On being made UK Prime Minister, Boris Johnson pledged to ‘answer the plea of the forgotten people and the left behind town', and to ‘level up across Britain'.
Hurrah, I thought. A leader wanting to tackle the countries inequalities head on with gusto and enthusiasm. But two years on and we remain in suspense as to what this ‘levelling up' hyperbole really means. As of writing, we are still waiting for a white paper that was promised in October 2021.
I think it's important to understand what levelling up could look like in the UK. In our Addressing regional inequalities in the UK: levelling to where? report last year, we considered whether this might mean inequalities in income and wealth are reduced and opportunities spread more evenly. Or will it entail additional investments in human and social capital that enable people to maximise their potential, wherever they live? Or perhaps it means a concerted effort to connect people and places through better infrastructure in transport and digital technologies?
The reality may be that all these approaches will need to converge. Neglecting pressures in one area will simply shift the problems elsewhere or to another day. It is important to note a one size fits all approach will not work either. There are simply too many forms of inequality that exist in our society today.
If there is a silver lining to this playbook, it would be that the COVID pandemic offers governments around the world an opportunity to rethink traditional approaches to policy. Indeed, there is an appetite for a more inclusive vison and approach that considers a holistic view of the economy, the environment and society before making costly decisions. This should also be underpinned by longer-term investments and a continuity in policy frameworks that can operate across successive governments.
Building back better is not enough. We also need to build back differently.
Let us hope that ‘levelling up' is not just the latest rebrand in a long line of failed policy agendas paying lip service to regional development and enhanced productivity and well-being. Since the 1920s, the lack of ambition and scale, coupled with political short-termism and expediency, have resulted in a perpetual state of inertia on this pressing matter. While the ‘north-south' divide is one that everyone seems to understand, surprisingly little has been actioned at speed.
So perhaps you will roll your eyes at another attempt to address the yawning gaps in our society. An upgraded policy with a punchy new name? I cannot blame your cynicism.
Of course, reducing inequalities is as complex as it is important. Cities and towns reflect people who come from different backgrounds and with different experiences. The places themselves may have deep-rooted histories that deserve recognition, and in some cases, preservation. Change can be sympathetic to these local conditions while also providing the necessary catalyst for growth.
In our latest report Investing in Regional Equality – lessons from four cities, we look at four international examples that demonstrate significant success in addressing regional inequalities while enhancing the lives of citizens. The study identifies the key success factors behind a range of interventions that share a common policy framework. While there are differences in governance structures across the regions, the findings have broader applications that can be used to inform the design and evaluation of policies in the UK and elsewhere.
The case studies are Fukuoka in Japan, Leipzig in Germany, Cleveland in the US, and Nantes in France. While these cities may have unique demographics, cultures and sources of economic activity, there is still much value to be had in identifying those best practices which help to define outcomes and evaluation methods.
Indeed, this report highlights a number of practical tips and guiding principles for practitioners and governments alike. One of these, which is very applicable to the current conversation in the UK, is around decentralisation and a whole system approach to public financial management.
A whole systems approach recognises the interconnected nature of organisations at local, regional, national and international levels. Policy outcomes can be made more effective when there is collaboration that optimizes total performance rather than just an individual part. Understanding how best to manage public finances and deliver value for money is integral to addressing regional inequalities as well.
Investing in Regional Equality – lessons from four cities finds that with the right funding and support mechanisms in place, decentralised decision-making can pave the way for local governments to leverage their knowledge of communities to more effectively allocate financial resources. This can accelerate economic development by targeting the areas of greatest need while aligning funding priorities with place-based values. Meanwhile, citizen engagement and participation by the private and third sectors can promote transparency and accountability.
But the answer is not to devolve all powers. For example, the coordination of large-scale transport and digital infrastructure projects, national defence and other public services, which do not vary much from one region to the next – such as hospitals and the criminal courts – will often benefit from a more centralised approach. Finding the right balance is key, and the final calibration must be informed by robust evidence rather than conjecture or ideology.
For much of its history, the UK has been beset by large disparities in regional performance. The industrial and digital revolutions have each helped to shape the contours of economic and social opportunities. Successful towns and cities have been those most quick to adapt to these changing conditions. Strong leadership and the ability to innovate matter too.
The role of good policy then is to ensure that public finances are managed in a way that is resilient to future shocks. A penny saved is a penny earned.
Jeffrey Matsu is chief economist at CIPFA
@CIPFA
CIPFA's chief economist Jeff Matsu will be discussing the findings of Investing in Regional Equality – lessons from four cities at a CIPFA event on 3 March. For more information visit the CIPFA website.
