The Medici Code – Essay 1: ‘Right words, wrong actions’ by Joe Fyans, head of research, Localis
The Levelling Up White Paper filled a void by dint of its very existence, with the concept of levelling up having been loosely and amorphously defined on the fly ever since it played its role in the landslide Conservative victory of 2019. This analysis looks at the white paper from various angles, aiming to build a picture of the paper’s chain of logic and indicate exactly where a breakdown in this logic leads to a disappointing end from promising beginnings. Nevertheless, there are always positives to be taken from a declaration of intent as detailed and wide-ranging as this, for advocates of a localist system, and this reflection on the white paper concludes with some points for localism advocates to take forward.
Terms of analysis
When working through a document like the Levelling Up White Paper, it is helpful to try to differentiate and delineate terms of analysis – or, to decide whether to take the paper on its own terms or within an assessment of the political environment in which it operates. As is so often the case, what the paper was supposed to do in terms of the government narrative around its formulation and release is quite a different thing to what it could reasonably be expected to do in the context of British politics in 2022. Does the white paper, as was prophesied, radically reshape the British state and create a blueprint which, if followed, will lead to a less lopsided, more prosperous UK economy? No, not really. However, a more realistic question might be: in the context of rotten central-local relations, a fractious government with a complicated electoral coalition and concurrent economic crises, does this paper in any way advance the cause of local autonomy? A fair answer is yes, a bit.
The Levelling Up White Paper is not the starting gun for a race to devolved, autonomous localities in stewardship of their own economic destiny – as this analysis will show, the strings attached are far too many and the treatment of local leadership far too suspicious for that. Furthermore, it does not contain within its policy prescriptions sufficient measures to achieve its goals even within its own manifold strictures, as cutting analysis from the likes of the Institute for Fiscal Studies and Oxford Economics has pointed out. Yet in reality, the relationship between central and local government in England has always been an extremely restrictive one. Things local government might more pragmatically look for in the white paper are political openings, rhetorical tools or, in other words, sticks with which to beat central government in the ongoing push-and-pull battle that defines central-local relations. In this regard, the white paper represents an advancement in the debate, with ground ceded to advocates of localism and devolution in a way that would have been considered off the table only a few years ago.
The white paper can also be looked at in terms of what it says about the current government position. In this regard, the Levelling Up White Paper reveals the fault lines that run across the current political geography of the UK, and England in particular, presaging battles to come. The lack of any real money for the agenda under the terms of the 2021 Spending Review and the conflict between the vision it espouses – of an interventionist state using major capital spend to facilitate a growth revolution – and the policy decisions taken recently by government, most notably the cancellation of a portion of HS2 designed to do exactly that, betrays the tensions within government. The now-obligatory pre-publication leaks which inferred that the paper’s authors were not entirely happy with the slack they had been given with which to tie together policy solutions also point to a divided government. This is particularly troubling given quite how much faith the paper places in coordinated, consistent and long-term action from central government.
The Levelling Up White Paper thus arrives undermined, with the political and economic context of its release stretching the credibility of the strategy it outlines to breaking point. The paper is not what it claims to be, but it is far from useless. The white paper has brought us further along the long road to a system of governance that respects principles of subsidiarity and local democracy, albeit often in ways that require reading between the lines. In filling the void at the centre of the levelling up agenda with a holistic theory of economic development and geographic disparity; in expanding and nuancing the language of local growth and, most importantly; in its wholesale acceptance of the underlying argument made for years by advocates of locally-led economic growth, the Levelling Up White Paper has provided ample ammunition for those of us who seek to chip away at the structure of the most centralised nation in the Western world.
The white paper’s strengths and fatal flaw
The paper’s greatest strength is in its analysis of geographic disparities in productivity and prosperity across the UK. While this may seem like a fairly minor ask of a paper expressly concerned with the issue, making a case for both the existence of pervasive structural inequality and the role of economic policy as a causal factor is no small thing. As a perennial issue in British public policy, regional inequality has been refuted from many angles, with arguments that the current state of affairs is either inevitable, desirable or that the failure of successive governments to alleviate it is proof that it is an unassailable challenge. It is, therefore, a key achievement of the white paper that it manages to push back against the arguments against regional inequality as a cause for policy focus and the arguments that redressing the balance is some kind of Sisyphean task (successive UK governments failing to do something does not, in fact, mean that the thing in question is impossible). That it manages to do so while also responding to the much sounder criticism that regional inequality is a focus that smooths over far too much inequality within regions is doubly impressive.
