Levelling up

We are coming to the end of a parliament where levelling up has been an ongoing theme, so it is a good time to begin to consider what levelling up is (or was), how it emerged, what if anything it has achieved and what lessons the past few years might offer a new, potentially progressive, government. In this article we argue that government has begun to deliver on some eye-catching initiatives, but their impact on economic levelling up is unlikely to be significant. More positively, we argue that levelling up – including a broadening and deepening of devolved economic governance – has moved regional inequality up the political agenda and into the public consciousness. This represents an opportunity for a progressive government if it first resolves some of the political tensions and contradictions around levelling up. These include a conflation and confusion over whether interventions are designed to drive economic growth and productivity or build social infrastructure and pride in place.

Progressive Review readers are likely familiar with at least the headline evidence on UK regional economic inequality, which remains exceptionally high for an advanced economy.1 Pointedly, for an article such as this one examining the impact of recent policy, regional disparities have worsened over the past five years.2 Recent years saw populist politicians, thinktanks and commentators claim the cause of tackling regional economic inequality as theirs; with particular emphasis in Conservative politics on a ‘Brexit dividend’. Advocates of progressive politics were left on the defensive as ‘out of touch’ and representative of an often vaguely defined ‘metropolitan elite’. The government elected in 2019 presented itself as best able to help people in places that had been ‘left behind’ in a globalised economy – the places that “don't matter”.3

Levelling up builds on the Cities and Local Growth agenda (CLoG; incorporating the northern powerhouse) that gave us the current patchwork of regional development governance, including combined authorities, ‘metro-mayors’ and local enterprise partnerships (the last of which are being wound down this year). Genuine revolutions in regional policy have been comparatively rare, but the 2010 Coalition government's scrapping of much of the regional tier of governance – particularly the regional development agencies and regional government offices – was a relatively radical juncture. (The-then business secretary, Vince Cable, described the sweeping away of the regional structures as “a bit Maoist”. Is it possible to be a bit Maoist?)4

Analyses of levelling up often takes the 2022 levelling-up white paper5 as a point of departure. However, levelling up in practice is sometimes only loosely related to the themes in the white paper, which is broad in its analysis and aspirational in its goals. Much of the document discusses academic analysis of economic geography with an implicit nod to the agglomeration-focussed rhetoric of the northern powerhouse, framed as the “Medici model”. More practically, the white paper sets out 12 levelling-up missions with a series of metrics, reminiscent of the 1997–2010 government's public service agreements.6 The missions encompass pride in place, economic growth, democracy and public service improvement, and the targets cover most of the domestic business of government other than transfer payments.7 A levelling-up bill followed, with its main contribution being to set the missions in law. Given the grand scope of the white paper, and limited content of the levelling-up bill, it is reasonable to consider levelling up in the broader sense as it has developed in practice over the course of the parliament, rather than attempt to evaluate it against its wide-ranging missions, particularly given that there has been limited action against these targets in the two years since the white paper's publication.

Levelling up in practice, to the extent that it represented a distinct approach, developed in an ad-hoc, confused and confusing manner but there have been attempts to identify some structure and coherence.8 First, there was a possible shift in geographical focus to smaller places and an emphasis on community identity rather than the ‘cities’ rhetoric of recent years, together with ambitions to boost manufacturing through active industrial policy. There are the familiar themes of infrastructure investment, regional dispersal of civil service jobs, and special economic zones in the form of freeports. In addition, political devolution to functional economic geographies has remained prominent in policy discussions and there is also significant interest (but limited action) in the decentralisation of public funding for research and development (R&D). In governance terms, levelling up uses much of the institutional architecture of CLoG, which itself developed on an ad-hoc basis under the Coalition government and Cameron/Osborne Conservative government, alongside the emerging towns focus. The CLoG governance structures of combined authorities and local enterprise partnerships functioned through a series of place-based ‘deals’ and competitive funding streams, and levelling up continued this approach, with more emphasis on left-behind places and hyper-local delivery through local councils.

