Thomas Pope: The next prime minister must make Boris Johnson’s ambitions for levelling up a reality
The government’s flagship levelling up agenda has not featured prominently in the Conservative leadership contest so far. But the next prime minister will not be able to escape the political and policy reality that the United Kingdom’s longstanding regional gaps are at record highs.
Whoever succeeds Boris Johnson will be held to the 2019 manifesto pledge to do something about it, but the government’s current approach to levelling up is not enough to deliver the change promised. The new administration needs more ambitious policies, specifically targeted at the UK’s underperforming big cities, to succeed.
A new Institute for Government paper, drawing on the best available evidence and case studies of successful levelling up elsewhere, shows that the government’s approach will not drive big economic change. The five missions on education, skills, transport, broadband and R&D would lead to an economic boost of around £20 billion per year by 2030, which will only be enough to reduce the gap in productivity between London and the South East and the rest of the country from 41 per cent to 39 per cent. This would hardly represent the big economic change that the levelling up agenda promises.
One problem is that the government’s policies are not ambitious enough. There is good evidence that non-university further education has high economic returns and that the UK workforce needs more people who have these qualifications, for example. But the mission to increase participation in adult skills by 200,000 a year would still leave it well below 2010 levels. A mission to increase participation by 500,000 instead could lead to an extra £8 billion economic gain.
The government’s current approach to levelling up is not enough to deliver the change promised
There is also policy that could make a big difference but are ignored in the current missions. University education has been and will continue to be a big driver of productivity in the UK. And the chance of going to university is regionally unequal too.
Big changes in regional productivity will only happen if the government can change businesses and workers’ decisions about where to locate. This means, as well as being more ambitious, economic policies should focus on cities which have natural advantages that mean they are well-placed to attract high-skilled businesses and jobs. In the UK, big cities like Manchester and Birmingham underperform their potential and stronger cities would benefit the wider regions too. The approach so far – exemplified by the Levelling Up Fund – has been to spread money thinly across the country.
But while Boris Johnson’s levelling up policies do not match the scale of the task, the government should be credited with taking the problem of regional inequality seriously. Every government for the past 40 years has tried and failed to tackle it, largely because there has been a lack of coordination or consistency in regional policy. Past successful examples of levelling up show the agenda will take at least a decade to make a big difference, making these features crucial. The reforms proposed by the government to “rewire Whitehall” and devolve more powers are an attempt to break the cycle of decades of policy failure. They are currently untested and need to be implemented, but these reforms give a plausible answer to the question “why will it be different this time?”
As candidates lay out their plans and a new prime minister is chosen, we should hope to see more ambitious policies to tackle longstanding regional inequalities. But if the post-Johnson administration is serious about achieving levelling up then it should commit to the devolution pledges and other system reforms that are the best aspects of the agenda. Without that, this latest initiative will be as ineffective as the many other attempts that preceded it.
Thomas Pope is deputy chief economist at the Institute for Government.
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