House cost rise causes No10 to probe fear of `divide'

FEARS THAT the housing market boom in the south-east could worsen the north-south divide are to be investigated by the Prime Minister's policy advisers. Tony Blair has ordered Downing Street's social exclusion unit to investigate whether the alleged divide exists, and whether the housing market is partly to blame.

Mr Blair, whose Sedgefield constituency is in the north- east, does not believe his Government has presided over a two-speed economy, with booming business activity in the south-east and a flat economy in the north. A spokesman said the probe follows rising concern about the prices of housing in the south leading to a greater wealth gap with the north.

There are fears the divide will be worsened if the Government gives the go-ahead to a planning strategy for 1.1 million extra homes in the south- east by 2016.

John Prescott, the Deputy Prime Minister, is expected to reject the plan early in the New Year, although he is in favour of an expansion of housing of housing, particularly along transport "corridors".

Mr Blair was warned in September that Britain was in danger of becoming "two nations" because of the divide between rich and poor in the survey on social exclusion by the Department of Social Security. A CBI report showed manufacturing jobs are still being lost in the north-west although the unemployed total had fallen to its lowest for 20 years.

Sir Ken Jackson, Blairite leader of the Amalgamated Engineering and Electrical Union, blamed the loss of 30,000 manufacturing jobs in the north-west during the last year on rising interest rates aimed specifically at cooling the housing boom in the South.

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