Although the Levelling Up White Paper offers "Devolution for all", the proposals fail to offer the resource needed to build back better from the pandemic, move to net zero carbon economy, and reduce spatial inequalities in the UK, say Professor Ron Martin and Professor Pete Tyler.
On 3 February 2022, the Government finally published its long-awaited White Paper on how it proposes to ‘level up’ economic prosperity across the UK’s regions and cities over the next ten years. Although there is welcome devolution to local leaders from Whitehall, the proposals offer nowhere near the amount of resource that will be needed to reduce spatial inequalities in the UK economy.
The United Kingdom has some of widest and most entrenched spatial economic inequalities among the OECD (Organisation for Economic Co-operation and Development) nations and despite many policy initiatives over several decades, the problem is getting worse. Economic disparities translate directly into health, education and general quality of life inequalities, and into social discontent and political disaffection, so it is an issue that needs to be firmly addressed.
At one level, the White Paper offers quite radical new approaches to tackle the problem, not least of which are bold plans to shift power from Whitehall to local leaders and enable all parts of England to be able to have a mayor and greater control over some of the decisions currently taken by central Government. At last, there seems the intent at least to give local government more control over the economic development of their local economies. A further strong feature of the White Paper is the recognition that a major effort is needed to increase public investment in Research and Development by at least 40% in regions outside the South East of England.
However, as research we have just published shows, the new proposals are woefully inadequate in terms of coming up with new resources that will enable the left-behind regions and cities of the United Kingdom to close their economic development gaps with the prosperous places, most of which are in the south-eastern part of the UK. We estimate that around £4.9billion per year has been spent on policies to assist economically lagging areas since the mid-1970s (in 2020 prices). This contrasts with the Aufbau Ost (‘Building Up’ East Germany) programme in Germany following reunification which has spent around £55billion per year since 1990. From what we can see the new White Paper offers something around £3-4 billion per annum of levelling-up resources, and so is not materially different from the past.
Moreover, there are no new proposals in the White Paper to reform local government finance to enable local authorities to increase the resources available to them for economic development from their local tax base. As such, local government will continue to rely on Whitehall for the relatively modest discretionary grant funding in the years ahead. Overall, the White Paper fails to seize what is a transformative opportunity for the UK (building back from the pandemic, and moving to a net zero carbon economy) to achieve the levelling up in socio-economic prosperity and opportunities that is sorely needed.
Levelling Up Left Behind Places: The Scale and Nature of the Economic and Policy Challenge. Martin, R, Gardiner, B, Pike, A, Sunley, P and Tyler, P.
A recording of ‘Levelling Up Left Behind Places: The Scale and Nature of the Economic and Policy Challenge’ can be found at: Regions Cities Industry webinar