Is the phrase ‘levelling up’ dead? It didn’t make an appearance in Liz Truss’s first speech as prime minister yesterday because, in the view of Iain Duncan Smith, it is ‘meaningless’.
That said, the new PM did refer to getting ‘more investment and great jobs in every town and city across our country’. So, while the phrase may be out of fashion, the early indication is that the agenda remains a priority.
Truss has positioned herself as being pro-growth and in favour of a smaller state, with a particular focus on cutting regulation and getting things done. The levelling up agenda plays into all of these goals – here’s how she can use it to the UK’s advantage:
Being pro-growth means fixing big cities
Going for growth and fixing the UK’s poor productivity means getting more from our big cities. The nine largest cities after London account for 2 per cent of land yet produce 15 per cent of economic output, with considerable improvements made in recent decades. Despite this, however, they still trail well behind comparable cities on the continent. As the theory would suggest, large cities like Munich and Lyon lead their respective national economies. Most of the UK’s large cities do not and places like Manchester, Birmingham and Glasgow are well behind where we need them to be.
This is a big problem for UK plc. Our cities’ underperformance means the national economy is an estimated £50 billion (2.3 per cent) per year smaller than it should otherwise be. What the European experience tells us though is that improving their fortunes is achievable.
The politics of this are important too. These cities clearly are not Conservative heartlands (although the West Midlands does have a Tory mayor) but getting them firing will be integral to improving productivity, growing the economy and increasing tax revenues – three important goals of a government of any political colour.
Resistance to growth in these areas is also likely to be less than in the leafy Tory heartlands. Truss’s recent u-turn on planning policy in the face of opposition from Tory members shows that talking about growth and doing the development needed to achieve it are two very different things. Such resistance is likely to be much lower in our large cities where the need for growth to increase prosperity is likely to trump resistance to new development.
Getting things done means following through on the Levelling Up White Paper, not scrapping it
We waited a long time for the Government to produce the Levelling Up White Paper. We finally got it in February, around two and a half years after Boris Johnson started using the phrase and, on the whole it was pretty good as far as government white papers go.
While the ‘levelling up’ moniker could eventually be jettisoned, the approach set out in the white paper must not be if the Prime Minister is to get things done. Another two-and-a-half-year discussion on what levelling up will be will take us six months (at least) beyond the next general election.
The appointment of Simon Clarke into the levelling up brief is encouraging. Clarke is someone who has worked in this area in the past, and was a keen supporter of the agenda, particularly around devolution.
Now there are three immediate things that he and the Prime Minister should do to deliver. The first is to see the Levelling Up and Regeneration Bill through Parliament and into law (it is currently working its way through the Commons).
The second is to conclude the trailblazer deals with Greater Manchester and the West Midlands, as well as the other devolution deals that have been ongoing through the summer. Two deals – York and North Yorkshire and East Midlands (noting the latter can’t happen until the bill is passed) – have been announced in recent weeks. More will need to follow very soon.
The third is to put detail around policies – such as the three innovation accelerators and the 20 regeneration areas identified in the white paper – and get on delivering them (Centre for Cities will have more to say on the latter policy in the coming weeks).
A smaller state could not deliver the above, but a reformed state would help
Levelling up will cost money. A lot of it. For example, Germany has spent an estimated €2 trillion on successfully bringing its Eastern and Western economies closer together since the country’s reunification more than 30 years ago. So, while these long-term national projects require substantial investment and political attention, their economic and financial gains are potentially huge.
The UK Government has committed just a fraction of the money needed to level up, and the new Prime Minister’s proposed tax cuts are unlikely to help in finding the rest of the cash (not least given the other competing pressures on the public purse).
It is also not obvious that a move to cut regulation would be key to stimulating growth in struggling places. Making areas that are already relatively cheap to do business in even cheaper is merely doubling down on what they already offer. Instead, policies to make these places more attractive to high-paying businesses will need to deal with the barriers that are preventing their investment in the first place, with skills being a main one. The PM’s preferences for ‘full-fat freeports’ and investment zones will not do this.
That said, there are some regulatory reforms that the Government could undertake that would make a difference to places across the country. Planning is the biggest of course: it bites harder in the Greater South East than elsewhere but this shouldn’t be a reason not to do it – as has been the case in recent decades, growth in this part of the country remains important for the national economy. The second is local government reorganisation. If local government is to play a role in encouraging growth across the country in the coming years, institutional reform of structures and responsibilities will certainly be needed.
If levelling up is a meaningless phrase, then it reflects poorly on a government that has been attempting to define it for the last three years. The agenda though is anything but meaningless; spatial inequalities across the country are longstanding, and getting much more out of the biggest cities is something that would reduce the divides between places and stimulate growth. If the new Prime Minister is serious about stimulating growth and delivering change, the agenda has much to offer.