HomeGreening the economyWhy levelling up should mean real economic change

Why levelling up should mean real economic change

For two years, levelling up has been one of the main slogans of Boris Johnson’s administration, but there’s still no agreement about what it means. Strategic ambiguity can be a political virtue, though given both the government’s serious political challenges and the limited time before the next general election, it’s time to be explicit about what levelling up will actually do.

Levelling up starts from recognition that the UK is surprisingly geographically unequal, with added impetus from the 2019 election. Deprivation closely matches England’s now famous ‘red wall’ seats, the lynchpin of the new Conservative electoral coalition, which is a fact of life even if Boris Johnson goes.

This very political view of the target for levelling up suggests political solutions. The government’s leaked levelling up white paper focuses on governance: sweeping away the historic boundaries that govern the country in favour of more economically rational new unitary authorities, led by mayors. The hypothesis, one assumes, is that American style local democracy, plus borders that have some basis in the 21st century, will somehow see regional inequalities decline.

Certainly, political geography creates problems: years ago we pointed to squabbles over bin purchasing in neighbouring local authorities, wasting £200 million of public money and, more significantly, undermining the economics of a circular economy. There is something in the idea that handing agency to people to harness local pride and enterprise might see growth surge. Even if it doesn’t, taking back control is a powerful political message. It is logical to extend this core political offer of Brexit downward to local government to shore up the Brexit-related electoral coalition that red wall Tory votes represent.

Levelling up is harder than ‘taking back control’
However, this view of levelling up ignores the recent, rapid rise in the cost of living. Faced with new people to elect and spiralling bills, most voters will side with Brenda from Bristol against yet more politics because, unlike the denizens of Whitehall and Westminster, most people are not political obsessives. Levelling up is an economic promise to transfer wealth from richer to poorer, somehow achieved without taking money from the well off. Cakeist to its core, it is no wonder it has proved so hard to define.

Certainly, the early approach of spending £4 billion on a confused pork barrel of sports clubs, tow paths and road projects won’t deliver on the promise. Funded from taxes, this might make sense as a one off, but an ongoing programme will face opposition from those wealthier taxpayers in blue wall seats expected to pay for it. More importantly, these projects may improve local amenity but don’t provide parity of esteem or prosperity. That combination of pounds and pride needs something substantive.

A quick glance at the Scottish equivalent of England’s deprivation map shows what this might mean. Those areas that are most deprived today are former industrial powerhouses. Greenock built ships for the world because the compound engine designed in Scotland was more fuel efficient than any other. It guaranteed a century of prosperity and pride on the Clyde. Dalmarnock’s engineering expertise saw it design Britain’s iconic bridges, including those crossing the Forth and Tower Bridge. A commitment to levelling up means daring to create these sorts of new ‘northern powerhouses’ in deprived areas. Ministers weren’t just playing for time when they said levelling up would take a decade.

We know the future direction of the economy is green
Today we have an advantage over the first industrial revolution: we know future economic activity will be zero carbon, circular and nature rich, or it will not lead to growth. We also know the UK’s comparative advantage is overwhelmingly in decarbonising or carbon neutral sectors, including renewables, pharmaceuticals, chemicals and biotech. And we know where the UK is weak: our homes leak heat three times faster than those in Germany, raising our energy bills, and much of our once world beating steel industry is struggling with increasingly outdated kit.

Knowing all this, what would a levelling up agenda that delivers on its promise look like? It would be tangible, with sizeable investments in sectors which have the prospect of fostering sustained prosperity and pride. There’s no getting around the risk involved: we cannot know what the next compound engine will be. We can make educated guesses. Here are five that we think Michael Gove should put into his levelling up white paper:

  1. Top of the list has to be floating offshore wind manufacturing. The private sector has just bid for the right to build more floating offshore wind than all the fixed offshore wind built over the past decade. The UK has the skills and the manufacturing base to build these new turbines in the UK, and the ensuing revenue over the next 20 years in formerly industrial areas of the UK would be a lasting form of levelling up. Because floating offshore wind can operate in deeper water, it could be deployed across over three times the area of sea suited to today’s turbines.

  2. In the same vein, a new centre for alternative proteins based at Teesside’s Centre for Process Innovation, which has the requisite facilities, would capitalise on the fact that the UK is already the largest consumer of plant-based proteins in Europe. It also has the biotechnology and chemical expertise to compete in precision fermentation, which is the next frontier in food. The UK has a track record here: Quorn was invented by the British chemicals company ICI, and the National Food Strategy identified this as a large growth opportunity for the UK with the prospect of creating 10,000 new manufacturing jobs, and supporting 6,500 farming jobs.

  3. Britain’s steel industry deserves a look in, not least because it is concentrated in some of the areas most in need of some levelling up. The UK could succeed in zero carbon steelmaking, by combining hydrogen direct-reduced iron with electric arc furnaces (EAFs). This is, in part, because the UK has enough scrap steel to expand its fleet of EAFs today, making early investments low regret. Adding to the attractiveness is the fact that most of the money needed has already been earmarked.

  4. On transport, the government’s recent investment into a battery gigafactory in Blyth is a big step forward, but rumours that the Treasury has halved the funding for the ‘Bus Back Better’ programme, hailed as “one of our major acts of levelling-up”, is an own goal. This shows the fragility of devolving governance without funding. If Michael Gove wants to make a success of his leaked white paper’s governance first approach, he will need to link money to local powers, and connect local industrial clusters to benefits across the country. Rebooting the bus programme would be a good start. If it needs a patriotic slogan, how about ‘Bus Back Better with Batteries Built in Blyth.’

  5. Finally, because creating new industries or rebooting old ones won’t deliver before the next election, a big investment in home energy efficiency (perhaps the original ‘levelling up’ policy) and the one most directly in Michael Gove’s control, is too good to miss. Spending on efficiency disproportionately benefits less affluent areas, and the recent Green Homes Grant scheme provides ample lessons to improve upon. A similarly sized annual scheme, designed to enable rather than frustrate local supply chains, would have the double benefit of directly addressing energy bills of those able to benefit, and putting money into the pockets of tradespeople across the country.

Levelling up started as thinly veiled pork barrel politics. The white paper defining its meaning is due at a time when it could help make or break this government, whether led by Boris Johnson or not. If it seizes the opportunities of the UK’s zero carbon, resource efficient, nature rich trajectory, rather than just rearranging local government, ‘levelling up’ might secure the long needed revival of the UK’s lagging regions.

[Image: UK Government Flickr – Michael Gove Levelling Up Visit to Greater Manchester]

Written by

Policy director at Green Alliance. Tweets at @dustin_benton.

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