate into wage growth. While a million new jobs were created in UK cities between 2010 and 2014, urban wages fell by 5 per cent over the same period – a decrease in average annual salary of £1,300 in real terms per person.

 
Unite assistant general secretary Steve Turner placed the blame of northern cities’ struggles and stagnant wage growth across the UK squarely on the shoulders of the present government and its coalition predecessors.

Years of suffering
“There is no escape from the basic fact that Cameron and Osborne- in this Parliament and the last – are failing to implement policies that create decent jobs across the country,” he said.

 
“People suffered seven years of real cuts, and wages have yet to recover to pre-crisis levels. Most of the new jobs being created are in the lower paid sectors of our economy. And at the same time they have overseen the loss of skilled jobs such as in our steel industry. They have no plan to drive wages higher.”

 
“Because of this government’s actions, economic growth has been skewed towards the South East and local authorities with higher levels of deprivation have been the hardest hit by the government’s funding cuts, year after year,” Turner added.

Northern cuts

 
Indeed, a study by Newcastle-upon-Tyne city council from last year found that poorer northern and inner-city London councils bore the greatest brunt of cuts to local authorities.

 
The study showed that in the 2015-16 town hall funding settlement, councils in the north east, which are largely Labour-run, would see a drop in spending power of ÂŁ78 per household, while more affluent Tory-controlled councils in the south will actually experience an increase in spending power amount to ÂŁ9 per household.

 
Turner highlighted government attacks on the most vulnerable.

 
“Disabled people and people who have lost their job have been subjected to punishing benefit cuts and a humiliating sanctions regime,” he explained. “It was only sustained opposition that stopped them taking over £1,000 a year from low paid households with young families through Tax Credit cuts.”

 
Turner noted that lowering the welfare bill means tackling the housing crisis, which the government has so far done virtually nothing to address.

 
“Government social spending is in reality is being driven by spiralling housing benefit costs as the housing crisis continues to worsen,” he argued. “Rather than take the necessary action to invest in building new social rent homes that would create thousands of decent jobs and provide decent homes across the UK, they watch from the side lines.”

 
He explained that the government taking a stake in vital industries such as steel would substantially enhance struggling cities’ economic prospects.

 
Sustained public investment in infrastructure projects such as public transport, communications, green energy and housing, would also collectively contribute to a massive boost to local economies.

Government investment on this scale would in turn ensure decent jobs were created across the country.
“Simply improving transport links, for example, is a major boost to an area and encourages further private investment,” Turner noted.