Analysing The Political Economy

Why the 'Levelling-Up' Agenda Won't Work

By Graham Vanbergen: ‘Levelling-Up’ is a two-word slogan designed to get votes in an area of Britain that does not normally vote Conservative. It is a flagship policy destined to fail for two reasons. The first is that there is no appetite in the south of the country to have its wealth drained and transferred to the north to pay for it. The second is more complicated but boiled down – it’s about logistics.

The new Department of Levelling Up, headed up by Michael Gove is tasked with addressing regional inequalities in Britain. But Michael Gove, who was once education minister pushed the flagship education policy of academies that saw 200 schools in special measures under Labour widen out to 6 in 10 English secondary schools. It has since been branded an unmitigated disaster for education. This fact alone gives a taste of what can be expected.

Research shows that over 85% of former so-called ‘Red Wall’ seats are now worse off than they were before Boris Johnson became the Prime Minister. That research even went as far as looking at life expectancy, income ratios and other factors and found that irrespective of the input by government – ‘the goal is failing.’ Further research has also shown that the north-south divide has been widening since Johnson took office and has accelerated since the cost-of-living crisis took hold.

No one in a position to know is convinced by this policy. The Institute for Government says – “Levelling up plans will fail.” The Local Government Chronicle writes – “Policies are devised for Tory political gain rather than to help facilitate the government’s supposed defining mission.” The Local Government Authority says the policy will fail because of the twelve missions outlined by the government:

  • Five of the missions lack ambition

  • Three are too ambitious to be realistic

  • Four fail to define what success looks like

  • Two have too narrow a focus

  • One – on R&D spending – fails to line up with the overall policy objective

What this says is that the very people who have to administer this policy are fully convinced failure is baked in.


Four Decades of Failure

‘Levelling-up’ is also an admission that the god of Tory economic policy – Margaret Thatcher, was in fact, wrong. New transport projects, housing developments and re-industrialisation is at the heart of policy focused on the North of the country – the very things that four decades of ‘trickle-down’ economics have denied those same areas. Thatcher’s hatred of the working classes and the unions hollowed out the very industrial heartlands of Britain – that the same party is now trying to repair – for votes.

And because this policy is designed to attract votes, it won’t work. It’s just like their other flagship policy called Brexit, which is now costing the economy tens of billions each and every year – which economists are now almost universally agreeing will be like inflicting a perma-recession of 4 per cent on the nation.

If Boris Johnson is relying on red-wall voters to stay in power, they will soon realise the lies. And Johnson is already losing power in traditional Tory seats down South because of lies – as the local elections have demonstrated.

What really needs to happen is a rebalancing of education, that leads to better jobs, productivity, eventually better pay and all the things that higher incomes bring with it. Professor Henry Overman makes the point that – “The share of adults with degrees ranges from 15 per cent in Doncaster to 54 per cent in Brighton. High-skilled workers tend to work in better performing labour markets, which further magnifies individual labour market advantages. At least 60 per cent and up to 90 per cent of differences in average wages across areas can be attributed to differences in the types of people who work in different places.” Hence, many people who are well educated in the North migrate to the South – because that’s where the money is. And that concentrates more money in the same area. To reverse this alone would take huge amounts of investment over decades. Positive results will never come through fast enough for this Tory party even if that is what they intended to do – which they don’t.

To reinforce how important this point is, here’s Prof. Overman again – “The concentration of high-skilled firms and workers generates productivity advantages for firms and better labour market outcomes for workers. In turn, this attracts high-skilled workers from across the country. In short, London’s economic advantages stem from the concentration of skilled firms and workers, and from its economic size, and these factors are self-reinforcing. London’s economic strength also spills over to benefit towns and cities across the wider South-East.”

In other words – better transport might help a bit – but not much.


An Example of Success

The problem is that what is left in the areas that need levelling up have high proportions of vulnerable people with complex needs and low levels of economic activity. This further compounds their problems, as long-term unemployment, poverty, mental illness and poor health often go hand-in-hand. These are the consequences of deindustrialization and concentrating capital to one end of the country.

Then there’s money. If there was enough of it and the people who were managing it were competent, there is every reason to believe that ‘levelling-up’ could work. Take for instance the reunification of East and West Germany. Financial experts have calculated that the unification of Germany cost 2 trillion euros – the largest investment in the country’s history. But with good governance and three decades, it paid off. The transfer of wealth spurred a second German economic miracle.

Britain doesn’t have 2 trillion pounds to add to the national debt. Well, certainly if the Tory party is to be believed – as they have universally agreed throughout the last four decades that increased national debt is to be avoided – at all costs. Thatcher and Cameron imposed very strict levels of austerity because of it – and Sunak is effectively doing the same, for the same reasons.

Sending a few civil servants – building a railway line and passing a few million to each red-wall constituency to make everyone feel as though something is being done is not going to work. It is the same type of promise as Brexit. Sunlit uplands are not coming because of it. It will be seen by the electorate as nothing more than a mirage – in truth just a bid for power by means of deception. ‘Get Brexit Done’ – and ‘Levelling-up’ ultimately mean the same thing.



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