Byers pledges regional funds

Economic deprivation can cause crime and urban decay

Trade and Industry Secretary Stephen Byers has pledged funding to stimulate poorer regional economies after new research confirmed the existence of a north-south divide in growth and prosperity.

The research showed what the minister described as a "winners' circle" emerging with some regions slipping behind others. It was an "unfair and divisive" problem that destroyed economic and human potential, he said.

Too many areas are still under-performing

Stephen Byers

Earlier this year Prime Minister Tony Blair sparked a backlash when he sought to play down the existence of any significant north-south gap.

But on Wednesady Mr Byers told a London conference that economic growth had been stronger in the east and in London and the south east than it had in the north east, north west, West Midlands, Wales and Scotland.

Manufacturing businesses were investing more than 10 times as much in research and development in the south east than in the north east.

"In order to enjoy increasing prosperity in Britain we need strong economic growth in every part of the country," said Mr Byers.

"We need a new regional policy which not only tackles historic regional disparities but which also responds to the challenges of the modern knowledge economy."

Regions needed to be "renewed" so that the "winners' circle" could be expanded across the country.

"Too many areas are still under-performing," Mr Byers said.

"The existing disparities have serious economic cost implications which also lead to disturbing social costs - poverty, crime, poor education, ill health and social exclusion."

A fifth of people of working age in the north east and the West Midlands have no qualifications, compared with 11% in the south east, according to the report.

Country divided

The description of a north-south divide was an over-simplification, he went on, pointing out that Cornwall had such a low share of the economy that it qualified for special funding.

Cornwall - land of tin and tourists but also deep poverty

But he said a detailed look at Wednesday's unemployment figures showed that the claimant count had gone down by only 26% in the north east since 1997, compared with 48% in the south east.

"There is a clear need for radical regional policy," Mr Byers told the conference. "Simply tinkering at the edges will not be enough.

"Our regions need to be renewed. They were at the heart of the first industrial revolution and we must now ensure that they can play their part in the knowledge-based economic revolution which is now taking place.

"Past policies have failed to resolve the underlying weakness of the least successful regions and have failed to capitalise on their strengths."

Mr Byers pledged to provide funds to increase innovation, particularly in poorer-performing regions.

He said the DTI needed to change the way it considered the needs of regions: "In the past most policies did not take account of local and regional differences. That will change."