Recipe For Success
Andy Haldane discussed the levelling up white paper during a lecture at AMBS.
Why is levelling up needed, what do we mean by it, and how can it now be delivered?
Let’s start with the why. In short, whether it’s health or wealth, spatial differences across the UK are big and regional differences are large and long-lived. In fact, if you look at a broad ranking of the UK regions by GVA per head in 2020 it is not much different than it was in 1900, and regional differences have progressively widened over the last 70 years or so. And if you look at regional disparities across OECD countries the UK also stands out relative to pretty much every other western advanced economy.
But it isn’t just about regional differences. In fact, within region differences are larger on average than between region differences. In other words, you make a great mistake if you think you can understand the UK’s rich economic geography purely by looking at regional patterns. You need to look at the sub regional level, the local level, the hyper local level. And if you drill down, what you see are pockets of affluence and deprivation sitting cheek by jowl in most cities.
So levelling up economic and social geographies cannot be defined as north vs south, or as cities vs towns vs villages. The story is much richer and more granular, and levelling up needs to be a hyper local pursuit if we are to make a success of it.
But what do we really mean by levelling up? In the recent levelling up white paper I would have liked nothing better than to have encapsulated levelling up in a single simple mission, but it would have been deeply inaccurate. Instead, we defined it in terms of a set of missions because the key to success in levelling up a place isn’t a single ingredient, it’s a single recipe with multiple ingredients.
Levelling up is like baking a cake. The most important ingredient in a cake is the missing one and the same is true with places. In some places it is transport, in some places skills, in some places culture. In some places it is a whole combination of different ingredients.
That’s why we defined 12 key ingredients without which levelling up would not work, based on the theory and the evidence in UK and internationally. These missions serve as an anchor, a fixed point for ambition and policy action over the medium term.
The missions cover the usual suspects such as productivity, living standards, digital and physical infrastructure, education and skills. But they also include factors such as wellbeing, quality of housing, and the amount of crime. Because having agency over your life is tremendously important.
You make a great mistake if you think you can understand the UK's rich economic geography by purely looking at regional patterns.
These problems are not new, so why have we not been able to level up in the past? The single most important reason is that regional policies have come thick and fast over the last 70 years, policies which at best last a decade. That pre-ordains failure because if regional disparities are deep and entrenched, then constant chopping and changing of policies guarantees that you will not make inroads to those differences over time.
But this is not the only reason. We also do a pretty poor job of mixing the right ingredients in the right way, in the right amounts, at the right time. There is, crucially, a lack of local empowerment. The UK is one of, if not the, most centralised, least devolved of western advanced economies in terms of spending and taxation powers. That too is a core ingredient as to why disparities are larger.
However, we have not a hope of making good on levelling up unless the majority of the action takes place not in a command and control way from Whitehall, but instead happens locally using local people, local information, and local agency to craft local plans to drive local growth.
Part of this will be continued development around 30 to 40 specific clusters of business activity across the UK. The key will be to convert pre-existing clusters into ‘super clusters’ which can then bridge a larger range of industries, sectors
And finally, this is not just about the public sector. Without a thriving private sector and university sector, levelling up will forever be pushing water uphill.
Andy Haldane is Chief Executive of the Royal Society for Arts and an Honorary Professor at Alliance Manchester Business School. He is the former head of the UK government’s levelling up task force.