Tony Blair today admitted a North-South divide exists - in Yorkshire.

But while top business organisations and economic galvanisers in the county agreed with his conclusions, they were determined that he should not play down the North-South divide nationally.

A new report out today, commissioned by Tony Blair, called Sharing the Nation's Prosperity, suggests that while inequality still exists, the gap between national North and South is closing.

But the Prime Minister highlighted that North Yorkshire is prospering while many other parts of South Yorkshire are still suffering severe economic problems. And he stressed Labour was succeeding in helping people out of poverty with measures like the Working Families Tax Credit, Minimum Wage and the New Deal for the unemployed.

Penny Hemming, Yorkshire and Humberside regional director of the Confederation of British Industry, said that Mr Blair had a point in spotting notable economic differences within her region.

"But I do not think anyone can argue that the South-East is in general more prosperous than the North."

Within Yorkshire, it was a fact that there was European Objective 1 funding for South Yorkshire as one of the continent's most deprived areas.

But this cash was now part of a new economic strategy which had been formulated by Yorkshire Forward, the regional development organisation which was designed to iron out differences.

"The only way we will start to address the desparity in our region is to begin to work together."

Paul Murphy, chief executing of the York Inward Investment Board said: "There is a North-South divide nationally and as far as York is concerned it works in our favour.

"We have a higher quality of life and a better and more suitable workforce which is why organisations like CPP, the Government's MAFF operations and earlier, this decade, Smith and Nephew, were attracted to our area."

York's MP Hugh Bayley agreed that the national divide was still obvious in some areas like house prices and rents but said that the Prime Minister, who represented a Durham seat, knew a lot about the North and instinctively knew that the issue of the North-South divide was "much more complicated than in the 1980s when the Conservatives laid waste to our traditional industries like coal, steel and textiles.

"This new report shows that the PM is right. Our policies are creating jobs and spreading prosperity in every region, but we have to make sure that nowhere gets left out."

The report stressed that York's GDP per head was 26 per cent higher than the European average in 1995, compared to 35 per cent below the European average for Barnsley, Doncaster and Rotherham.

It also showed the percentage of children getting five GCSEs A to C in 1997-98 was 54 in North Yorkshire and 21.4 in Hull.

see COMMENT 'Tony must heed Northern fears'

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