The cyclical and complex nature of the problem as the paper lays it out presents a good defence against the fatalistic, ‘twas ever thus’ analysis of regional inequality. Well aware of the many arguments against the stated goals of the agenda, the paper’s authors have taken care to outline the depth of the problem and created a neat typology to explain the multidimensional nature of the problem. The ‘six capitals’ approach explains why simply ‘turbo-charging’ one element of a local economy will not lead to deep change or real structural transformation, rather making the case that focusing on the accumulation of multiple different types of capital into a broader agglomeration is the key to real growth. Making this point, the paper uses a broad range of metrics to illustrate the complexity of the problem and demonstrate that this is an issue for the whole country not just individual towns, cities or regions – on some of the metrics, like life satisfaction, the more successful regions of the country look comparatively poor. Each new data line pulled out and mapped further provides buttress against claims that regional inequality isn’t really that dramatic. The paper then, in its first section at least, finally provides us with official UK government acknowledgement that, yes, inequality does exist in London and the South East and, on many metrics, they are not particularly fantastic places to live for everyone.
Having rightly begun with a thorough analysis of the problem, the paper’s turn towards the solution begins positively with a coherent and innovative theory of economic growth, one which centres on the notion that the current economic geography of the UK is neither efficient nor inevitable. Using the idea of six capitals as the basis, the white paper puts together a synthesis of various contemporary theories to build an analytical framework for understanding why it is that, for example, the UK’s second-tier cities are outliers in their underperformance and why London continues to resemble an economic supernova. This framework illustrates how the conception of economies as complex systems, where agglomeration is driven by different forms of capital, leads to four high-level target areas for policy: productivity, quality of life, place and leadership. From this are extrapolated four goals of policy, the final of which is to empower local leadership and communities.
Were the paper to end at this point, perhaps with a commitment to a programme of devolution in order to empower local leadership to drive up six capitals in line with the four policy goals outlined, there would be very little to criticise indeed. Yet this is barely a third of the content, with many more lists to come – to join the six capitals and four policy goals will be twelve ‘missions’, and the caveats to empowering local leaders will begin to outweigh the actual evidence that local leaders should be empowered by the time the paper is through. How does a white paper go from such a thorough and grounded start-point to such a disappointing, wide-of-the-mark end-point? The problem starts with the deeply flawed conclusions of the historical analysis of chapter two.
The general historical overview given by the white paper is reasonable enough. Since at least the inter-war period, when traditional industries began to decline, successive UK governments have led major initiatives to reduce inter-regional inequality. These policy regimes have varied in character – a post-war focus on industrial development and resource equalisation through central government, a marked expanse of the role of the private sector in the 1980s and an expansion of focus to include human and social capacity through regional development agencies in the 90s and start of the millennium and then the emergence of LEPs, city deals and the Localism Act from the Coalition government of the 2010s to the pivot to and from an overt ‘industrial strategy’ in present day. These policies have had some positive long-term effects, notably the revitalisation to a certain degree of the UK’s regional cities. However, as a result of a complex combination of factors, none have gone far enough.
The fatal flaw with the paper begins to emerge with the lessons taken from this potted history. All the historical case studies are well put together and the points extrapolated are reasonable: there were issues with coordination and a lack of local empowerment, for example, in all of the cases examined. These conclusions all exclude an analysis of the essential nature of the key actor: UK government. For all its analysis, the section of this paper concerned with learning from previous policy regimes does not consider the glaringly obvious: the fundamental inability of the British government to focus on more than one thing at once, nor the lesson about short-termism and political cycles that is quite clear in the marked inconsistency of the government’s approach. The obvious conclusion, that the kind of policy regime identified as necessary to achieving levelling up would be better vested in local leadership through devolved powers is entirely missed. Instead, by the end of the chapter, the white paper ends up preaching local empowerment while demanding, granular, real-time data on outcomes fed directly to Whitehall, which must oversee the competence of all local leadership at once. Here we go again.
A better lesson from a century of constantly reinvented regional policy, entirely subject to political headwinds and the whims of individual ministers, is that it is a matter perhaps best taken out of central government hands. Instead, the Levelling Up White Paper ploughs ahead with the idea that the central government machinery of the UK has the political stability and long-term focus to carry out twelve diverse missions over eight years. It essentially wants it both ways, recognising that local leadership needs to be utilised but unable to truly vest trust and authority at the local level, envisioning a situation where omniscient ministers and civil servants can at any point pull the string and collapse local autonomy. Even in this extremely restrictive form of devolution, no answer is given to the ongoing crisis in public service funding in councils across England, who despite proclamations of the end of austerity are still on the whole being edged ever closer to a core service offer. To understand the depth of this problem of perception, where Whitehall can see the flaws of local leadership with such clarity while remaining seemingly blind to the problems with its own operation, there follows a consideration of the data drive which runs through this paper like a golden thread of its very own.
