By Noah Wild-Hebbs, Editor
The release of Michael Gove’s heavily anticipated, and long awaited, governmental white paper on ‘levelling up’ finally arrived last week after a series of delays. The 332 page document, whilst heavily detailed in its diagnosis of the myriad of problems caused by inequality in the UK, is lacking in the specific policy proposals and adequate funding necessary to solve these issues.
Filled with outdated references to Renaissance Europe and antiquity metropolises (themselves partially copied from Wikipedia), the document offers hope for potential reform, but ultimately fails to do enough to address the deeply entrenched “postcode lottery” that remains ubiquitous across the UK. The levelling up agenda needs a systematic strategy for long-term reform if it is to be successful, a recognition that the current administration seem yet to have realised. This article will urge them to do so, and hopes to outline a potential plan for what a realistic levelling up agenda could look like in the North.
The principal critique that can be levelled at this official report is its principal underfunding, which can be explained as a refusal to confront the reasons behind the explosion of inequality seen in the UK in the last 50 years. Whilst the paper acknowledges that the UK’s hyper market-driven growth model is broken, as the Mancunian author Christine Berry notes: ‘it fails to pursue this reasoning to its logical conclusion,’ namely that this small-state, highly financialised economic model must be fundamentally altered in order to initiate significance change. The absence of adequate resources to deal with the issues created by inequality has been recognised by multiple experts. For example, Professor Sir Michael Marmot, author of a recent health equality review in Greater Manchester that starkly exposed falling life expectancy in England among poorer areas, conceding that the funding promised is ‘tiny’ relative to the ‘scale of the problem.’
Despite an excess of bombastic rhetoric with repeated reference to recycled money previously announced, the white paper doesn’t include any new money for investment. Only an insufficient £11bn has been set aside for levelling up schemes thus far, ensuring any change will be rendered superficial, with this abyss of fresh ideas embodied in the fact that 8 out of the 12 targets mentioned in the report are the same as those listed in Theresa May’s industrial plan. The scale of the problem can be seen when considering the long-term redevelopment of Eastern Germany following German reunification, a feat that required over €3tn being spent between 1990 and 2014, equivalent to £71bn annually. This is magnitudes more than the current government has committed to, and has prompted Paul Johnson, director of the Institute for Fiscal studies, to assert that the levelling up plan is ‘highly unlikely to be met, even with the best policies.’
Therefore, any significant levelling up programme must be granted more funding in order to effectively grapple with the vast inequalities created by almost half a century of governmental neglect. Unfortunately, this seems unlikely given the tendencies of the current Thatcherite Chancellor who holds the purse strings over the inherently parsimonious Treasury. This is exacerbated by the already depleted public coffers given the extraordinarily costly government intervention that Covid-19 precipitated, an unfortunate reality which should not discredit further public borrowing in order to finance redistributive measures. As such, it is crucial that any additional financial allowances be spent productively.
The principal way to ensure an efficient allocation of capital would be the decentralisation of power to local authorities. The heavily concentrated model of governance in the UK is much of the initial cause for these regional disparities; with a systemic Westminster and Whitehall obsession perpetuating a deeply London-orientated political system. A further undesirable effect of this is the understandable resentment that it engenders, especially in less affluent areas in the North disproportionately adversely affected by austerity cuts, which feeds political discontent and elite contempt. The ensuing undermining of the democratic processes of government that this produces has been well-documented, for example in the latest Audit of Political Engagement by the Hansard Society (2019). Therefore, devolving power is an essential prerequisite for any successful levelling up agenda.
Consequently, some devolution proposals included in the white paper, such as the creation of new metro mayors and Greater Manchester being invited to negotiate increased autonomous power, are welcome. However, this will only be the case if these devolution proposals are sincere and significant in scope. Unfortunately, current evidence points to the contrary, highlighting a conspicuous absence of detail regarding specific policy proposals. An example of this can be seen in the ‘innovation accelerators’ announced to boost local business in the Greater Manchester area. In spite of its impressive sounding name, there is little in the way of specificity regarding this scheme, with this presumably being saved for a later date.
It is precisely this incessant kicking of the political can further down the road that hinders any real change in the form of structural reform. Fundamental attitudinal change is an imperative for any meaningful devolution agenda. There is a profound need for radical shifts in government thinking that acknowledges local democracy is often a more effective means of decision-making than centralised, ‘top-down’ imposition, something which this white paper could do more to acknowledge.
The most significant way that the government could help instigate this behavioural transformation is by relinquishing central control of the purse-strings, i.e. giving regions greater independence over funding decisions, even granting them tax raising powers for certain issues. This view has seen wide support from institutional experts, with the Chief Executive of the Local Government Information Unit, Jonathan Carr-West, recognising that regions being “kept dependent on Whitehall for funding and approval” will be unable to “drive levelling up.” The success of levelling up is therefore contingent upon a strategic fragmentation of power from the traditional arenas of politics, almost all situated in the capital. However, this geographical regionalisation is dependent upon “new investment and not just a repackaging of old money” according to the president of the Royal Society Sir Adrian Smith. This emphasises the need for various government departments to engage in co-ordinated collaboration, ensuring that policies occur in tandem and harmoniously. Two recent events highlight the opportunities for this synergy.