Importantly, there are tensions around the political rhetoric of levelling up that partially distinguishes it from CLoG's city-region-focussed approach. These tensions are in part the result of levelling up beginning life as a political slogan that has subsequently struggled to differentiate itself from (or to coherently direct) existing policy. Whoever forms a government after the forthcoming general election will inherit them, and a new progressive government would likely need to resolve them.

Some of these tensions flow from the rhetorical conflation of economic growth with pride in place, and the suggestion that all places have equal economic potential. First, there is a tension between a message that everywhere can have a dynamic local economy and the reality of a continuation of the competitive deals. The second tension concerns geographic scale and levelling up's (sometime) emphasis on smaller places (or towns) over larger cities/urban areas (although the levelling-up white paper emphasises that different places have different roles in the spatial economy). Third is a tension between promoting pride in place and policies to promote regional productivity and growth, with the two often being conflated. Fourth, there is a clear tension between the rhetoric of devolution and a government that seeks to control regional policy from the centre, often bypassing subnational institutions, such as metro-mayors, that purport to provide a regional strategic tier of governance.

On industrial strategy, R&D funding and the role of place, there remains internal friction between the idea of ‘science superpower’ and levelling up. UK Research and Innovation and other research funders have increasingly emphasised ‘place’ in their literature and in their funding calls, and the government has created Innovation Accelerator pilots in Glasgow, Greater Manchester and the West Midlands. However, in practice this is still quite marginal (for example, the Innovation Accelerators have a total budget of around £100 million) and much of the government machinery and many of the beneficiaries of public research funding remain resolutely ‘space neutral’ and have a belief that allocating money to place or using some kind of levelling-up criteria will lead to sub-optimal investments. Civil service dispersals are a welcome (but marginal) policy where government has made some high-profile progress. For example, Darlington Economic Campus has seen staff numbers from different government departments increase there, including some senior civils servants, and success is being claimed.9

On funding, there have been several high-profile regional development funds since the launch of the Towns Fund in 2021, including the Levelling Up Fund (LUF) – essentially a local infrastructure fund open to bids from local authorities – and the UK Shared Prosperity Fund (UKSPF) – the long-awaited replacement for the European Structural Investment Funds. Delivery of the LUF has been slow, with a lack of local capacity and inflationary cost pressures meaning councils have struggled to get infrastructure projects off the ground, leaving much of the LUF unspent.10 Government investment in larger infrastructure projects has at best stuttered, exemplified in the scrapping of High Speed 2 (HS2) to the north of England and the poorly communicated and sceptically received assurance that the budget would be spent elsewhere on regional transport projects.

The UKSPF is largely revenue funding and therefore easier to invest more quickly but has experienced many of the issues that had been raised as concerns in advance, particularly greater centralisation of control, timescale requirements from government that encourage rapid spending, and policy churn. Government dictated that more than a fifth of the fund was to be spent on the Multiply national numeracy programme (in effect centralised), while the structure of the fund – wherein with the largest amount available is the final year – makes it more difficult for local leadership to plan for the long term. More broadly, there is no guarantee that the UKSPF will continue beyond the current spending review period, meaning the UKSPF, as it stands, does not come close to matching the level of funding available through the EU funds it replaced.11 Importantly, the fund is managed by combined authorities where they exist, or local authorities where they do not, meaning councils can lack the critical mass to deliver larger projects. The wide-ranging UKSPF objectives, reflecting the levelling-up missions, spread the fund even thinner, with local authorities using it to provide anything from skills projects to lights shows. On spatial policy, freeports are in place for ministers, mayors and council leaders to point at, and local teams and Whitehall civil servants are working on them. Elsewhere, negotiations are under way to develop business cases for investment zones across the UK. Again, freeports and investment zones are likely to be marginal interventions, given their relatively small scale and limited budgets. Levelling up has continued to implement devolution deals with combined authorities, and most of the north of England is now covered by a deal, including (and eventually) the North East, which had seen a ‘no’ vote in a devolution referendum in 2004 and the failure of more recent devolution deal negotiations. This is an area where levelling up has made progress, although the devolution framework with its four tiers still lacks some transparency on what constitutes good governance and good performance.

