01A lost year of levelling up
2022 was another lost year for levelling up. But with Labour setting out a more detailed position in December, 2023 should finally see a competition between the two main parties for who can deliver a programme of policies to improve economic growth across the country.
Levelling up has never been about tackling short-term issues; the agenda is attempting to address deep-rooted challenges that have been at least 100 years in the making. The past 12 months have been dominated by short-term problems such as the cost of living crisis, NHS backlogs, worker shortages and strikes, all compounded by political turmoil. And this is before the impact of the predicted recession in 2023 is felt.
Quite rightly, this has been the focus of policy attention. But it has come at the expense of any meaningful progress on levelling up, which highlights the inherent weakness of the UK’s centralised political system.
We are now a year on from the publication of the Levelling Up White Paper and very little has happened. Much time was lost in the period it took the Government to produce the white paper itself, which was published more than two years into its term. This further delay has exacerbated the inaction and makes achieving targets with a deadline of 2030, as set out in the white paper, even less likely than it was 12 months ago. The Conservative leadership contest proved to be deeply unhelpful for the levelling up agenda, with both candidates seemingly ignoring the detailed plan their own Government had published only months earlier. This culminated with Liz Truss’ ill-fated investment zones idea – a debacle that was particularly frustrating for several reasons.
Firstly, it was in no way linked to the thinking set out in the white paper in February. Secondly, evidence suggested that investment zones would not have had the impact anticipated. Perhaps worst of all, it once more marched local authorities up the competitive bidding hill in double-quick time to make submissions for a policy that was abolished when Rishi Sunak became prime minister.
Despite Sunak’s seemingly lukewarm views on levelling up during the summer, his words and actions since have offered better news. Most notable has been the reinstatement of Michael Gove to the Department of Levelling Up, Homes and Communities as he, of course, oversaw the production and publication of the white paper.
Gove finds himself in a fiscally more constrained position given what has happened since it was published a year ago. Much focus has been placed on the Levelling Up Fund and how inflation has seen this modest pot of money shrink even further, and he is very short on time. Because of this, what needs to happen from now on must be split into two periods – the two years before the next election, and the subsequent parliament and beyond.
In terms of the current parliament, the Government should focus on:
- Expanding and deepening devolution. This is an area where there has been progress. Some new deals have been announced in the past six months, and an announcement on the ‘trailblazers’ that will increase powers for the mayors of Greater Manchester and West Midlands is expected imminently. This should be done alongside further deals that bring mayors to areas that currently do not have them.
- Getting royal assent for a Levelling up and Regeneration Bill that is fit for purpose. The bill has been subject to a series of challenges from backbench Conservative MPs that risk watering down key proposals around planning and the built environment to the point of making this part of the bill toothless.
- Setting out a programme for delivering the white paper spending commitments in areas such as research and development. In the Autumn Statement the chancellor recommitted to increase spending in areas like research and development (R&D), which runs into billions of pounds. This creates potential to start making the sorts of investments required to get parts of the country to where they should be relative to their international peers, and enable these places to make suitable contributions to the national economy.
The significance of levelling up in the next parliament may well depend on what Labour decides to do. Labour has been even later to the table than the Conservatives in setting out its vision but, thankfully, that changed in December 2022 with the publication of Gordon Brown’s report on the Commission of the UK’s Future. Keir Starmer subsequently put devolution at the centre of his pitch to Red Wall voters in a speech in early January 2023.
The core argument of the Brown report, and this is shared by the Levelling Up White Paper, is that national economic stagnation, high regional inequality and the centralisation of the British state are all connected. It recommends that Labour embraces greater devolution in England, while going further than the Government by saying the metro mayor model should be applied in Scotland.
If the recommendations are accepted, this will not only be a shift in Labour thinking, it will establish a consensus between the two main parties on devolution. It also raises the possibility that devolution, and how ambitious the political parties are prepared to be, could become an important political battleground in the run up to the next General Election.
Alongside this, the next Government will need to set out a policy programme to pull up the economic performance of those parts of the country that are not reaching their potential. As Centre for Cities has previously stated, and this was a key theme in the white paper, poor economic performance outside the Greater South East is mainly driven by the underperformance of its biggest cities that are furthest from their potential. And this doesn’t just hold back the regions they sit within, it makes the UK economy an estimated £50 billion smaller each year.1
There is a national economic imperative to fix this through policies that should include:
- A 10-year, £14.5 billion package to pull up Birmingham, Glasgow and Manchester in particular, allocating funds that have already been earmarked to invest in R&D, local transport and city centres.
- Transport for London-style powers for all large cities.
- An increase in national skills funding from 5 per cent to 7 per cent of GDP, as is the case in Sweden.
The centenary of the first levelling up policy is just five years away and governments are still attempting to address sub-national divides. The current parliament was formed with a mission of levelling up the country but, sadly, it is likely that this will be a lost parliament.
This cannot be repeated. Whoever is in power after the next General Election needs to have a levelling up policy programme ready to go if we are to stop talking about this underperformance in decades to come.