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How the government can make progress on levelling up despite tight budgets

The government must do more than just revert to its levelling up white paper’s policy positions if it wants to address regional inequalities.

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The government must do more than just revert to its levelling up white paper’s policy positions if it wants to address regional inequalities, argues Thomas Pope  

For a few months after the end of Boris Johnson’s premiership, it appeared that ‘levelling up’ – a cornerstone of the 2019 Conservative manifesto and the prime minister’s flagship agenda – was either dead or seriously deprioritised. Michael Gove, the influential secretary of state who had brought forward the lengthy Levelling Up the United Kingdom White Paper 4 Department for Levelling Up, Housing and Communities, 
Levelling Up the United Kingdom, GOV.UK, 2 February 2022,
, had been sacked and prime minister Liz Truss showed little interest in the agenda, barely using the phrase during her short premiership. 

In contrast, Rishi Sunak has explicitly leant on the 2019 manifesto as the source of his mandate to govern and has reappointed Gove to his old post. This suggests the levelling up agenda has been revived, but it is still unclear what it will look like, especially in an era of fiscal restraint. The white paper had many good ideas – including many policy making and organisational innovations that will cost nothing – and the government should now look to implement those. But Sunak will also need to do more than just revert to the plans and policies in place a few months ago if he is to achieve lasting and substantive change.  

The white paper was right to recognise the importance of improving policy making 

The Institute for Government, among others, cautiously welcomed the white paper when it was published in February. The document did not pretend that this was the first government to have tried to address regional inequality, but identified common systemic problems that have led past initiatives to fail. As we have previously highlighted, policies related to regional economic development have been prone to excessive churn as governments have tried to reinvent the wheel. The white paper also identified that policies that should be coordinated often operate in Whitehall siloes, and flagged the problem of insufficient evaluation to learn what policies work. 

The white paper was right to diagnose these fundamental problems in the way regional growth policies have been made historically and proposed a series of ‘system reforms’ to promote long-term, coordinated and effective policy. These included 12 missions to be achieved by 2030, proposals for further devolution and a set of measures designed to improve how the centre factors regional inequality into its decision making, including an emphasis on further spatial analysis and evaluation. 

Few of these measures had been implemented, and still fewer had bedded in, by the summer. For example, one initiative in the white paper was to appoint Levelling Up directors to improve communication between Whitehall and local government, but none have been appointed. The government now can, and should, press ahead with these reforms. They were the most promising aspects of the white paper, and promise to improve the way policy is made. And they should be even more important in an environment of budget cuts given the need to spend money as effectively as possible. 

The levelling up missions were not ambitious enough to drive radical economic change 

Fixing policy-making structures is undoubtedly crucial to delivering better regional policy in the future but making a dent in persistent regional gaps requires ambitious policy now. The government’s 12 missions for 2030 were an opportunity to set stretching targets that would ensure sufficiently radical policy could be delivered over the next decade. We found that, on missions directly affecting productivity, the government was generally targeting the types of policy that were likely to work but not at sufficient scale. For example, there is good evidence that vocational qualifications beyond age 16 lead to big economic returns, but the mission would only return course participation to 2014 levels.  

Overall, Institute for Government analysis found that, even if they were delivered, the missions would only make a small dent in regional economic inequality. We concluded that achieving lasting economic change required more ambitious missions and, especially given limited resources which are only likely to become more limited, strategic targeting of economic investments at high-potential but under-performing cities.   

The agenda will need strong political leadership to succeed 

The levelling up white paper describes the system reforms as a ‘rewiring of Whitehall’. Achieving those lasting changes to the way policy is made will only happen if there is sufficient political impetus. Michael Gove, with his reputation for effectiveness and commitment to the levelling up project, will be able to deliver some of this as secretary of state. But it will require backing from No.10 and No.11 Downing Street too, corralling other departments to change the way they operate and commit to delivering the missions. It was notable, for example, that Michael Gove was unable to extract many policy commitments from other departments to include in February’s White Paper. If levelling up is not a Sunak priority, Gove is unlikely to succeed in changing Whitehall in the way he would like. 

Even as the government finds cuts, it can and must continue to fund its priorities. If levelling up is a priority, then key transport projects and critical budgets such as vocational education might be protected, or even expanded, and allocated to areas with the highest bang for buck. While this would make cuts elsewhere deeper, these budgets are not very large in the context of overall government spending so it would be deliverable.  

Many were sceptical about Rishi Sunak’s commitment to levelling up when he was chancellor. If he is to deliver on the agenda, he will need to give Michael Gove the freedom and support to implement his reforms and further devolution, but he will also need to prioritise and target key projects to ensure there is enough funding to deliver real change. Levelling Up existed for a long time as little more than a slogan. The government at least has plan, but now it needs to go further.  

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