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A mission to level up the UK

From the moment he assumed the office in July 2019, Prime Minister Boris Johnson put ‘levelling up’ at the heart of his rhetoric. But we’ve had to wait until now for a major statement of policy. And the Levelling Up White Paper is certainly a statement, weighing in at over 300 pages long (along with a 50 page technical annex of facts and figures).

The first part of the document provides an account of some of the long-term problems and challenges of inequality and uneven development that characterise the UK. There’s also a short history of local growth policy - though a curiously apolitical one, in which structures and programmes come and go without any acknowledgement of the deliberate political choices involved (including by the governing party since 2010). There’s also no explicit mention of austerity policies. As the saying goes ‘Mistakes were made – but not by me’.

There is much that is familiar in the White Paper proposals. It is structured around a set of ‘missions’, many of which were priority themes in the junked Industrial Strategy of Theresa May’s premiership. It reintroduces targets reminiscent of New Labour’s Public Service Agreements. It announces the appointment of 9 regional directors for levelling up, presumably covering much the same territory as the directors of the 9 regional Government Offices abolished by David Cameron in 2010.

However, it quickly becomes clear that there is a mismatch between the scale and persistence of the problems and the level of ambition and long-term commitment in relation to tackling them, and there are also question marks about the degree of joined up thinking across this complex policy agenda.

You can get a sense of this by looking at the ‘mission’ around R&D and innovation. This involves a commitment to proportionately grow public spending on R&D outside the Greater South East (London, the South East and the East of England), in order to stimulate private sector innovation and productivity improvements. Govt spending on R&D was already due to rise significantly over the next few years, but this is a commitment to shift the regional balance of spending. There’s a specific commitment that at least 55% of BEIS (Department of Business, Energy and Industrial Strategy) funding will be spent outside the Greater South East.

BEIS is the major funder of ‘discovery science’ and of innovation support for businesses, so this is a large part of government R&D spending. However, 55% isn’t that much greater than the current share, so in truth this feels more like a limit to stop any further concentration of R&D spending in the so-called ‘Golden Triangle’ bounded by Oxford, Cambridge and London than it does a major commitment to rebalancing in the short term. But even a modest increase in % terms should mean significant additional funds in absolute terms.

Moreover, the main science and innovation funding agency within BEIS, UKRI, will get a new formal objective to “deliver economic, social, and cultural benefits from research and innovation to all of our citizens, including by developing research and innovation strengths across the UK in support of levelling up”. This is also welcome - though broad enough to leave plenty of room for interpretation. Other big spenders on R&D, such as the ministries of defence, health and environment, will also get new targets for research spending outside of the Greater South East – but we don’t yet know what those targets will be, or even when they will come into force. Nor is it really clear how such commitments can be enforced (and not quietly forgotten) in the medium term.

There’s a specific new ‘cluster’ policy initiative, to create pilot ‘innovation accelerators’ in three city-regions, Manchester, the West Midlands and Glasgow. This is good news, though the order of magnitude of funding here is not much different to that being allocated to science and innovation by regional development agencies in the New Labour era. And to avoid just repeating past mistakes, these accelerators will need to be led by genuine local needs and opportunities - and go beyond the usual obsession with technology transfer and commercialisation of university research, something the UK has pursued intensively since the 1980s. To make a difference, the accelerators will need to look at the company side of the equation – where is the demand for innovation, and how can this be stimulated?

But increasing R&D done outside London and the Greater South East, whilst welcome, cannot itself drive levelling up. There’s a big hole in this White Paper where a developed, long term industrial development strategy should be - one that meets the scale of the problem with appropriate and long-term commitments. One that integrates a genuine commitment to devolution, long-term commitments to improved hard infrastructure, R&D, education and skills, plus a focus on stimulating demand for innovation amongst firms. And one that recognises that the UK is an 80% services economy, and adapts its interventions accordingly.

R&D is a valuable and productive investment – not just in new knowledge and technology but also in creative and innovative people who can solve problems, create new companies, and stimulate further demand for innovation. However, an emphasis on R&D disconnected from these other sets of interventions is really just a short-term political sleight-of-hand - it may give an impression of investment in a generically high-tech future, but it does little to actually build a better future for real people in real places around the UK.

Blog posts give the views of the author, and are not necessarily those of Alliance Manchester Business School and The University of Manchester.

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