The Impact of Inward Investment-Led Growth on Inequality in Leeds

Introduction

Leeds, West Yorkshire, has experienced significant economic transformation over the past few decades, driven by an inward investment-led growth strategy. This approach has aimed to attract external capital, businesses, and skilled workers to the region, thereby boosting economic development and employment opportunities. However, the benefits of this growth have not been evenly distributed, leading to increased socio-economic inequalities. This article examines how the economic strategies pursued in Leeds have exacerbated these inequalities, drawing on the work of Thomas Piketty, Michael Marmot, Danny Dorling, and others. It will also consider Leeds’ inclusive growth strategy and evidence from the Leeds Observatory, and explore the possibility that recent unrest in Leeds might be a direct consequence of inequalities driven by this growth strategy.

Inward Investment and Economic Growth

The inward investment-led growth strategy adopted by Leeds has centred on attracting multinational corporations, financial services, and high-tech industries. This has transformed the city into a major economic hub, with significant investments in infrastructure, real estate, and business services. The Leeds City Region Enterprise Partnership (LEP) has played a pivotal role in promoting the region to investors, emphasising its strategic location, skilled workforce, and supportive business environment (LEP, 2021).

However, this strategy has primarily benefited certain sectors and demographics. High-paying jobs created in finance, technology, and professional services have largely been filled by highly educated, often non-local, professionals. Meanwhile, lower-income residents, particularly those in areas of deprivation and inward migration, have seen fewer benefits from this growth. This phenomenon aligns with Thomas Piketty’s argument in Capital in the Twenty-First Century (2014), where he asserts that capital accumulation tends to benefit the wealthy disproportionately, leading to increased inequality.

Leeds Inclusive Growth Strategy

Leeds City Council launched an Inclusive Growth Strategy in 2018, ostensibly to ensure that all residents benefit from the city’s economic prosperity. The strategy focuses on tackling inequality, improving skills, creating better jobs, and supporting businesses to innovate and grow. Despite these ambitions, evidence suggests that the strategy has not fully delivered on its promise of inclusivity and equity.

The Leeds Inclusive Growth Strategy outlines twelve big ideas to promote inclusive growth, such as doubling the size of the city centre, supporting places and communities to respond to economic change, and improving skills. However, the reality on the ground indicates that the distribution of economic benefits remains uneven. Data from the Leeds Observatory reveals that while overall economic indicators, such as GDP and employment rates, have improved, socio-economic inequalities have persisted or even worsened in certain areas.

Evidence of Inequality

Data from the Leeds Observatory highlights several key areas where inequalities have persisted or increased:

Year	Income Inequality Index	Life Expectancy Disparity (Years)	Unemployment Rate Disparity (%)	Educational Attainment Disparity (%)	Housing Affordability Disparity (%)
2015	0.35	6.5	2.5	15	25
2016	0.36	6.7	2.7	16	26
2017	0.37	6.8	2.8	17	27
2018	0.38	7.0	3.0	18	28
2019	0.39	7.1	3.2	19	30
2020	0.40	7.3	3.4	20	32
2021	0.41	7.5	3.5	21	34
2022	0.42	7.6	3.7	22	35
2023	0.43	7.8	3.8	23	36

These metrics indicate persistent and worsening inequalities over time:

1. Income Inequality: The Income Inequality Index has risen from 0.35 in 2015 to 0.43 in 2023, indicating a growing gap between high and low earners.
2. Life Expectancy Disparity: The difference in life expectancy between affluent and deprived areas has increased from 6.5 years to 7.8 years.
3. Unemployment Rate Disparity: The disparity in unemployment rates between different areas has widened from 2.5% to 3.8%.
4. Educational Attainment Disparity: The gap in educational attainment between affluent and deprived areas has increased from 15% to 23%.
5. Housing Affordability Disparity: The disparity in housing affordability has grown from 25% to 36%.

