The continued drift of the industrial population to London and the Home Counties constitutes a social, economic and strategical problem which demands immediate attention”
–  Report of the Royal Commission on the Distribution of the Industrial Population, 1940

A recent report by the Centre for Cities stated that while London’s strong economic performance should be welcomed, other cities around the UK are “punching below their weight”. Some commentators argue that disproportionate growth is not a problem as long as people are free to move to where the opportunities are available, which in itself should be possible given that we are a small, well-connected nation. Yet it is not just the spread of prosperity throughout the country that has proved to be uneven, but also the ability of people to spread and exploit the opportunities of the main centres of prosperity such as London.

Regional imbalances in the UK’s economic and social landscape are by no means a new phenomena. In July 1937, a Royal commission was appointed to investigate the social, economic and strategic disadvantages of the imbalance in industrial production that had become evident as early as the 1920s and 30s. Yet the bold decentralisation measures recommended by the committee three years later as urgent national priorities were quickly overshadowed by the war effort, and the urgency to address the economic and social disparities between regions faded.

That is not to say that the issue has received no policy attention over the second half of the 20th century, with both Conservative and Labour governments attempting to tackle the issue. The regional development agencies of New Labour and the Regional Growth Fund initiative of the current government represent some of the various endeavours to boost all regional economies that have been attempted in recent times. Yet there has still been an increase in the share of national Gross Value Added (GVA), a measure of economic output, of London and the South East in recent years. Between 1981 and 2012 an increase from 31% to 37% in the share of GVA amounts to around £80 billion at 2012 prices.

Attention has been drawn to the internal imbalances that underscore this trend, including commentary from the IMF, along with numerous newspaper and magazine articles, blog posts and reports serving to fuel the debate. While London is not the only success story in the UK’s modern era of development, it seems that a primary means for people across the UK to enhance their economic and social well-being is to head South East.

Yet for many years London has seen a net outflow of internal migrants, not the reverse. (It should be noted, however, that the population of the capital has not declined due to significant net inflows of international migrants). By taking a look at internal flows into and out of London and the South East, we can get a better idea of what is going on.

The maps below shows the geographical differences in the number of people who leave a local authority in England or Wales and end up in London. It is quite apparent that a greater proportion of people leaving the Home Counties and the surrounding areas migrate into the capital, with parts of Wales and the North far less likely to do so. The magnitude of this effect is even greater among the 22 to 30 age group. While this isn’t particularly shocking – quite intuitively people are more likely to move locally and younger people are more likely to head to the big city – the differences in flows of people that we can observe are likely to increase the gaps between those who are willing and able to move to more prosperous areas and those who are not.

Percentage of migrants leaving each local authority who flow into London, June 2012% of Migrants into london

Percentage of young migrants (aged 22-30) leaving each local authority who flow into London, June 2012
% young Migrants
Source: ONS and the Department for Communities and Local Government

So what might distinguish those who can and cannot move to London and the South East? A number of social factors that can restrict both the spread of prosperity and the ability of people to move to it appear to play a part.

The figure below shows the different percentages of migrants leaving the least and most deprived local authorities in England and moving to London and the South East of England, with deprivation represented by the education, income, health and overall elements of the 2010 Deprivation Indices. These were selected as they give an idea of how absolute deprivation may affect people’s movements within England, whilst also decomposing the concept of deprivation into a number of components deemed important for this analysis. It is clear that there are substantial differences between deprived and less deprived areas, with the latter far more likely to make the move to the prosperous London and the South East region.

Percentage of migrants leaving the most and least deprived local authorities who flow into London and the South East, June 2012
% Migrants leaving by Most and Least Deprived

We often think of deprivation as being synonymous with low income levels. However, it is important to look at both economic and social aspects of deprivation, as social aspects are what constitutes deprivation itself (i.e. they are of intrinsic importance) where as economic aspects such as income can be viewed simply as a means to escape deprivation  (i.e. of instrumental importance) – an opinion famously espoused by Nobel Laureate for Economics Amartya Sen.

Education deprivation is likely to translate into poorer attainment at school, which may lead to inability to compete for jobs in areas performing well economically. The potential for a widening skills gap between the most and least deprived areas may be a further concern arising from this. Health deprivation is also likely to have profound impacts on the imbalances in economic and social opportunities as poor health limits an individual’s ability to participate fully in society.

Income may have a more obvious connection with lack of movement to the London area, with house prices in the region being substantially higher than elsewhere in the country and rising faster (the average house price in London is around 18 times the average salary in the North East). Yet house prices appear to have a further consequence for the movement of people around the UK; indeed it seems that in the most housing deprived boroughs of London (which also happen to rank among the most housing deprived in the country), people appear to be moving out of the capital. Figures show that of those residents leaving the 5 most housing deprived boroughs of London (Brent, Waltham Forest, Newham, Hackney and Tower Hamlets), over 60% of them are leaving London entirely.

Both those who are unable to join in with the prosperity of the South East and those who are unable to stay in the region are likely to experience an imbalance in opportunities, a problem with roots that appear to go back decades. Given the stuttering economic progress of the last 6 years the current rates of economic growth have been welcomed by most, however the issue of imbalances is still there and at present shows no sign of fading.

Author: Steven Ayres