The Long And Winding Road**
I haven’t read the Levelling Up White Paper yet but I’m going to talk about it anyway.
I haven’t read it yet because it’s very long, I’m quite busy with other things right now — it’s a busy teaching term — and because many smart people have read and summarised it already.
This is not to dismiss the White Paper. A huge amount of effort has clearly gone into it. And people I know and respect have worked extremely hard to build it.
But for now I’m going to talk about the White Paper blind — because the challenges it discusses are longstanding, but also because the politics and political economy of levelling up are very important, and stand outside the document. It’s these things I’ll spend most time on below.
Also, frankly, because policy events like this have a strong gravitational pull which is hard to escape for anyone working in the field. We all have to talk about it eventually.
(So — you could think of what follows as the public policy equivalent of the GPT-3 AI being fed 20 years of urban economics training data. Helpfully Tom Forth has already done this, so you can compare and contrast with what I’ve written below.)
1/ Self-reinforcing dynamics and familiar solutions. As everyone has already pointed out, the economic problems levelling-up seeks to solve are dug-in. Spatial economic disparities are always hard to shift; right now, the UK’s are self-reinforcing.
The UK is not unique or even unusual in these features of the spatial economy. For more UK detail see here; for EU and international evidence see here and here.
It’s therefore not surprising many of the solutions proposed in the White Paper feel familiar. I count five clear continuities:
- With New Labour ~> Coalition ~> May-era industrial policy
- With George Osborne’s urban devolution agenda
- With New Labour PSAs on regional economic disparities and social exclusion
- With Major / Heseltine era regeneration programmes, and the regional network of Government Offices
- And perhaps most importantly, with New Labour’s emphasis on joined-up government. I’ll come back to this one below.
I don’t think these continuities are a problem as such; in fact they show evidence of learning from the past, which is good. However, this kind of policy mean-reversion also point to a problem — churn — that I’ll come back to in a minute.
And what’s more alarming is the lack of continuity with the government’s own recent economic strategy documents, as Diane Coyle and Adam Mathur demonstrate well here.
2/ Devolution and institutional churn. The White Paper rightly pushes for more devolution to city-regions to reduce disparities between places. There are strong reasons to favour this in theory; in practice the evidence is less clear-cut, but that’s partly because it’s hard to evaluate impacts. Not a reason not to try it.
The bigger issue is what we should now call the ‘Westwood Paradox’. For local economic growth outcomes to improve, local institutions need reform; but a big reason for this is constant institutional change in the past. As Nicola suggests here, this history of excessive, often politically-driven reform is now an argument against systems change today.
3/ Joining-up central government. The White Paper is correct that joining-up centrally is just as important as devolving locally. This is not a new idea — see point 1 above — but it matters a lot. The UK is very centralised, and most commentators think the White Paper’s devolution measures don’t go far enough. So in theory, Whitehall reform should be just as important as devolving powers — or more — in shaping outcomes to 2030.
That means the big questions here are political economy questions:
- First, are there effective formal mechanisms to bring other departments on board? New Labour tried legally-binding commitments; these were insufficient.
- Second, does Gove have the raw political power to force cross-department working? In practice you want a strong Prime Minister, Chancellor and Secretary of State aligned on this, with the PM driving it. That is clearly not the case right now, as an insider tells Esther Webber:
All these ambitions speak to different systems and chains of command, made ever more tricky by the fact the centralizing force [Johnson] doesn’t know the detail and just wants the ‘Gover’ to ‘fix it.’
Of course Boris Johnson may not be in charge for much longer. But that dynamic also seems unlikely to change much with (say) Rishi Sunak or Liz Truss as PM.
I think that these dynamics are more structural than personality-driven — partly it’s №10 vs. №11, partly №10 and №11 vs. every other department. This twin tension is going to limit what any UK national government can do: much of the work will therefore be local. I’ll come back to this at the end.
4/ Not enough time. The 8-year timeframe for the missions is not long enough: see the go-to example of ‘Levelling Up’ the former East Germany; or just as relevant, the 60-year-plus timeframe of US New Deal ‘Big Push’ policies.
Again, the political dynamics matter a lot. The long(ish) commitment in the White Paper is helpful, but in practice Boris will have to show results by the next election around 2024. So there’s an obvious incentive to focus on performative short term actions — highly visible and/or shiny policies like cleaning up town centres and new buildings — which may have benefits but won’t fix the deep economic problems.
5/ Not enough money. There’s no new money. Michael Gove is clearly aware that this is a big problem — thus the pre-launch attempt to repackage existing funding into ‘extra billions’. In fact it’s worse than this: policy choices have created three money problems:
- The UK is spending orders of magnitude less than the benchmark example: Germany post-unification.
- The UK’s chosen Brexit has meant the loss of EU funding, and the Shared Prosperity Fund does not fully plug the gaps.
- Since 2010, austerity has stripped a lot of money from local government, and this has been deliberately targeted on the most deprived areas.
This may not matter so much if mainstream government spending can be re-orientated towards levelling-up goals — ‘bending the spend’, in New Labour-speak. Gove and Andy Haldane clearly get this, and so the White Paper’s Missions aim to realign many domestic policy agendas towards levelling-up ends — a move reinforced by other announcements on education and crime coming down the track.
However, past experience shows that both formal mechanisms (like targets set in legislation) and core political power need to be aligned to get any kind of Whitehall traction on this — like its predecessors, DLHUC is just another spending department not at the centre of government. So while the lack of money doesn’t have to stall progress on levelling up, the combination of no money and no power are rather more problematic.
I would dearly love levelling up to succeed. And given the deep-rootedness of the problems it’s trying to fix, we should not expect near-term success.
Overall, though, two things still worry me. The first is about expectations. Evidence from even the biggest ABIs suggests the most we can expect from area-level policies is to partially push back against very strong spatial economic megatrends. Of course it’s still worth trying — but we need to set our expectations right. And as the White Paper rightly says, we have to pay as much attention to levelling up local amenities and public services as attempting to close economic disparities.
The other is about delivery. Regardless of the White Paper’s quality — current national politics and institutions make it difficult for England to drive through the kind of committed, long-term agenda for economic development — and public services more broadly — that’s achieved (some) progress elsewhere.
For all these reasons, I suspect that in practice much of the economic work of levelling up will have to be done on the ground, by Mayors, councils and other local institutions — just as it always has been, under other names, in the past.
[*] Many thanks to Andrew Carter, Nicola Headlam, Neil Lee and Anna Valero for helpful input.
[**] I originally called this piece ‘My Struggle’, after Knausgård, which seemed quite amusing at the time, but did … confuse some readers.