‘this won’t tackle inequality without Treasury buy-in’ – expert Q&A

More than two years after its landslide election victory, the UK government has finally unveiled its white paper for narrowing the gap between the richest and poorest parts of the country.

The levelling up secretary, Michael Gove, has told the Commons that his upcoming Levelling Up and Regeneration Bill is to be based around 12 interrelated missions. These include increasing healthy life expectancy everywhere by five years by 2035; increasing pay, productivity and employment everywhere by 2030; a big push for reducing crime, focusing on the most disadvantaged areas; and offering mayors and far-reaching devolution powers to any region that wants it.

There are plans to eliminate illiteracy and innumeracy by refocusing education spending towards the poorest areas, as well as policies to improve transport, home ownership, broadband and research and development. The government has also confirmed that Wolverhampton and Sheffield will be the first two areas of 20 to receive money from a £1.5 billion brownfield fund to help drive regeneration in former industrial areas.

So what does all this add up to? We asked finance and economy specialist Steve Schifferes to react.

How did we get to this point?

UK governments have been struggling on how to address regional economic disparities with limited success for the past 100 years. In the 1930s, the government designated for extra assistance some “special areas” – including Tyneside, south Wales and Scotland, which had been blighted by mass unemployment.

While regional disparities diminished during the economic boom in the 1950s, they returned with the de-industrialisation that came to a head under Margaret Thatcher in the 1980s.

In the next 40 years, both Conservative and Labour governments introduced a number of schemes to tackle this issue but with only limited impact. These included enterprise zones with tax benefits to encourage inward investment – which led to Nissan moving to Sunderland in 1984, Toyota to Derby in 1992 and LG Corporation to south Wales in 1996.

In the New Labour era, regional development agencies were created to plan and promote regional economic growth. These were replaced by the 2010 coalition government by local enterprise partnerships and a Regional Growth Fund. These continued under Theresa May, who defined her purpose as “making Britain a country that works for everyone” focusing on the those who were “just managing”.

What do you make of the new strategy?

What’s striking is the tremendous variation in scope of its key objectives. You have huge and very welcome ambitions such as reducing the gap in healthy life expectancy, boosting productivity and reducing crime in the poorest areas. But it’s not quite clear how these will be realised, and having goals for 2030 or 2035 are too far in the future to hold this government to account.

But at the same time, some of the 12 missions are much more limited, such as 200,000 more people completing high-quality skills training in England each year. I question how this list was drawn up and whether some departments have different approaches to others – I don’t get a sense of a coherent central strategy.

The new white paper envisages 200,000 high-quality skills trainees every year.
Image Source

Some ambitions are very vague, such as increasing people’s “pride of place”. That’s difficult to measure and it’s hard to know what success would look like. And other measures, such as long-term investment in social as well as physical infrastructure, have been left out.

Another issue is that this strategy is all about disparities between regions, not within them. But the disparities between the richest and poorest within big cities such as Glasgow or London are bigger than those between the richest and poorest regions.

In other words, this strategy doesn’t look much at income inequality, which is the key to tackling inequalities in health and education. Helping poor people who, faced with cuts in universal credit, are struggling to afford good food, childcare or access to early years education, will be crucial to improving their families’ life chances. This is why it is important to prioritise reducing income inequalities within regions too.

Will more devolution help levelling up?

The government is certainly putting a big emphasis on the value of devolving more powers to new regional units of local government. Yet its thinking seems unclear because it is letting every area decide exactly what new powers – if any – it wants. Also, the government isn’t proposing any extra money to restore the years of cuts to local government spending, or any extra powers for local authorities to raise or borrow more money themselves.

The Treasury is also keeping control of any new funding streams, which will be doled out on a discretionary basis. This is a curious way of devolving more power. There are already fears that this will become about patronage, with the government prioritising its constituencies in the traditional “red wall” seats in the north of England that it won in 2019.

Are Labour right about the lack of money?

It certainly appears that way. The government, particularly the Treasury, has refused to commit any extra money for levelling up, apart from that already announced in the 2021 spending review, which sets government spending for the next three years from this coming April.

When asked about money on the BBC Radio 4 Today programme, Michael Gove quoted The Rolling Stones song, You Can’t Always Get What You Want. It sounded like an acknowledgement of the limits of his ambition. And yet, as government levelling up advisor Andy Haldane pointed out after looking into Germany’s attempts to bring up the east after reunification, even after a huge long-term project involving more than £1 trillion over three decades, the gap is still proving difficult to shift.

Some buildings behind the ruins of the Berlin wall

East of the old Berlin wall, the disparities still exist.
EPA

The lack of Treasury buy-in also makes me wonder about whether Gove has enough clout to succeed. His department is traditionally not a powerful one, and it needs to persuade other departments to make fundamental policy shifts to fulfil his brief, which could be challenging. For example, will spending on public health and prevention – a key to improving healthy life expectancy – be substantially increased at a time when the health secretary’s main priority is arguably resolving problems in acute care?

by : Steve Schifferes, Honorary Research Fellow, City Political Economy Research Centre; Professor of Financial Journalism, 2009-2017, City, University of London

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