Is Boris Johnson’s ‘levelling up’ promise achievable?

Until business prospects and confidence improve, and the economy has entered a sustainable recovery, the UK will have difficulty levelling up its regions, writes Sean O’Grady

Try as he might, the prime minister may find levelling up a challenge (Getty)

Levelling up is one of the most familiar of the government’s snappy slogans, and although most people sort of know what they think it means, nowhere is it precisely defined. In the 2019 Conservative manifesto, for example (which seems now a relic from a lost age, but remains the programme for the Johnson administration), there are four mentions, along these lines: “Boris Johnson has set out an agenda for levelling up every part of the UK – not just investing in our great towns and cities, as well as rural and coastal areas, but giving them far more control over how that investment is made. In the 21st century, we need to get away from the idea that ‘Whitehall knows best’ and that all growth must inevitably start from London.”

Thus far, there seem to be four main planks of the policy:

• The UK community renewal fund (£220m);
• The levelling up fund (£4bn);
• The community ownership fund (£150m);
• The UK shared prosperity fund (possibly £2bn per year).

Of these, the first three are up and running, and the last – being the effective replacement for the various EU structural funds that until recently were helping to reduce inequality – is now to be launched.

All the funds have the aim of reducing the regional disparities in economic opportunity across the UK, through central government funding of local or regional schemes to promote more skills, revive town centres, subsidise activities hit by Brexit (such as Scottish shellfish production), upgrade transport links as well as cultural and heritage assets, and help people into employment.

Aside from these specific funds, there are also major infrastructure projects – for example HS2, 5G – and the partial relocation of government offices and public agencies, such as the Department of Housing (to Darlington and Wolverhampton) and the Treasury (to Darlington). The UK Infrastructure Bank has recently launched in Leeds. Free ports in places such as Humber, Liverpool, Teesside and East Midlands airport are also designed to boost local growth and jobs. A UK space centre has been established on Shetland, and a spaceport in Cornwall.

Economically, the “levelling up” agenda seems designed to redress the long-term trend for economic growth and prosperity to be concentrated in London and the southeast. It is a distinctly interventionist programme, in stark contrast to the more laissez-faire approach of previous Conservative governments. In Margaret Thatcher’s time, some ministers spoke privately of simply allowing market forces to take their course, letting depressed cities such as Liverpool fade away, until – or unless – the forces of supply and demand changed the dynamic. Regional policy, grants, state-owned stakes in businesses, national “banks” and funds, subsidies, intervention against foreign businesses (such as Huawei) and the rest were regarded as at best irrelevant to economic growth, and at worst, a hindrance to it – the taxes of successful businesses being used to prolong the lives of failed ones. This philosophy remained strong until the premiership of Theresa May, when attitudes began to soften; and the Johnson government has reverted to the earlier, more pragmatic approach adopted by Tory governments in the 1960s and 1970s.

Politically, critics see the various funds and schemes as semi-corrupt. They note the sometimes otherwise inexplicable award of grants to the relatively rich constituencies of cabinet ministers as a prime example of pork-barrel politics. The funds are also seen as a blatant attempt to bribe voters in marginal seats to return Conservative MPs: the “left behind” voters being invited to attract investment funds provided they vote the right way. Investments in new hospitals and schools fall into the same category. This is said to be the case most acutely in parts of the north and Midlands – in the so-called former red-wall seats won by the Conservatives in 2019, often for the first time in decades. The Conservatives argue that they are merely redressing the historical imbalance of growth, and ending the neglect of communities by the Labour Party (especially in local government). They tend not to mention that much of the deindustrialisation, and destruction of pit communities, took place under the Thatcher and Major governments.

Logically, the government cannot “level up” every community, as is sometimes implied, and past attempts by governments to “pick winners”, create jobs and boost growth in the regions have enjoyed mixed success. Investment is the key to raising productivity, and thus wages and living standards, in any nation or locale; and, post-Brexit and in the pandemic, private-sector investment has been depressed. Public-sector investment has helped to plug that gap and will trigger further private investment, for a time. However, the overall sums involved in the various funds and initiatives are mostly modest in the context of both the size of the UK economy and the scale of the historic challenge. Until business prospects and confidence improve, and until the economy has entered a wider, sustainable recovery, the UK will struggle to grow, and will have difficulty levelling up any of its regions.