The Levelling Up White Paper is ambivalent for those who believe in community power. Some warm words for localism - but still too much centralism and top-down
We were glad to see the above tweet from New Local’s Adam Lent, as we were struggling with our response to the UK government’s Levelling Up white paper, on reducing economic and geographical inequalities in Britain (full PDF). The rhetoric from the report’s driving force, Andy Haldane of the RSA, is superficially attractive - from the article Adam’s quoting above:
The government’s new levelling-up strategy should help Britain’s left-behind towns and cities emulate Renaissance Florence in cooking up the “secret sauce” of economic success, according to its co-author Andy Haldane.
The hefty report, published on Wednesday, was mocked by some for its frequent historical references – including to 15th-century Florence under the Medici – but Haldane, a former Bank of England chief economist, is deadly serious.
Only by looking back at where and when economic development has really worked, he says, can we decide how to reverse what he calls 70 years of government failure in tackling regional inequality.
“The power of this is not that every part of the UK is going to look like Florence – I think that would be a stretch,” he said. But he added that the “raw ingredients” were the right ones. “It was the coming together of scientists and artists and business people, and financiers of course, as the Medicis themselves were. It was that crucible, of skills and of professions and of sectors, public, private, third, that generates a kind of spontaneous combustion.”
…Haldane insisted that economic regeneration only works when a range of different factors are tackled. “We know the secret sauce of success in places has these multiple ingredients. You can’t just not do transport, or not do high streets or not do jobs or not do broadband,” he said. “You’ll fail if you have one missing ingredient, in the same way as if you miss out the eggs or the sugar or the flour from the cake, it’ll fall flat.”
This is strikingly top down as an approach - and as Adam says, seems to have an attitude to growth which barely considers the externalities it generates. Also. any student of 15th century Florence would note its constant warring skirmishes with neighbours…
Do these successful, diverse urban clusters in the present just draw vitality (both human and economic) from smaller towns between them? (See this: some wealthy areas of England to see 10 times more funding than poorest). We are always interested in the mix of cosmopolitanism and localism - cosmolocalism - but not just at the level of the city-state.
Some commentators in the “community power” field are ambivalent about the small but significant nods in the White Paper to the vibrancy of localism (which we’ve been charting for years). See the tweet below:
The Conversation UK had a very concise critique of the Levelling Up paper:
To understand what the government is trying to do, we need to understand how it is setting out the problem. It identifies six “capitals”: physical capital (e.g. infrastructure and housing), human capital (e.g. skills and health), intangible capital (e.g. ideas and innovations), financial capital (e.g. business finance), social capital (e.g. community and trust), and institutional capital (e.g. local leadership).
The places that have an abundance of these are in a virtuous circle, where the different capitals reinforce one another. Places that are struggling are in downward spirals. The idea is to increase the UK’s stock of these capitals and, crucially, to begin to close the gap between the best and worst performing areas by 2030.
The proposed solutions are organised into four areas.
There are policies that aim to grow the private sector to boost productivity, pay, jobs and living standards. Policies here include freeports, redistribution of R&D investment and transport improvements.
Next, policies to spread opportunities and improve public services, including 55 “education investment areas” and measures to improve skills. Improving health through changes to school meals and a new tobacco control plan are also part of this area.
There are policies to restore a sense of community and local pride, including 20 town regeneration projects, along with a range of smaller projects, such as new football pitches and out-of-school activities. There are also attempts to redistribute housing investment outside of London and create minimum standards for rented homes.
Finally, there are policies to empower local leaders and communities, spreading devolution by negotiating county devolution deals led by county “governors”, and to deepen existing English devolution.
But while many of these aims are laudable, the plan is ultimately flawed – in four important ways.
Problem 1: big problem, small solutions
On the plus side, the levelling up policy is grounded in a thorough base of research on spatial inequality in the UK. There is a good understanding of the scale and nature of the challenge ahead. However, this is not matched by the scale of investment or the proposed solutions. Missing are a clear set of mechanisms that break the vicious cycles in places that are lacking in the “six capitals”.
Problem 2: where are the local strategies?
This policy is huge. The sheer range of policies shows that the government has realised that levelling up has to be truly cross-sector if it is to work.
However, this is not a cross-sector strategy for each place but a disjointed and centrally designed package. The policies target lots of issues but do not coherently target individual places. The “six capitals” and “four policy areas” may offer a coherent system of thought for those at the centre but they sit alongside an incoherent collection of policies. And it’s the latter that really matter to a town or city that feels left behind.
This kind of work has to be done at the local level because places face different challenges and have different growth potential. Our research shows, for example, that matching the supply and demand of skills at a high level is crucial for turning around failing local economies.
But this only works if a local place uses a strategy that takes account of both the structure of the economy (skills demand) and the system of education and training (skills supply). Without this, our research shows that places resort to focusing on job numbers rather than quality and productivity – and risk being pulled into a low-productivity, low-skills equilibrium.
Problem 3: London is still in control
The UK is the most centralised political economy in the OECD. One of the biggest problems is that levelling up is, in essence, another centrally designed programme of interventions, some of which will be delivered by local government. The devolution plans are welcome but ultimately, levelling up is going to happen from Whitehall.
In fact, devolution and reforms to local government are just one of the 12 listed missions that make up the levelling up agenda (and incidentally the twelfth). This mission should have been the central theme through which everything else would be delivered. And it needs to happen first rather than being drawn out for another decade.
Problem 4: some plans will makes things worse
The existing system for distributing money is highly complex and the plan is to simplify it – which is a positive step. However, it still entails the centre striking deals with local areas and funding projects through competitive bidding.
This approach is highly inefficient, and is disliked by those in local government. The places best positioned to bid and make deals are not necessarily the places that need levelling up, so inequality could be aggravated. Instead, money should be allocated through a stable funding formula that prioritises places that are most in need.
Ultimately, our research shows that what’s needed are reforms to how local areas and regions are funded, governed, and organised to provide a more solid structure on which to build.
Otherwise levelling up is likely to lead to a scatter gun approach. Small improvements will be made here and there that do not connect together into a virtuous cycle of transformational change. It’s doubtful that this will make enough people feel that their local area has really improved – and it is on this feeling that the government’s future electoral hopes hang.
More here. For an insider-outsider take on the report (he was consulted in its formulation, but is an external academic) read Geoff Mulgan’s assessment.