The North-South Divide and Margaret Thatcher, by Kim, Changhyun, Oct 2005


Expansion of Regional Policy


Regional policy is intervention by governments in the location of industry and people to ensure a more even distribution of economic activity. It first emerged in Britain during the inter-war years, when the South first came to be more prosperous than the North.
During the 1950s and 1960s, when both the Conservative and Labour governments actively undertook policies aimed at demand management and economic equality, regional policy grew in scope. Until the 1970s, regional policy remained strong in the United Kingdom. The British government believed that shortage of labor in one region and shortage of work in another was detrimental to the economic growth of the nation. Also, wartime planning by the UK government had given it experience and the machinery to carry out regional policy. The regional policy targeted mainly manufacturing.
Clement Attlee's Labour government of 1945-51 strengthened regional policy. The Distribution of Industry Acts of 1945 and 1950 identified areas eligible for assistance and called them development areas. The Board of Trade was empowered to build and equip factory sites, provide finance for trading estates, reclaim derelict land, and make grants and loans to firms. The Resettlement Scheme of 1946 provided assistance with migration to all unemployed workers. In 1947, Town and Country Planning Act was enacted and the Industrial Development Certificate (IDC) was introduced. New manufacturing operations or extensions to existing operations over 5,000 square feet in area required an IDC. The certificates were used to direct industry away from "congested" areas. The 1965 Control of Office and Industrial Development Act augmented the government's power to redirect development by creating the Office Development Certificate. In the mid 1960s, more than a quarter of applications for IDCs in the Midlands and the South were refused.
The Wilson government introduced the Selective Employment Tax, or SET. The SET was levied at a rate of 15% on the payrolls of service industry employees and a portion of the money raised was redistributed to manufacturing. The aim was to penalize the service sector and promote employment in manufacturing. But the SET also had an important North-South dimension in that the South had a higher proportion of service industries than the North.
In 1967, the regional employment premium was introduced. It was a refund payable to manufacturing firms in development areas and provided for payments equivalent to 1.50 pounds a week for men, 75p a week for women, and 47.5p for "girls." The rates were doubled in that year. The regional employment premium lasted until 1974.
There was redistribution of jobs, especially those in manufacturing, from the North to the South. R. S. Howard, in an official paper The Movement of Manufacturing Industry in the United Kingdom, 1945-65, which was updated to 1981 by Armstrong and Taylor, showed that there was net loss for the southeast and the west midlands and net gain for all other regions. From 1945 to 1981, the southeast lost 1,647 manufacturing establishments and the west midlands lost 334. Wales experienced a net gain of 586, north England 365, East Anglia 354, southwest England 316, east Midlands 61, northwest England 18, and Yorkshire & Humberside 6. When regional policy peaked in the late 1960s, manufacturing jobs flowed out of the Southeast and the west Midlands to other areas at around 25,000 a year.

Kim, Changhyun
December 2005





EXTERNAL
FILES
I used the following sources in addition to the sources I used for Thatcherism

North-South Divide in the United Kingdom, from Wikipedia
Economic Geography of the United Kingdom, from Wikipedia
REFERENCE The following books were used in addition to the books I used for Thatcherism

Smith, North and South: Britain's Economic Social and Political Divide, Penguin Books, 1994, 375 pages
Harrison and Hart, Spatial Policy in a Divided Nation, Jessica Kingsley Publishers, 1993, 304 pages
Cairncross, The British Economy Since 1945, Blackwell Publishers, 1994, 338 pages