Scotland challenges inequality, while UK falls behind

 

Deprivation is a useful measure to identify areas of the country that are experiencing significant disadvantage. The Scottish Index of Multiple Deprivation (SIMD) uses statistics on income, employment, health, education, access to services, crime and housing to calculate the level of deprivation across all regions of Scotland. Last year, levels of deprivation fell in Glasgow City, Renfrewshire and City of Edinburgh compared to SIMD 2016. Glasgow City demonstrated the greatest fall, from 48% of data zones in the 20% most deprived areas in Scotland, to 44%.

However, the UK Government has not privatised solving deprivation and so, a UK-wide index of multiple deprivation does not exist. Therefore, it is difficult to compare levels of disadvantage in areas of Scotland and other regions of the UK. As a result, this article will offer a comparison of GDP per head of population, one of the common indicators of deprivation and disadvantage, within the UK and across the EU.

10 Regions of UK with lowest GDP per head (2018)

Region GDP per head
Tees Valley and Durham (England)

 

21,882
Northumberland and Tyne and Wear (England)

 

24,960
Merseyside (England)

 

24,464
South Yorkshire (England)

 

22,104
Lincolnshire (England)

 

23,322
Outer London – East and North East (England)

 

22,626
Cornwall and Isles of Scilly (England)

 

22,096
Devon (England)

 

23,858
West Wales and The Valleys (Wales) 21,274
Southern Scotland (Scotland)

 

19,937

As this table demonstrates, of the 10 regions with the lowest GDP per head in the UK, only one area is within Scotland. Meanwhile, 8 of the regions are within England and one is in Wales. This suggests that economic inequality is a greater problem in the rest of the UK than it is in Scotland.

Furthermore, it is interesting to compare these figures to the EU-27 countries average GDP per head of population. Indeed, it has been implied that regions within the UK have struggled to keep pace with the rest of Europe since the financial crash in 2008.

In 2018, GDP at market prices in the EU-27 was valued at 13.5 trillion euros, equivalent to an average of 30,200 euros per person (approximately £26,195.63).

UK NUTS 2 (Nomenclature of Territorial Units for Statistics) Regions with GDP per head lower than EU-27 Average

Region GDP per head (£) % of EU-27 Average
Tees Valley and Durham

 

21,882 83%
Northumberland and Tyne and Wear

 

24,960 95%
Merseyside

 

24,464 93%
South Yorkshire 22,104 84%
Derbyshire and Nottinghamshire

 

25,367 97%
Lincolnshire 23,322 89%
Shropshire and Staffordshire 25,574 98%
Outer London – East and North East

 

22,626 86%
Dorset and Somerset

 

25,442 97%
Cornwall and Isles of Scilly 22,096 84%
Devon

 

23,858 91%
West Wales and The Valleys 21,274 81%
Southern Scotland

 

19,937 76%
Northern Ireland

 

25,981 99%

This table highlights that many regions across the UK continue to lag behind many European countries in terms of GDP per capita. Indeed, 14 NUTS 2 regions in the UK have a GDP per head lower than the EU-27 average. Of these regions only 1 is in Scotland, 1 is in Wales, 1 is in Northern Ireland and 11 are in England.

The major exception

While we have demonstrated that deprivation and inequality are rife across England, there continues to be one major exception – London. In fact, this is a huge part of the problem. In 2018, data from the Office for National Statistics showed that London recorded a 1.1% annual rise in output per person to £54,700. Meanwhile, in the North East, growth was only 0.4%, rising to just £23,600 per head. This shows a further widening of the per capita gap between the richest and poorest regions of the country.

We have recognised for years that the key issue at play here is that the UK is far too centralised around London and the South East. Seven years ago, at Business for Scotland, we said that “power, money, opportunity and influence has been drained from the rest of the country for generations towards a metropolis that has developed its own financial and capitalist culture which sits a world apart from the distant regions and nations that make up the wider UK” and unfortunately, this still applies today but to an even greater degree. Ultimately, this constant investment in London and the financial sector has resulted in huge disparity across England, and harmed the other nations of the UK, including Scotland, Wales and Northern Ireland.

Further mismanagement

The past year has undoubtedly been a challenging one for many countries across the world, with the COVID-19 pandemic having drastic consequences for economies and healthcare systems worldwide. However, adding a hard Brexit deal to the equation has only worsened matters, particularly with regards to deprivation. Indeed, studies have found that there is a high risk that the economic impacts of COVID-19 and Brexit will further increase regional disparities. In particular, already deprived areas such as the North East, Wales and Outer London are likely to be hardest hit by Brexit. Meanwhile, tourism dependent coastal communities and hospitality dependent cities such as Manchester and Liverpool are already facing drastic consequences as a result of COVID-19.

These struggles are only emphasised by the lack of support displayed by the UK Government. Indeed, new research has shown that if the Chancellor’s plans to cut Universal Credit go ahead, millions of individuals will be left without the income needed to afford the minimum living standard and the Scottish Child Payment will be undermined. Indeed, after years of austerity, followed by the chaos of Brexit and a global pandemic, such policy decisions will only cause further deprivation and inequality in the UK, particularly in England where great disparity already exists. This highlights that as a result of UK Government mismanagement and the already severe levels of inequality, certain impoverished areas in England are likely to suffer further in the coming months and years.

Southern Scotland

This region is the only area of Scotland that is within the 10 regions of the UK with the lowest GDP per head and holds a GDP per capita lower than the EU-27 average. However, it is important to note that this situation is gradually improving and the GPD per head of population in this region has significantly improved since 2011. In 2011, Southern Scotland’s GDP per head was £16,142. Meanwhile, the EU-27 average was approximately £22,346. This means that Southern Scotland’s GDP per head was approximately 72% of the EU-27 average in 2011. However, in 2018, this figure had risen to 76%, demonstrating the gradual increase of GDP per head and the closing gap between Southern Scotland and the EU-27 average.

Scottish Government Approach

So, let’s see why Scotland is leading the way in reducing such deprivation. One of the key ways to tackle deprivation is through education. Indeed, the Scottish Government recently announced the investment of £215million to benefit pupils in Scotland’s most deprived communities.

An area in which the Scottish Government has also invested in to reduce deprivation and inequality is affordable housing. Indeed, in the 2021-22 budget, £711.6 million was dedicated to affordable housing and a new £55 million programme was put in place to support town centres.

Another critical example that extends to the wider community is the Empowering Communities Fund. This programme was established in 2015 and has already had huge benefits for deprived communities in Scotland. To date, the programme has helped hundreds of projects that create change in disadvantaged communities through training, employment, healthy eating and volunteering opportunities.

It is clear that reducing inequalities and deprivation is a key ambition of the Scottish Government and one that is continuously being met, with levels of deprivation reducing across the country.

Conclusions

It is evident that inequalities and uneven levels of deprivation across the UK continue to be a significant problem. However, it is also clear that Scotland is continually challenging these inequalities and the Scottish Government is working to ensure that levels of GDP per head in Scotland match the average of EU countries.

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