Julia Unwin, of the Joseph Rowntree Foundation calls for five key reforms.
As a member of the Northern Economics Futures Commission, I am passionate about the need to tackle poverty and inequality, as part of any economic growth plan for the region. As our own research at the Joseph Rowntree Foundation shows, the northern economy will worsen and, without action, will only entrench regional disparities over the next decade.
Earlier this month, I announced the new Living Wage rate for those living outside London. The national focus on the Living Wage rightly focused attention on different ways of reducing poverty and inequality. But the fact that we need two rates - £7.45 outside London and £8.55 within – tells us a lot about the nature of inequality in the UK and the means by which it needs to be challenged.
There is the danger that a pan-northern strategy glosses over so-called 'pockets of deprivation' and overlooks areas of risk and poverty in its thrust for growth in the core cities. It is too easy to see the pursuit of high skill, high value jobs as conflicting with the creation of lower skill jobs. These are very difficult challenges, and the Commission has attempted to reconcile them.
We need to act now.
So what are the solutions?
Full employment is essential
While important high growth sectors matter, there are also a great many potential jobs in the service-based sectors as well as in construction and engineering, aligned with proposals for investment in transport infrastructure and housing. Job quality, skills utilisation and the Living Wage are all important elements of this.
Decentralisation of employment and training provision
By bringing together local skills strategies with locally commissioned welfare-to- work programmes, we can deliver a system that is more reactive to local needs, as well as create the connection between employment and training for those out of work. Welfare-to-work programmes have been unresponsive to local economic environments, reflecting regional economic inequity rather than ameliorating it, and thus leaving many of the long term unemployed without work, or without training.
Expansion of Small and Medium Enterprises
SME growth is central to delivering full employment, but also to sharing the fruits of economic growth amongst more marginalized groups in the labour market. Evidence from the Federation of Small Businesses, shows that SME expansion has a greater impact on employment growth than larger employers. Groups of people such as the long-term sick, and disabled people, are more likely to be employed by a small business.
Improving the quality of training and apprenticeships must be a cornerstone to boosting the supply of well paid jobs in the North of England. Funding for apprenticeships should be reallocated away from the weaker intermediate level qualifications towards advanced and higher apprenticeships to improve job quality, pay, and progression. The aim is to double advanced apprenticeships from 30,000 to 60,000 places by 2015.
By emphasising the primary importance of economic growth of all kinds and supporting the Living Wage, the recommendations in the Northern Economic Futures Commission report will go a long way to ensuring that we reverse, rather than exacerbate, levels of inequality and poverty in the region.
Julia Unwin is chief executive of the Joseph Rowntree Foundation and a member of the Northern Economic Futures Commission.