Can the Government strike the right balance between politics and economics?
Kathrin Enenkel explores the tense relationship between politics and economics within the Government's levelling up agenda.
Kathrin Enenkel explores the tense relationship between politics and economics within the Government's levelling up agenda.
The Government has promised to level up the country and make disadvantaged places in the North and Midlands more prosperous and productive – a big challenge that has been exacerbated by the pandemic. When Boris Johnson gave his first levelling up speech last week, Centre for Cities was holdings its first event on levelling up on the political and economic tensions that exist within the project.
This blog looks at the key topics raised during the discussion between The Economist’s Duncan Weldon, The Institute for Government’s Gemma Tetlow and Centre for Cities’ Paul Swinney.
Within the levelling up agenda lies an inherent tension between economics and politics. A purely economic levelling up agenda would require the Government to address persistent regional disparities across the country in areas like productivity, unemployment and skills.
While investments in these areas take decades to implement and the positive effects are largely invisible to the public, improvements to a scruffy-looking high-street will be almost instant – an enticing prospect for politicians seeking re-election on a four or five year cycle.
Understanding these tensions and getting the balance right between economics and politics is therefore crucial for the development of a levelling up agenda which, not only helps the Government prove to voters that it is delivering what it promised, but also to ensure that any interventions have a long-lasting impact and reduce the inequalities across the country.
Although the term “levelling up” first appeared in the political discourse back in 2019, and is now the buzzword in what seems like every speech by government officials, no one has yet defined it.
While that vagueness has an advantage for politicians who can make levelling up the tagline for everything or nothing – this comes at a real economic cost. Without clear economic goals and success measures, there is a real chance that the levelling up agenda will be yet another strategy that begins with high ambitions before fizzling out and being replaced with a new slogan.
To successfully reduce regional disparities the levelling up agenda must be clearly defined, with specific benchmarks, objectives and a good communication between different Whitehall departments and layers of Government.
Defining a levelling up agenda must also mean coming up with appropriate objectives and assigning them to the right regions. For instance, when it comes to raising productivity and creating good jobs, economic realities make this easier in some areas than others – despite the political will to distribute them uniformly across the country.
Past experience shows us that cities have the best potential to create good jobs and raise productivity. Because of this, they will need a separate levelling up package to towns or rural areas. Johnson did acknowledge this in his speech in Coventry, but now he needs to tell us the key indicators that progress can be measured against.
However, many towns do face severe social and economic issues that need to be addressed and, as the speakers at our event noted, not all of these are in the North and Midlands. So rather than picking only a few lucky places to help with some eye-catching interventions – such as moving part of the Treasury to Darlington – the Government needs a strategy to improve day-to-day life for people in every town.
The speakers at our event discussed another important point on geographical variation: While the economic divides between cities are huge, there are also big divides within them.
London for instance has a strong economy overall, but many boroughs have to grapple with economic and social challenges that are every bit as big as cities in the North. The Government must remember this when developing its levelling up agenda because places in the North won’t be levelled up by allowing those in the South to level down.
The participants at our event agreed that levelling up cannot just be a centrally-mandated project; it must also be accompanied by institutional change through a commitment to further devolution within England.
For many areas that the levelling up agenda will affect – transport, skills, planning – local leaders are actually best placed to take action rather than the Government. Devolving more powers to local leaders would improve accountability, result in better locally-tailored projects and would relieve the pressure on central Government to do absolutely everything.
The Prime Minister’s speech last week did hint at further devolution within England. This is something Centre for Cities supports in principle, but further devolution of powers to local government must be accompanied by devolution of resources to allow them to make a success of the project.
You can watch to our full event The levelling up dilemma: Can the Government strike the right balance between politics and economics? here.
Senior Analyst Elena Magrini on what the Government needs to do in skills policy to level up the UK.
Levelling up the economy should be about helping struggling places, but policy must recognise its limitations in how much it can do for different places.
Join us for this online event
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