The Centre for Regulation, Governance & Industrial Strategy (CGR&IS) recently hosted a one-day workshop on ‘Levelling Up or Down? Addressing Regional Inequalities in the UK’. The event celebrated a Special Issue of the journal Contemporary Social Science edited by CGR&IS co-Directors, Dr Felicia Fai and Professor Phil Tomlinson.
The workshop concluded with a public roundtable event. The panel included Bath MBA alumnus and former Conservative MP (now Executive Director of the Manufacturing Technology Centre) Professor Chris White; Dan Turner, Senior Advisor to the Mayor of South Yorkshire; Dr Nicola Headlam, Chief Economist at Red Flag Alert; Professor Phil McCann of the University of Manchester; and Paddy Bradley MBE, a CGR&IS Industrial Fellow and former Chief Executive Officer (CEO) of Swindon and Wiltshire LEP (SWLEP).
Here, two of the panellists share their thoughts on what’s next for the UK’s levelling up agenda.
Paddy Bradley MBE
The policy of ‘levelling up’ was first articulated in the 2019 Conservative Party manifesto. A taskforce was formed in September 2021 and the policy became better defined in a February 2022 white paper. From a policy implementation point of view, technically we have only been levelling up for two years.
During 2021, the Government started the process of allocating up to £4.5 billion of funding, but delivering the policy has been wracked by accusations of political interference in the allocation of funds. Why should two sets of funding be allocated to Richmond in Yorkshire, Rishi Sunak’s constituency, when it is in the least deprived 20% of upper-tier authorities? Amongst claims of ‘pork barrel politics’, Dan Jarvis – then Mayor of South Yorkshire and Labour MP for Barnsley Central – complained that government actions were “levelling down” the region.
Our problem is that much was made of the intended impact of levelling up as though this approach was new and would achieve greater results than previous policies. However, the policy lacked long-term strategy to ground it in a structured delivery plan. The UK Government did have an industrial strategy and mapping that against the desire to level up economic and social inequities would have been a good move – but the strategy has been dropped. Similarly, the UK’s departure from the European Union gave opportunities for new, country-wide industrial thinking, which have not emerged in a coherent manner.
As it is, we have a long way to go to lift the economic power of regions outside London. Of England’s nine regions, just three had a trading surplus in 2021. London’s trade balance of £51,573,000 is over 15 times higher than the two other regions with a positive balance (North East and South West). The devolved nations have positive trade balances, but these too are significantly smaller than London’s – which is a little over 11 times greater than Wales, more than twice the surplus in Scotland and more than 22 times the figure for Northern Ireland.
Levelling up is a tired concept and lacks credibility. We need to see and seek to influence what emerges during 2024 as a general election looms.
Dan Turner
Doing more to close regional divides in productivity, living standards, public services and outcomes poses both technical and political challenges.
The imperative on any UK government act is clear: if parts of the UK are stuck in a productivity trap, they are needlessly serving as a net drain on the Treasury; while lagging economies may themselves drive higher demand for public services.
My contribution to the economic debate, published last summer in Contemporary Social Science, argues that we can identify specific bottlenecks to productivity growth in the UK’s regions (such as the transport system); some of the factors preventing convergence between the regions and nations of the UK (such as a non-responsive housing market); and the role of public policy in exacerbating rather than ameliorating inequalities (such as skewing pro-growth spending to London and the South East).
It is one thing to identify the challenge; it is a far harder task to actually shift public policy. In a working paper published last October, my co-authors and I summarise the findings of nearly 100 interviews with top-level UK policymakers (including former Prime Ministers and Chancellors).
Their reflections on why the UK has failed to get a grip on rising regional inequalities set out a story of both structures and agency. To break the cycle of well-intentioned, but ultimately flawed, national initiatives to ‘level up’, we need both institutional change and a shift in the mindset of leadership.
Given the high level of centralisation that the UK is starting from, my conclusion is that – if we really want to level up the UK – agency will trump structures. The personality and preferences of the two or three most powerful politicians will be pivotal.
There will always be other issues – from the macroeconomy and geopolitics, to healthcare, to immigration – demanding the attention of Number 10 and Number 11. Their temptation will be to use the tools available (a centralised state) to address them.
It will take an act of self-denial on their part to create the political space for decentralisation. That in turn is a necessary condition to build high calibre local and regional institutions – which will take time and come with political risks and scandals along the way.
But – as we set out in a new policy-orientated paper out this month, ’What Needs to be Done’ – if the centre of Whitehall can hold its nerve, a virtuous cycle of greater capability of trust across the country, stronger trust and relationships between the centre and the periphery, and a tolerance to act in concert rather than uniformity may finally take hold.
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