UNITED KINGDOM

SAN JOSÉ STATE UNIVERSITY
ECONOMICS DEPARTMENT
Thayer Watkins

The United Kingdom

Regional policy may be said to have begun in the United Kingdom. The Government of the U.K. has for more than sixty years tried to deal with the following three types of regional problems:

agricultural regions which cannot provided living standards comparable to the rest of the country
industrialized regions whose industries are stagnant or in decline. These are often the regions that first industrialized.
the highly congested regions with strong economies but serious problems of air and water pollution, traffic congestion and inadequate infra structures.

The first regional policy in the U.K. was the creation of the Industrial Transference Board in 1928 to upgrade, retrain and relocate the unemployed to areas of growing industry. In the early 1930's the Special Areas Act was passed which designated four areas for special economic development programs. Those four areas were: South Wales, Northeast England, Clydeside-New Lanarkshire, and West Cumberland. The urban areas within these Special Areas were excluded from the development program grants.
In 1936 the government established the Special Areas Reconstruction Association to provide loan capital for small businesses in designated areas. Despite the efforts of this organization and other modifications of regional policy the problem of regional disparities in income and employment opportunities persisted.
In 1940 a commission on the distribution of industry and population recommended national action on the problems. World War II made it impossible to implement any of the commissions recommendations.
After World War II, with the election of a Labour Party government, the Distribution of Industry Act of 1945 was passed. This Act created a Board of Trade which took over responsibilities for the special areas designated in previous legislation.
The goal was to balance economic growth, which meant diverting economic development which otherwise would go to the prosperous areas such as the Southeast to the special areas. In 1947 the Town and Country Act required that any firm seeking to make a major investment in industrial development obtain permission from the Board of Trade. This meant difficulties and delays for projects in the Southeast but encouragement for projects in the special areas.
The Government provided loans and assistance to firms in the designated areas and shifted its purchases to firms in those areas. The Government also concentrated its public service expansion to the designated areas. It even created whole new towns in these designated areas in order to encourage development.