North East Devolution and Levelling Up

North East unemployment ‘wake-up call’ – Chamber

North East leaders reacted with dismay today as the region resumed its position as the UK region with the highest unemployment, overtaking London for the first time since September 2020.

As the region waits for the government to publish its Levelling Up White Paper, figures for the three months September-November 2021 released today by the Office for National Statistics show North East unemployment (including Tees Valley) rose by 0.5% compared with the previous three months, reaching 5.7%.

Meanwhile the London rate fell by 0.4% to 5.4%. The UK rate was also down by 0.4% to 4.1%.

At the same time the North East’s economic inactivity rate, measuring those who have dropped out of the labour market, rose by 0.6% to 25.1%, the UK’s highest apart from Northern Ireland. There are now 406,000 economically inactive people in the region, 10,000 more than a month ago and the highest since March-May 2019

The unemployment and inactivity rates together mean only 70.5% of working age people in the North East have a job compared with 75.5% for the UK as a whole. Only Northern Ireland with 70% has a lower rate.

LEVELLING UP NOT WORKING YET

Jonathan Walker, policy director of the North East England Chamber of Commerce, said: ‘This morning’s statistics should be a huge wake up call to government about the challenges facing our region. While most parts of the country saw a fall in their unemployment rates, the North East was one of only two regions to see an increase, while our employment rate fell at the same time.

‘Despite the rhetoric, the effects of “levelling up” are yet to be borne out in this data. While this is obviously a long term project, the longer the gaps between regions are allowed to grow, the more daunting the task becomes.

‘Our own survey data shows that while businesses continue to bounce back from the pandemic, they face challenges in recruiting the right skills as well as severe headwinds caused by inflation and rising energy prices. If the costs of doing business are not addressed, then there is every chance that job creation will suffer.’

Helen Golightly, chief executive of the North East Local Enterprise Partnership (NELEP), said: ‘Today’s statistics make for difficult reading. The North East region’s latest employment rate was at 70.5%, which is by far the lowest in England.

‘We’ve seen consistently over the previous three quarters that the number of people in work has fallen and that the number of people who have left the labour market and are categorised as economically inactive has increased.

‘Significantly, the unemployment rate – this is people who don’t have a job, but are actively looking for work – has increased to a level that exceeds London, something we’ve not seen since September 2020…

‘[i]t is clear that whilst other regions are moving ahead as they recover from Covid-19, the North East continues to face labour market challenges. 

‘We are expecting the government’s Levelling Up White Paper to be published and it is clear that this is increasingly urgent to better understand how government want to work in partnership with the North East to support us with our economic recovery to address these gaps and avoid further economic imbalance.’

Today’s statistics come exactly a week before NELEP is due to hold its annual meeting and set out its progress so far in meeting its ten-year targets, which include closing the employment gap between the North East and England, excluding London, by 2024. By September 2020 the gap had been reduced by 21% and now appears to be widening again.

The unemployment figures put more pressure on Levelling Up Secretary Michael Gove to include meaningful measures in the long-awaited White Paper to do more to boost the regional economy than simply dole out comparatively modest £20m grants from the Levelling Up Fund to support civic improvements, welcome though they are.