Two decades of development policy have levelled North East productivity DOWN

Twenty-two years of regional and local economic development policy have done absolutely nothing to level up labour productivity in the North East relative to the rest of the UK. In fact, it has slipped further.

Meanwhile Scotland, which gained a devolved government in 1999, has risen up the productivity table and now ranks behind only London and the South East.

Latest figures from the Office for National Statistics, published yesterday, show productivity in the North East in 2020, measured by output per hour worked, to be at 86.4% of the UK median (UK =100), above only Yorkshire & the Humber in England as well as Wales and Northern Ireland.

UK = 100. Source: ONS.

In 1998, the first year for which statistics are available, the North East was eighth highest out of 12 nations and regions in the UK productivity table. Though it has swapped places from time to time with Yorkshire & the Humber, the East Midlands and West Midlands, by 2020 it was down to ninth.

What is more, in relation to the UK median it had gradually fallen, with some ups and downs, from 88.9% to 86.4%.

Meanwhile, at the other end of the table, Scotland has risen from fifth equal with the South West, behind London, the South East, the Eastern region and the North West, to third behind only the capital and the South East.

Further, with a score of 97.6% of the UK median compared with 92% in 1998 Scotland is now comfortably ahead of fourth-placed Eastern region on 92.8%.

London and the South East are the only regions above the 100% mark, on 134.4% and 109.2% respectively, as they have been almost continuously throughout the period, though the Eastern region briefly achieved 100% in 2002 and 100.3% in 2003.

According to the ONS: ‘While there have been no marked changes in the relative performance levels of most regions since 1998, in nominal terms Scotland has improved over the last two decades and moved up the rankings to now outperform the East of England and North West regions.

‘The East of England has seen the fastest relative decline, moving from just below the UK average in 1998, and clearly differentiated from the bulk of nations and regions, to being at the top of a relatively closely packed set of nations and regions in 2020, with only London, Scotland and the South East being at materially higher levels.’

Output per hour worked is the headline measure used by the ONS, but the picture is similar using the alternative output per job measure. The only significant difference was that in 2020, the first years of the Covid-19 pandemic, Norther Ireland jumped up the table to fifth, pushing the North East down to 11th.

The ONS comments: ‘Across the UK, many workers were furloughed for much of 2020, which generally reduced levels of output per job… Output per job levels in London, the South East and Scotland were significantly higher than the UK median level in 2020.  However, Northern Ireland performs noticeably stronger on this metric, where it is above the UK median, than it does using the output per hour measure, where it is noticeably below the UK median. Conversely, the South West has moved in the opposite direction.’