Paul Ormerod, an Honorary Professor at the Alliance Business School at the University of Manchester, has stated that successive governments have failed to address the core reasons for regional economic disparities in the UK. He notes that while Prime Minister Andy Burnham's Number 10 North initiative aims to revive economies in more deprived areas, similar aspirations have existed for decades.
Ormerod highlights that the primary reason for economic weakness in many regions is the relatively low productivity of average firms, which consequently leads to lower wages. He argues that initiatives such as new transport links or training courses only have an indirect impact on regional income differences.
According to Ormerod, raising firm productivity levels is the key objective. This involves addressing industrial structures weighted towards low-productivity sectors and improving the productivity of existing firms. He cites a 2020 OECD report that identified the industrial structure as a main reason for UK regional cities lagging behind London, the South East, and Western European counterparts.
Evidence from a new paper by the Productivity Institute at the University of Manchester, which analysed 25,122 projects funded by UK Research and Innovation (UKRI) between 2004 and 2021, suggests that public support for R&D and knowledge collaborations has a positive effect on regional economic development. Ormerod concludes that targeted spending, rather than blanket spending, can make a significant difference in narrowing the economic gap.