Britain must spend at least £1trn over 20 years and devolve power out of London if Boris Johnson’s government genuinely wants to “level up” the country, reducing the gap between the poorest and richest areas.
In a report to be published on Thursday, the UK 2070 Commission led by former civil service chief Bob Kerslake, said the government must match its rhetoric with money and policies. “The gap is enormous, the biggest gap of any large economy in the developed world, and it is getting wider,” Lord Kerslake told the Financial Times.
He compared the amount required to transform the British economy with the £1.5trn spent on the former East Germany over 25 years. But he refused to be drawn on how the government should pay for it. To date only around £100bn has been earmarked for infrastructure over five years.
While he said the government was sincere in wanting to improve life for millions, he added: “I do not think the government grasps the scale of the challenge.” He denounced “gimmicks” such as reopening a handful of rail lines or moving part of the Treasury to the north of England.
It must shift power and funding away from Whitehall through a programme of devolution in the developed world’s most centralised country, the report added.
The centrepiece of its plans should be to more than treble the size of the planned Shared Prosperity Fund, the rebranded name for the EU’s financial support programme for poorer areas, to £15bn per annum and extend it to 20 years — effectively a £200bn increase in investment.
At the moment the EU allocates £2.2bn to the UK in structural funds, a sum matched by Britain. The UK will take on the full £4.4bn allocation at the end of the Brexit transition period on January 1 2021.
The report calls for an increase of at least £40bn annually on infrastructure spending over the next 20 years.
The Conservatives won December’s election by promising to “level up” the economy. Boris Johnson’s party secured an 80 seat majority by capturing so called “red wall” seats, traditional Labour voting constituencies, in the more deprived areas in England’s north and Midlands and Wales.
London’s economic output per head is 70 per cent above the national average and more than twice that of Wales, Britain’s poorest region. The cost of poverty annually is £78bn a year, 4 per cent of gross domestic product, the Commission calculated.
Lord Kerslake’s report also includes proposals on better bus and train links within cities and between them and surrounding towns and boosting private and public R&D spending from 1.7 per cent to 3 per cent of GDP to fund networks in the regions to match the “golden triangle” of London, Oxford and Cambridge.
The Commission predicted that without a shift in strategy, half of all new jobs by 2050 would be created in the south east, home to a third of jobs now.