Amol Rajan: Coalition is presiding over the fissuring of England

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It is customary halfway through a parliament for modern British governments to express concern about the issue disguised by that terrible cliché, "the North-South divide", a phrase fit to be updated given that North and South England will soon have as much in common as Venus and Pluto. Shocking figures in yesterday's Financial Times revealed not just that the problem is getting worse, but that in the aftermath of financial crisis and recession, it is getting worse at an accelerating rate. We are now in the realm of national catastrophe.

Since the recession began, employment has grown by 2.9 per cent in London, but fallen in most other regions. In West Midlands and Yorkshire and the Humber it has fallen by 4.5 per cent and 3.1 per cent respectively. Output per head in London is 171 per cent of the national average; in Wales and the North East it is 74 and 77 per cent respectively. Since March 2008, house prices have fallen by an extraordinary 24 per cent in the North East, 19 per cent in the North West and 18 per cent in Yorkshire and the Humber. In London, they have fallen by a mere 4.2 per cent.

The dependence of the Treasury on London's financial centre for tax receipts that will fix our deficit removes a major incentive to solve the problem. And this economic divergence is compounded by social indices: rates of alcoholism, depression and obesity are all higher in the North, while educational attainment is lower. What is to be done?

The only solution is focusing investment on the North. The northern economy is already too dependent on the state; but by investing in infrastructure, world-class education, scientific research and environmental engineering, the North can be weaned off the public purse. At the same time, ultra-radical tax breaks should encourage northern entrepreneurs and small business owners. By all means give them preferential treatment.

The seeds of northern decay were sown in the post-war years. Then Thatcherism raped several industrial heartlands. The Tories, who were 10 per cent behind Labour in the North of England in 1979, and need northern votes to secure a majority in 2015, are 13 per cent behind now – before their cuts, which will disproportionately affect the north, come into force. They have every incentive to woo northern voters. But current policies leave those voters to the wolves.

Never mind devolution and the loss of Scotland; the Coalition is presiding over the fissuring of England into two nations, an affluent South and an abandoned North.