Data and accountability in the white paper
Do we have enough data on local government? The answer from the Levelling Up White Paper is, “not enough for any local leaders to be given any kind of autonomy just yet”. We certainly have enough to understand regional inequality, the paper must acknowledge that as it draws extensively on existing data to make its case in the first chapter. Yet given that a lack of accountability and transparency at the local level are identified as reasons for the failure of previous policy regimes, the internal logic of the report leads to the proffering of a series of new metrics, outlined in the paper’s annexe alongside existing indicators which are attached to the twelve missions.
More than just local economic performance however, the white paper seeks to identify the tangible outcomes of government investment on local economies, turning the metrics into indicators of local government performance. Using such data as an accountability mechanism for local leadership is potentially problematic, and it is not clear whether combining local economic performance into an understanding of local government performance is in line with the theory of growth or analysis of inequality put forward in the first place. Fundamentally, there is a reasonable amount of data on local economies already available, as evidenced by the very detailed case put forward in the first section of the white paper and the ONS’ new dashboard, which in many ways recreates services that have been available for some time via tools like Nomis UK and Public Health England’s Fingertips website.
Yet in the quest to establish enough accountability to allow local empowerment, councils face being tasked with developing and reporting a wide variety of data, all designed to show direct impact of government spending on local economies. Direct causal outcomes of this kind, available at the push of a button in Whitehall, are not a realistic way to approach evaluating local leadership, particularly given the fiscal constraints placed on local government and the idea of an agglomeration theory of growth where multiple intangibles interact to produce growth and prosperity. This is the case even working under the assumption that such a regime of standards and monitoring would be applied with consistency and political neutrality as governments change over time.
If local economies are complex systems, with strong institutional capital required to build capacity and boost growth across a variety of factors not easily reduced to simple causal inference, can the performance of local leaders be boiled down to an easily-navigable dashboard or, perish the thought, a league table? This question speaks to the one longstanding issue of regional development which is not properly expounded upon in the Levelling Up White Paper: the dim view held of local government in Whitehall and across Westminster. The fundamental problem identified repeatedly by local leaders is a lack of respect for the abilities of local government, combined with a misunderstanding of the role of local government. The data strictures laid out falsify the notion that the white paper might move past the idea that local government is a mere delivery arm of the central state. For all the talk of empowering local leadership, the parameters laid out for this empowerment make it clear that levelling up is a service provided to citizens by the UK government, delivered via local channels.
Rather than twelve cross-cutting, multi-departmental missions, each with its own set of metrics for monitoring and accountability, a more fitting conclusion to be drawn from the paper’s early analysis would be to hand down long-term targets to local leadership alongside capital funding. Furthermore, addressing the hole in revenue funding which in so many instances is equally culpable for people’s lack of pride in place as suppressed economic growth would surely be an obvious solution. The heart of the problem with the white paper is thus found in its quest to find a level of accountability that would be enough for Whitehall to truly hand over some powers to town halls across the country. A change of mindset and an adjustment in institutional focus, to bring the concept of subsidiarity to the fore and step back from the paternal urge to have total visibility and control over all aspects of policy, is what is actually required to level up the UK.
Taking it forward for localism advocates
Despite its flawed nature, the white paper has moved things along in the slow crawl to devolution. As well as making a comprehensive case for geographic disparity as a policy issue, the paper has also broadened the language of local economic development with its abundance of economic concepts and political heuristics. Perhaps most importantly, it has surely once and for all removed the proverbial genie from the bottle when it comes to addressing regional inequality as a government issue.
The paper sets terms for how local economic development and regional inequality can be discussed and argued in the future. The first section definitively shuts down the argument against the existence of, or the potential of policy to work against, structural geographic inequality. This war chest of analytical weaponry must be taken on by local government in the future. By acknowledging the significance of inequality within regions and the issues faced by more successful parts of the country, it provides a disjunct from the easy political points about London and the South East which have thus far characterised the agenda – this can be seized upon by those places in negotiations with Whitehall. And, although this is hardly reflected in its prescription, the diagnosis of the paper makes clear that local leadership is essential to economic growth, in what amounts to about half an acknowledgement of the principle of subsidiarity. The disparity between these words and the action that will follow them must be a point raised loudly and often by local leaders.
Joe Fyans is head of research, Localis