While further steps towards decentralisation are welcome, most of the levelling-up interventions are unlikely to be transformative, either because they lack scale or because they are marginal – or both. First, it is important to acknowledge the narrative that emerged of levelling up representing an almost unique or first attempt to tackle spatial economic disparities. In this sense, levelling up has ‘failed’ when measured against some of the more ambitious rhetorical claims and media coverage, but in terms of real policy interventions, the post-2019 government has begun to deliver much of what it realistically set out to do, albeit in an ad-hoc way. The problem is less that these policies have failed in their own terms, but more that they never amounted to a great deal, and were never likely to make a measurable impact on regional economic inequality.

Perhaps levelling up's biggest achievement has been to help put spatial economic inequality at or near the top of the policy agenda and in the public consciousness, and in doing so articulate a sense that peripheral places matter. It may be electorally motivated, but levelling up recognises that places that feel neglected need a decent public realm, physical infrastructure (most obviously transport) and social infrastructure,12 the last of these being articulated in the levelling up white paper as a sense of pride in place. Of course, there are large caveats to this faint praise, with the government's own spending cuts since 2010 leading to a sense that places do not matter after all, while many of the initiatives badged as levelling up and paid for with time-limited levelling-up funding (from new leisure centres to community events) are things local government would have done anyway when it had more money. However, the new enthusiasm for regional policy and tacking spatial economic inequality still represents a huge opportunity for an incoming government.

The years following the global financial crisis of 2008 and subsequent fiscal retrenchments (and, in the UK, particularly around and after the vote to leave the EU) have seen progressive politics accused of solely middle-class, metropolitan interests. It is beyond the scope of this article to unpack this fully, but levelling up provided the backdrop against which Conservative and populist politicians championed ‘left behind’ and ‘forgotten’ places. A narrative developed that levelling up was the first serious attempt in decades to reduce spatial economic inequality. While this was at best debatable, it proved a political challenge for progressive politics.

However, the national political mood appears to have turned, with voters giving government little credit for levelling-up initiatives and polling on voting intention suggesting that levelling up's political success could be temporary, at least in a general election (Conservative mayors Andy Street and Ben Houchen remain popular). Progressive politicians can reclaim the agenda, but Labour as the likely next government needs a clearer message.

Recent years have seen a range of interventions from academics and thinktanks, offering advice and guidance on better regional policy.13^,14^,15 An additional blueprint for the future is beyond the scope of this article, but as a first step we argue that a new government needs to tackle the distributive politics of levelling up and resolve some of the contradictions and tensions. One of the first things to address are some of the tensions around growth and pride in place and the role of different places in the spatial economy (typically articulated as a towns/cities divide). This is exemplified in the conflation of policies to promote pride in place (including a better public realm) and policies to facilitate economic productivity – a false promise of levelling up that people in peripheral places tended not to believe.16 A new, transparent regional policy would be clear that different places have different roles in the spatial economy and require appropriate public investments.

From this perspective, productivity-oriented spending would be selective and targeted while a needs-based funding formula for local services would demonstrate fairness and empower local leaders. In the latter context, local public services, infrastructure and the public realm have required significant investment for some time. Many places have social and economic challenges that are deep, persistent and beyond the scope of discrete economic development policy where, for example, poor health interacts with economic challenges. Crucially, this means the need for serious public investment and, while everyone is in favour of fair and progressive taxation, probably a willingness from most, if not all, citizens to pay more tax.

The era of levelling up presents lessons for a future government in providing clarity of purpose and policy coherence. Government can pursue economic growth alongside policies to promote pride in place and social inclusion but should take care not to conflate and confuse different challenges. In doing so, the next government should clearly articulate the ‘rules of the game’; with funding allocated by credible justification to encourage the crowding-in of the resources, skills and talents of industry, government, academia and communities. Despite the fiscal challenges the government may inherit, the clarity and ambition highlighted above may go some way to driving a progressive response to the challenges of places where the concept of levelling up itself seems confusing and far away.