The twin crises of the pandemic and climate change, whilst undoubtedly catastrophes of extreme scale, also present potential for the government to seize the ‘levelling up’ initiative and utilise the consequences of these problems to help redevelop regions.
If the recent emergence of the “zoom economy” appears transient, Covid-19 has still precipitated major changes to the labour market that are likely to be permanent, with the rise of flexible working being one adjustment unlikely to fully diminish soon. As such, the pandemic (and the accompanying rising house prices in London and the South East) could prompt a huge relocation of workers back to the areas they grew up, reversing the “brain drain” effects of young people moving to the capital for employment opportunities. Sufficient government investment in neglected, underdeveloped regions could help facilitate and expedite this process, enhancing its positive economic multiplier effects by creating the critical infrastructure necessary for growth. This could finally help to cultivate the ‘Northern Powerhouse’ first discussed by the Coalition government, of which Manchester could play a leading role.
Similarly, the potential exists for the current administration to marry their levelling up agenda, arguably the key cornerstone of Conservative domestic policy, with their increasingly consequential climate targets, namely that of becoming net zero by 2050. As the New Economic Foundation notes in their strategy for a “devolution revolution,” decentralisation could allow for more efficient, sustainable public investment projects directed by local figures and institutions that could help to stimulate environmentally-friendly economic prosperity. This would have the desirable effect of not only levelling up regions via raising living standards, provided that this growth is balanced and equitable, but would also substantiate the UK’s explicit desire to act as a global leader in fighting climate change. Unfortunately, the white paper fails to fully consider these unique possibilities, paying mere lip service to the notion of devolution.
The pernicious consequences of consistent government inaction over levelling up and the ensuing inequality created can be seen in the asymmetrical impact of the looming cost of living crisis. Rising inflation and the higher prices that result, especially in essentials such as food and energy, will cause financial hardship for many, pushing thousands below the poverty line. The severity of the crisis is evident, with finance expert Martin Lewis estimating that energy bills will increase by a minimum of 50% in the coming months, and the rising costs of basic foods also being highlighted by the writer Jack Monroe. The latter outlined how recent price rises in her local supermarket were heavily skewed towards cheaper necessities that are essential for families on low incomes. The most affordable bag of pasta had jumped 141% in price, with the cheapest kilogram bag of rice rising 344% - eye-watering figures for households already barely surviving on shoestring budgets.
These rises are thus simply unendurable for many and belie the internal contradiction inherent in the recent white paper, and more broadly the current government approach. Any long-term strategy to level up, predicated over decades rather than years, whilst ultimately needed in order to reinforce indelible change, will do little to alleviate financial imbalances in the short run. Instead, inequality will likely worsen, diverting further attention and resources away from creating lasting reform. This vicious cycle of makeshift quick-fixes that subsequently hinder and erode the capacity for future planned reforms will be felt the worst in those areas with high incidences of poverty, of which the North constitute an inordinate amount.
This is a huge problem in the Greater Manchester area, with 620,000 people living in poverty. In Manchester alone 35.5% of under 16s are deemed to be living in poverty, a number that grants it the unenviable title of having one of the highest child poverty rates across the country. These increasingly worrying figures will impede any levelling up agenda’s attempts to bring about any consequential improvements. If the government wants to avoid trapping families into intergenerational poverty as inequality gaps widen, then any levelling up policy needs to concede the need for short-term intervention to alleviate economic woes in order to allow the groundwork for longer-term change to be created. This challenging balancing act needs to be careful not to succumb to political short-termism and pork-barrel politics, a difficult equilibrium which will require exhaustive governmental scrutinisation. Although the white paper goes some way to elucidating the transient problems caused by stark inequalities, a greater appreciation of the renewed and continual need for government intervention to alleviate these disparities would be welcomed.
Ultimately the ‘levelling up’ white paper fails to fully rise to the myriad challenge of levelling up. A set of ad hoc proposals, lacking any real bold unifying strategy, the white paper highlights increasing scope for improvements in the government’s approach. Firstly, an absence of adequate resources to fund redevelopment should be replaced with new, comprehensive funding and government investment to allow regions in the North to fully ‘level up.’ Furthermore, decision-making on spending plans should be devolved to local authorities, allowing those best informed to make more efficient policy decisions. Finally, and closely related to the first problem, short-term policy emergencies should be confronted whilst simultaneously embarking on future projects; a profound rejection of the superficial dichotomy accepted by the vast majority of current political discourse, including the government.
Real, institutional change will not be easy given the complex nature of this deep-rooted issue, but reform is a necessity. The sociopolitical and socioeconomic impacts of widening inequality will be infinitely worse than robust government intervention. It will not pay to delay the inevitable.