Opinion: Levelling Up is Dying on the Vine

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Hal Arnold-Forster

Policy and Research Analyst, The Levelling Up Commission

About a month ago, when Liz Truss was but a mere overwhelming favourite to secure the keys to No.10 (rather than a terrifying incumbent), I was writing for Chamber’s upcoming journal about the future of the levelling up agenda. At the time, I wrote:

As a priority, Liz Truss needs a serious economic strategy that prioritises productivity, skills and education. Growth will not recover without one. These criteria are, at least theoretically, met by a coherent, well-delivered and accurately measured levelling up agenda.

However, the agenda is undeliverable with irresponsible tax cuts that will add to inflationary fears, fuel further interest rate hikes from the Bank of England and leave everyone worse off.

Measures that fuel inflation further undermine any policy programme that is designed to spread prosperity across the UK. If Liz Truss is serious about levelling up, she will have to carefully weigh this against her instinct to cut taxes.”

This was not some sort of political prophecy. It was a conclusion that anyone with a basic grasp of economics and inflation could (and indeed did) come to. It is the reason that Rishi Sunak’s agenda, though unpopular with the Conservative base as it was supposedly steeped in Treasury-think (God forbid we listen to the advice of experts), would have been the right course of action.

But here we are. The PM and Chancellor, indulging in a perverse kind of Thatcherite cosplay, setting out an unscrutinised budget that overwhelmingly favours the top 1%. We are not levelling up; we are trickling down.

Levelling up: A tall order

So is the Levelling Up Secretary, Simon Clarke, the most unimportant important member of government?

Part of this is separated from levelling up itself, bleeding into wider government policy. When the first two major acts of a government are to (1) release a budget that abolishes the top tax rate, slashes corporation tax and uncaps bankers’ bonuses and (2) set out a plan for fracking with no provision for ensuring that consent of local communities is required, then, at an abstract level at least, it seems Liz Truss is uninterested in spreading prosperity to areas of the country that feel left behind, and in local decision making.  

But most of it is directly related to levelling up bids and available funding. With inflation expected to stay at around 10% in the coming months, councils are already reporting that the funds they have already either received or been promised will no longer be sufficient to deliver the projects. The result is that, when the next general election rolls around in 2024, many of the benefits that were promised to communities across the UK by this Conservative government will not have accrued.

Sharon Taylor, vice-chair of the District Councils Network, recently noted that: “It’s a massive issue for our councils. The government has to recognise the increasing cost or these projects won’t get done and we’ll end up in 2024 with half the number… or lots not completed.”

A survey of the District Council Network found that 12 developments, with a value of £184 million were at risk. With projects likely to fall by the wayside, there is also little hope of extra funding from the Government being made available, despite construction sector inflation sitting at approximately 13 per cent.

This spells political trouble for the Conservatives, because ultimately, “I released extra funding to regenerate your high street” is a sexier electoral message than “I uncapped bankers’ bonuses to deliver for you”.

At the same time, the Government’s not so mini budget did no favours to the levelling up agenda. Analysis from the Conservative think tank Onward showed that reversing the national insurance rise will cut taxes by £311 for the average full time worker in London each year, but only £188 for the average worker in the northeast. The cut to corporation tax will also save businesses in London an estimated £5.7 billion in total, equivalent to 1.2 per cent of its GDP, and £2.5 billion in the southeast, 0.8 per cent of GDP, compared to just £355 million in the northeast, or just 0.6 per cent of GDP.

Final Thought

Simon Clarke, just a few weeks into his tenure as Levelling Up Secretary, is starting to feel like the ghost at the feast. All of the Department’s existing funding was guaranteed under Boris Johnson, and if I were Simon, I would not be holding my breath for more. It must also feel relatively demoralising, when all other actions that the new government have taken to date seem to run counter to the stated aims of your department.

However, it is also important not to catastrophise. It took two years for the White Paper to be published, and when it was, it guaranteed no new funding. While things look bleak for levelling up under Liz Truss, lets also remind ourselves that, for all of the rhetoric, things barely got going under Boris Johnson.

Read more here about Curia’s Levelling Up Commission, taking a bottom-up approach to levelling up. If you are interested in getting involved, email our policy team at hal.arnoldforster@chamberuk.com.

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