Andrew Westwood suggests that success for the Levelling Up white paper depends on Treasury backing
The launch of the government’s long-awaited Levelling Up white paper is the latest in a long line of strategies promising to rebalance the economy across England. By coincidence, 2 February was also Groundhog Day. Since 1887, at Gobbler’s Knob in Punxsutawney, Pennsylvania, a groundhog named Phil has emerged to help predict the remaining weeks of winter. Legend has it that on this morning, if the groundhog can see its shadow, there will be six more weeks of winter. If it cannot then spring is on the way.
Sadly, there is no space for Punxsutawney Phil in the 332 pages of the Levelling Up white paper. But there are mentions of Jericho, Constantinople, Florence and Detroit, as well as Schumpeter, Putnam, Ostrom, Burke and Jimmy Choo. It is a serious piece of work with the depth of analysis that you would expect from the likes of Andy Haldane, former Bank of England chief economist and head of the government’s levelling-up taskforce; Neil O’Brien, levelling-up minister; and Michael Gove, levelling-up secretary of state.
The white paper casts its net widely and ambitiously. It describes the importance of “six capitals”—physical, human, financial, social, intangible and organisational—and their absence or insufficiency in particular places. It also sets out a series of thoughtful principles that should underpin long-term change: longevity and sufficiency, coordination, local empowerment, monitoring and evaluation, and transparency and accountability. These are all principles that successive governments have struggled to maintain—in some respects, this government more than most.
Ambitious missions
Twelve “medium-term missions” set out in the paper cover most aspects of government policy and delivery, and many departments and agencies. They range from raising productivity, employment and pay to improving health outcomes, housing, life expectancy, school results, numbers in skills training, transport and ICT infrastructure, to increasing spending on R&D throughout the UK. These are significant ambitions.
Aims to boost “pride in place”, wellbeing, social infrastructure and local leadership, while important, are harder to quantify. Taken overall, they are reminiscent of the performance measures called Public Service Agreements that came from Gordon Brown in the early 2000s, and George Osborne’s push for devolution in the 2010s. These were both initiatives led from the Treasury, with powerful chancellors controlling departmental spending. This agenda is not.
It is easier for the Treasury to drive such cross-government and long-term activities, first because it controls the money and second because it is around for the long term—something that cannot easily be said for other government departments or local and regional institutions that are expected to deliver the missions and change on the ground. The white paper might have set out a further mission of keeping the Department for Levelling Up, Housing and Communities in place or ensuring stability among local and regional institutions, such as combined authorities and local government. That would be 13 missions overall—unlucky for some and unlikely for others.
Research commitment
The R&D mission—to increase public spending outside the greater south-east (in this case, the ‘golden triangle’) by a third over the spending review period and by 40 per cent by 2030 is to be welcomed. So too is the commitment to spending 55 per cent outside the greater south-east by 2024-25 and the adoption of levelling up as a strategic goal for both UK Research and Innovation and the Department for Business, Energy and Industrial Strategy (Beis).
As commentators including James Wilsdon, professor of research policy at the University of Sheffield, have pointed out, this is not much of a departure from existing spending and should be easily achieved. Richard Jones, my colleague at the University of Manchester, has also suggested that this spending is likely to be more at the applied end of R&D, and the stated expectation of a “2:1 private sector match” more or less confirms this. It should also remind us that this R&D mission has an explicit purpose of boosting productivity, pay and economic success rather than just dividing up the spending review’s spoils.
But that spending context is important—as are the government’s longer-term targets of spending 2.4 per cent (and eventually more) of GDP on R&D by the middle of the decade. The spending review allocations offer real headroom for growth and much of this spending remains unprescribed. Of the £20 billion promised across government by 2024-25, only £5.9bn will be spent on the “core research budget”.
So it’s less a fight over research councils and quality-related funding and more about other R&D spending, such as that distributed elsewhere in Beis and by other government departments, including health and defence. Hence the commitment to Innovation Accelerators in Greater Manchester, Glasgow and the West Midlands. Strangely, this doesn’t always seem to have been grasped by many in the broader sector.
Role of universities
The education and skills missions and accompanying targets are more problematic, the first issue being the lack of any obvious joining up to the R&D proposals. Also lacking is a convincing story about how colleges and universities can help to drive these and other missions; their importance to human, social and institutional capital and to productivity, local growth and wellbeing is glossed over.
What does the white paper set out to do in education? Its mixture of measures on schools and skills is underwhelming. There are new “highly selective sixth forms” in 55 “Education Investment Areas”, and there are underperforming schools handed over to big multi-academy trusts. There is also the ambitious target of getting 90 per cent of children to expected standards in English and maths and increasing the percentage in the worst-performing areas by over a third. As Rachel Wolf, founding partner of the consultancy Public First, observes on Conservative Home, this is a good target but the white paper gives us no idea of how it is going to be achieved.
Nine new Institutes of Technology have been announced, which might, in time, be granted royal charters—an idea first floated in Theresa May’s 2017 manifesto. The ambition for 200,000 people to get “high-quality skills training”, including 80,000 from the lowest-skilled areas, is unambitious. According to Stephen Evans, chief executive of the Learning and Work Institute, more than 800,000 adult learners have been lost over the past decade and an analysis of local Office for National Statistics data shows that 80,000 places would not go very far in ‘left-behind’ towns, cities or regions.
Setting aside the creation of learning institutions, there simply isn’t enough in the paper on the role played by those that already exist in tackling the problems of underperforming places and regions. Instead, the respective policy agendas for further and higher education are pretty much pasted in.
Coordination and leadership
Both Beis and the Department for Education did reasonably well in the spending review—at least compared with other departments. Beis is still working out how to spend its allocation, as well as how to hit its levelling-up and longer-term R&D targets. The Department for Education, on the other hand, has allocated most of its money and has a clear idea of where it wants to go on further and higher education and skills. The problem—not least for levelling up—is that these ideas are a) one size fits all and b) not very good.
This is an important challenge for the levelling-up agenda and the white paper as a whole. As it identifies, coordination and long-term leadership are vital. So too are sufficiency and stability. It cannot, then, be driven effectively by government without backing from the Treasury and Number 10. The Treasury looks lukewarm in its support and we don’t know how much of the economic analysis, or the policy prescription, either the Treasury or chancellor Rishi Sunak shares. Nor is it clear whether, over the longer term, they will tick the sufficiency box in future spending rounds.
Much of the paper talks about economic growth and productivity—areas that the Treasury has considered its own policy territory for a long time, as it has the roles of infrastructure, skills and R&D in improving them. I doubt that the Levelling Up white paper has changed this.
As for those in Number 10, it is clear that they have other challenges on their minds. When the white paper was originally planned to be published, alongside the spending review in the autumn, the idea of long-term missions to 2030 seemed more easily in reach than it does today. What is certain is that the problem of regional and local inequalities is not going away. It will still be with us at the next general election and in 2030—and likely beyond that too, whoever is in power.
Andrew Westwood is professor of government practice and vice-dean for social responsibility in the faculty of humanities at the University of Manchester.