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By Baroness Smith of Llanfaes
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Wales urgently needs levelling up – but can the Government overcome the challenges of devolution and delivery?

4 min read

Levelling up may be a relatively new phrase in our political lexicon but the aspirations it seeks to capture have been part of our politics for decades. It speaks to the challenge of achieving a fairer, more even spread of wealth creation across the nation.

Levelling up may be a relatively new phrase in our political lexicon but the aspirations it seeks to capture have been part of our politics for decades. It speaks to the challenge of achieving a fairer, more even spread of wealth creation across the nation. 

The context is well understood too. The ONS summarises it succinctly: “London and the South East outperform other UK regions and countries in terms of productivity, human capital and wages, with little indication of the other regions and countries catching up.” Covid-19 has made some of these divisions worse.

Levelling up is certainly a complicated, long-term undertaking. It brings together industrial strategy, transport, planning and skills policies in response to demographic and other broad economic changes. 

In Wales the challenge of closing the economic gap has been at the heart of political debate since at least the 1980s when the impacts of long-term industrial decline became glaring. 

It was a key theme in the devolution referendum campaign in 1997. Devolution would enable Wales to develop more effective home-grown policies, it was said. It was also used by both sides of the Brexit debate in 2016 as each sought to argue that the path to greater prosperity could only be found in or out of the EU.

Of all UK regions and nations, Wales had been in receipt of the highest level of EU structural funds. The whole purpose of this financial aid was to help bring the poorest regions of Wales closer to average EU levels. 

However, despite remarkable improvements in labour market performance over the last decade, Wales remains close to the bottom of most UK economic league tables. Prior to the pandemic, statistics showed Wales ranking 11th out of the 12 UK nations and regions for GVA per head and for Gross Disposable Household Income. New jobs do not automatically mean higher value output.

The Shared Prosperity Fund, the post-Brexit replacement to EU aid, is intended to provide both continuity in funding and, crucially, a more effective tool for levelling up. But success will be difficult especially as SPF has already become a battleground for constitutional rows between UK and devolved governments over who should control the fund and how it should be badged. 

With devolution, most of the levers of government with which “levelling up” might be achieved within Wales are the responsibility of Welsh Government. This creates complexity and, at times, tension between Westminster and Cardiff Bay. As UK ministers are finding out with northern mayors, devolution means that arguments over “powers” are never far away from a discussion about levelling up.

Transport remains a key area for action in Wales given that rail and road connections within and to/from Wales have suffered from decades of under-investment. The thirty year saga of the stalled M4 relief road has become emblematic of a seeming inability to deliver big-ticket infrastructure investment in Wales.

The current Union Connectivity Review under Sir Peter Hendy is intended to develop new thinking for improving UK-wide transport. Like the Shared Prosperity Fund, it has a strong levelling-up focus but also with one eye on the debate over the future of the Union. 

Other initiatives by UK Government like the Green Industrial Revolution and Free Ports certainly hold opportunities for Wales as potential sources of new economic growth and innovation. But here again, delivery in a devolved context remains a key challenge. 

Wales is perhaps the most challenging corner of the UK for the Government to translate the slogan of levelling up into a programme of action that makes a lasting impact. But with the potential of Covid-19 to leave deep scarring on the Welsh economy, there has never been a more important moment to try.


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