Wednesday 7 July 2021 6:00 am

Levelling up will fail if Boris Johnson pushes for a nationwide approach

Paul Ormerod is an economist at Volterra Partners LLP, a Visiting Professor in the Department of Computer Science at UCL, and author of Against the Grain: Insights of an Economic Contrarian, published by the IEA in conjunction with City A.M.

The phrase “levelling up” has permeated the political lexicon over the past year or so, but few seem to know exactly what it means or how to do it. 

Andy Haldane, outgoing Chief Economist at the Bank of England, put some flesh on the bones at a timely Policy Exchange seminar last week. 

For Haldane, the levelling up agenda means more than just economic variables, crucial though these are. Health inequalities, for example, are perhaps even greater and deserve just as much attention.

Inequalities across different places  are what statistical physicists call “self-similar”. This means they show the same features, the same distributions, at different geographic scales.  The regional differences in the UK are well known.  But the same patterns exist both within the individual regions themselves, and even within the individual boroughs of a region.

This has clear policy implications.  Levelling up is not just about making the regions more prosperous.  It is about enhancing the prospects of the poorer parts within each region.

Andy Burnham, mayor of Greater Manchester, grasps this point. There is a huge gulf between the northern and eastern boroughs of the city region, and the booming city centre and leafy Altrincham and Sale in the south west.  Levelling this up is already part of Burnham’s agenda, but other city regions do not seem to have latched on to this in quite the same way.

Haldane does not have a silver bullet to answer the question of how levelling up is to be achieved. While Haldane stressed the need for a variety of approaches, on some occasion, a strong emphasis on just one factor can be sufficient. For example, Eurostar enabled Lille in France to position itself as a strategic link between not just London, Paris and Brussels, but further afield into Germany.  

In a further-flung example, Estonia has received large amounts of money from the EU for it’s population of 1 million. With a huge concentration on digital specialisation, it has been able to expedite its economic growth. 

So, both infrastructure and other large scale public investments can work. But Haldane’s examples here are the exception rather than the rule.

The vast majority of money allocated for “regional policies” has been spent on building motorways, investing in rail links, and developing business parks. But rather than declining, regional inequalities have widened.

These conventional policy measures then are clearly insufficient in and of themselves to generate the sustained development Boris Johnson has promised. Building on the skills of an area is an obvious point. But the best results come when this is done in an integrated and transformative way. The coalfields of the Ruhr, in Germany, for example, have been transformed into a new generation of clean energy corporations. 

Successful levelling up will require us to shun the traditional routes and experiment. The formula success will not be based on a nationwide policy, but rather trying and testing out different efforts in a given area.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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