04Implications for levelling up

Looking at economic complexity in Britain and how it has changed over the past 40 years offers three main policy messages for levelling up.

1. Levelling up the economy must focus on the geography of knowledge

Levelling up has a clear economic component. Numerous schemes and proposals have been argued to meet the definition of levelling up on this basis.

Yet this report shows that for levelling up to truly occur, it must continue to alter the geography of knowledge in Britain. Over the past four decades this has already begun to change, as the renaissance of Britain’s large cities outside of the capital has been driven by them becoming places of knowledge creation and diffusion.

More specifically, levelling up requires policymakers to be aware of two distinct ideas. First, levelling up will only be achieved if it increases the amount of highly skilled exporting work in the private sector outside of the Greater South East. The existing variation in economic performance across the country is caused by the behaviour of firms in the private sector that bring money into their local economies, and improving their ability to access and use knowledge in other parts of the country is how that variation can be changed.

Second, any attempts to change the geography of high-skilled, private sector exporting work must have a strategic focus on the specific places across the country where it can flourish. Knowledge is created and shared by people exchanging ideas, and this kind of communication is more likely to occur in locations with more conversations, more activity, and more people.

In contrast, more public sector jobs, more local services work such as in shops and cafes, and more low-skilled exporting jobs will do little to level up the economy. While there are good arguments for boosting state capacity in local government, or ending austerity to improve public services in “left behind” parts of the country, these alone will not have a direct impact on improving economic performance and living standards within local areas.

2. Big cities are the most promising places for levelling up

The mismatch of the big cities, between their growing role as places of knowledge creation and their current economic underperformance, is why we see such stark differences in economic performance across the country. Especially when compared to other countries, big cities in the UK stand out as places of unfulfilled potential. If this potential could be realised, Centre for Cities has calculated it would generate £48 billion per year in the national economy, which would be in reach of city residents and of people living in towns and rural areas nearby.32

The conditions are there in big cities to make real progress in closing this gap, due to the growing complexity of their economies in recent years. As a result, the Government’s aspiration to have an internationally competitive city in each region is achievable and is the most plausible process by which levelling up can be realised in the foreseeable future. In particular, the Government will not level up the economy if it ignores the potential of Birmingham, Glasgow and Manchester.

This focus need not come at the cost of ignoring smaller places. But policy must recognise that its ability to bring about economic change in these places is more limited, and the outcomes of success (should it be achieved) for the national economy are smaller.

3. Calls for places to ‘build on their strengths’ should be received with caution

Recent calls by some northern Conservative MPs for levelling up to focus on manufacturing in the North is the latest in the long line of rallying calls over the years for struggling places to build on their strengths.33 The analysis above shows that the challenge is what these places are missing, rather than what they have. The aim of policymakers, especially local leaders, should therefore be to change the nature of these inherent benefits where they have the ability to do so, such as improving the skills of workers, to help them to reinvent their economies rather than further replicating what they already have.

There are two further implications of the economic complexity analysis for these places. First, levelling up will take decades to be successful. The experience of the big cities since 1981 shows that it takes time to change the geography of knowledge.

Second, we should not expect every part of the UK to be equally economically complex. Trying to make everywhere the same will simply “decapitate the tall poppies”34 and damage prosperous places because there will always be some places that possess a competitive advantage in low-cost production. While local government should always be trying to make their local economies more complex and should have the resources they need to do so, the priority for national government in the places that are low complexity should be supporting their living standards and wages.

Historically, this has often been done through redistribution and the welfare state, but sustaining demand for cities’ exports in other parts of the country and world is just as important. Planning reforms to increase disposable incomes by reducing housing costs in affluent parts of the country are one mechanism that will help achieve this, even if their primary objective is to address the housing shortage.35

In addition, Centre for Cities’ recent briefing So You Want to Level Up sets out the six areas policy should focus on to achieve levelling up: skills, devolution, public services, local transport, city centres and R&D spending. Detailed proposals on each are set out in the publication.36


  • 32 Swinney, P (2021), So you want to level up? London: Centre for Cities.
  • 33 Northern Research Group of Tory MPs call on Boris Johnson to ‘show the North some love’ and help create a ‘science and engineering corridor’, Yorkshire Post, 13th July 2021
  • 34 The Prime Minister’s Levelling Up speech: 15 July 2021 https://www.gov.uk/government/speeches/the-prime-ministers-levelling-up-speech-15-july-2021
  • 35 Breach, A (2021), Why levelling up requires planning reform, Centre for Cities https://www.centreforcities.org/blog/why-levelling-up-requires-planning-reform/
  • 36 Swinney, P (2021), So you want to level up?, London: Centre for Cities.