COLUMN-Two Nations: regional perspectives on UK austerity: Kemp

Tue May 8, 2012 11:32am EDT

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By John Kemp

LONDON May 8 (Reuters) - While the leaders of Britain's coalition government insist "we are all in this together", austerity is being felt and viewed very differently across the country, re-opening the big north-south divide which characterised the economy and politics in the 1980s.

Broadly the country is again dividing into the "Two Nations" that was part-title of a novel written by Benjamin Disraeli in the 1840s, when he was a young and radical politician, before he went on to become prime minister in the 1860s and 1870s ("Sybil, or the Two Nations", 1845).

But rather than splitting by class, as in Disraeli's novel, the country is dividing along a regional fault line that pits prosperous and coalition-supporting south-east England against the increasingly disaffected Midlands and north of England, Wales and Scotland.

NORTH-SOUTH VOTE DIVIDE

In political terms, austerity continues to receive solid backing across the south of England, outside London, with 40 percent of voters saying they support the Conservatives, and another 14 percent backing the Liberal Democrats, the junior partners in the coalition, according to the latest daily tracking poll published by YouGov ().

Support for the Conservatives remains above average in London, at 36 percent, but the party's position has eroded and it now trails its Labour opponents, who are on 43 percent.

In the rest of the country, however, support for the Tories has slumped to 29 percent in the north, 23 percent in Wales and the Midlands, and a paltry 15 percent in Scotland. Labour (and the Scottish National Party north of the border) enjoy corresponding majorities over 50 percent, according to the YouGov poll.

Regional differences in the levels of support for the government and its economic policies have been evident since 2010, but have become steadily more accentuated in recent months, as political backing for the two governing parties holds up relatively well across southern England but slumped everywhere else.

The regional divide was on display in last week's local elections. Labour captured 823 seats across England, Wales and Scotland, seizing control of 42 extra town halls (32 in England, 8 in Wales and 2 in Scotland). But almost all the captured councils were north of an imaginary line from the Bristol Channel to the Wash (36 out of 42). Just six were in southern England.

Regional differences in support are long-standing, and reached their most pronounced during the 1983 general election, when the Conservatives led by Margaret Thatcher all-but-eliminated Labour's parliamentary representation in the south outside London.

But under Labour leader Tony Blair and Conservative David Cameron, both parties sought to cross over the divide, winning seats outside their traditional heartlands. Now the austerity programme has re-crystallised those divisions.

ECONOMIC PERFORMANCE

Variations in support are unsurprising when differences in economic performance and the way austerity is affecting areas differently are taken into account.

Northern and western areas of Britain depend much more heavily on public sector employment than the south, so austerity measures tend to have a much more severe impact on regional unemployment rates and prosperity.

Of 23 counties and other statistical regions north and west of Bristol Channel/Wash line, 17 have a higher than average share of 16-64 year olds working in the public sector, according to an analysis of data from the Business Register Employment Survey (BRES) published by the Office for National Statistics (ONS).

Across 13 areas south and east of the line, just 2 have above-average public sector employment (and one of those is deprived Inner London).

Austerity appears to be hitting northern areas much harder than those in the south of England.

The Financial Times features a fascinating analysis showing how central government cutbacks are hitting local government funding for areas across Britain. The worst-hit areas are almost all in the north (and London) while authorities in the south mostly suffer much smaller cuts (and some are actually unscathed) ("The well to do town that austerity forgot" May 7).

Regional economic disparities are reflected in the housing market, where London continues to report the most widespread house price increases, while prices fall across the rest of the country, but again with differential declines.

"Reflecting the north/south divide further, the south east had the least negative price balance ... with the west Midlands and Wales recording the most severe price deteriorations," according to the April survey of the Royal Institution of Chartered Surveyors.

And differences in regional performance are not expected to improve. London's independent and pro-business Centre for Economics and Business Research (CEBR) forecasts that unemployment will keep rising until 2016 "across the UK, except in the south east, east and London" according to a report published on May 8.

"The regions expected to be worst affected by rising unemployment are those most dependent upon the public sector for employment and so are most exposed to government cutbacks. These include Northern Ireland, Wales, the North East of England and Scotland," according to CEBR.

"The coming years will be a period of transition for these regions and countries of the UK as public sector support is withdrawn, a process that could help foster private enterprise and job creation in the long run," the authors conclude ().

IT DEPENDS WHERE YOU LIVE

Political support for the government and austerity correlates directly with the differential employment and economic impact of the spending cuts.

In the first 18 months of the Conservative-LibDem coalition, from around May 2010 through until the end of 2011, the very distinct political reactions to austerity in the north and south of England were largely ignored by the media.

Headline news coverage focused on the neck-and-neck polling of the coalition and its opponents. The implication was that Britain was evenly divided about austerity and the government's track record.

In fact, the daily tracking polls revealed sharp differences, which mostly escaped comment. The coalition continued to pile up massive support across southern England (little hurt by austerity), in some cases approaching 50 percent while polling poorly across the north, with the Midlands and London somewhere in between.

But as the Conservative Party's poll ratings in the south have slipped, and those in London and the Midlands have fallen sharply, the full extent of the regional divisions is being laid bare.

In the most recent tracking poll, Labour has a lead of 12 percentage points over the Conservatives (43-31 percent). Much of this is being racked up in the party's traditional heartlands.

It is still three years until the next scheduled parliamentary election, but the strong regionalisation of voting bodes badly for the ruling parties. Much of the Tory vote is piled up (uselessly) in southern England, where the party will rack up big majorities. Labour's support, at present, is more evenly and broadly spread, which would translate into more parliamentary seats.

Crucially, Labour has pulled ahead in the battlegrounds of the Midlands, as shown by the tracking polls and a string of council victories last week from Birmingham, Cannock Chase, Derby, Dudley, Newcastle under Lyme, North East Lincolnshire, and Redditch.

While supporters of austerity claim "we are all in this together," the view is not shared by voters. Britain's experiences and perceptions of austerity reveal a sharper regional divide than at any time for 30 years, with powerful support in the south and strong opposition in the rest of the country.

Electoral arithmetic, more than anything else, explains why the government will almost certainly have to temper its austerity programme in the months ahead if it is to close the polling gap before elections due in 2015.

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