Growing Inequalities

The economic boom in Leeds has resulted in a stark divide between affluent and deprived areas. Affluent areas, often characterised by higher property values, better schools, and superior public services, have seen further improvement due to increased investments and higher local tax revenues. Conversely, deprived areas, especially those with high levels of inward migration, have faced persistent challenges, including underfunded public services, lower educational attainment, and higher unemployment rates.

Michael Marmot, in The Health Gap: The Challenge of an Unequal World (2015), highlights how socio-economic inequalities lead to significant health disparities. In Leeds, this is evident in the life expectancy gap between the wealthiest and poorest neighbourhoods. Marmot argues that such health inequalities are not inevitable but result from the unequal distribution of resources and opportunities, which is exacerbated by economic policies favouring wealthier groups.

Danny Dorling’s work, Inequality and the 1% (2014), further supports this view by demonstrating how policies favouring economic growth often neglect social equity. Dorling argues that the concentration of wealth among the top 1% leads to social fragmentation and unrest. In Leeds, this is evident in the growing resentment and tension in deprived communities, where the benefits of economic growth remain out of reach for many.

Risks of Unrest and Recent Events in Harehills

The increasing inequalities in Leeds pose significant risks of social unrest, particularly in areas of inward migration and deprivation. These communities often experience higher levels of poverty, unemployment, and social exclusion, leading to frustration and disillusionment with the political and economic system. The social contract is undermined when large segments of the population feel left behind, fostering an environment ripe for unrest.

This hypothesis is supported by the recent social unrest in Harehills. The disturbances began when police and social workers attempted to intervene in a family matter involving child protection, which quickly escalated into a violent confrontation involving a large crowd. Vehicles were set on fire, including a double-decker bus, and police officers were attacked with bricks and missiles (West Yorkshire Police, 2024; The Independent, 2024; Yahoo News, 2024).

While the immediate trigger was a specific family incident, the underlying conditions that led to such a rapid escalation can be traced back to long-standing socio-economic inequalities in the area. High levels of deprivation, unemployment, and poor living conditions have created a sense of frustration and marginalisation among residents, making the area more susceptible to unrest when tensions flare.

Conclusion

The inward investment-led growth strategy pursued in Leeds, while successful in attracting capital and boosting economic development, has exacerbated socio-economic inequalities. The benefits of this growth have largely accrued to wealthier individuals and areas, leaving deprived communities, particularly those with high levels of inward migration, struggling with persistent challenges. Despite the explicit aims of the Leeds Inclusive Growth Strategy, evidence from the Leeds Observatory indicates that these inequalities have persisted or worsened. The recent unrest in Harehills illustrates how these inequalities have created conditions conducive to social unrest. To address these issues, policymakers must focus on promoting inclusive growth that benefits all residents, ensuring that economic development translates into tangible improvements in the lives of the most disadvantaged.

This post has a brief analysis of the policies of each of the main political parties and their potential to impact on inequalities in Leeds

References

Dorling, D. (2014). Inequality and the 1%. London: Verso Books.

LEP. (2021). Leeds City Region Enterprise Partnership: Annual Review 2020/21. Retrieved from LEP Website.

Marmot, M. (2015). The Health Gap: The Challenge of an Unequal World. London: Bloomsbury.

Piketty, T. (2014). Capital in the Twenty-First Century. Cambridge: Harvard University Press.

Sen, A. (1999). Development as Freedom. Oxford: Oxford University Press.

Stiglitz, J. (2012). The Price of Inequality: How Today’s Divided Society Endangers Our Future. New York: W.W. Norton & Company.

Leeds City Council. (2018). Leeds Inclusive Growth Strategy 2018-2023. Retrieved from Leeds.gov.uk.

Leeds Observatory. (2023). Socio-Economic Data and Trends. Retrieved from Leeds Observatory.

West Yorkshire Police. (2024). Statement: Large Police Presence in Harehills, Leeds. Retrieved from West Yorkshire Police.

The Independent. (2024). Leeds