Boris finally has a chance to prove that levelling up means something

With Cummings gone, the PM needs a policy for the regions focused on tax cuts and liberalisation

Campaigning ahead of last December’s election, Boris Johnson promised to “get Brexit done” and “unleash the potential of the entire country”. The Prime Minister’s 80-seat majority was built not just on a pledge to break the Brexit impasse, finally implementing the referendum result backed by so many “red wall” seats. Those Labour strongholds switched because of Tory promises to revitalise down-at-heel towns and depressed cities across the North and the Midlands, that felt a million miles from the South East.

The “levelling up” agenda was widely deemed to be the brainchild of Dominic Cummings. And now that the Prime Minister’s chief strategist has left No 10, there is a fear among his allies that Tory priorities will shift away from “blue collar” concerns, back towards a more “metropolitan” agenda favoured by affluent voters. It is no doubt true that some well-heeled Tory strategists long for a return to the pre-brexit era, when Conservatism was about “hugging hoodies”, and will be pleased by mooted announcements such as bringing forward the ban on new petrol and diesel cars, which will disproportionately hit the finances of less prosperous, regional voters.

Yet there was always more to “levelling up” than the presence in Government of one man. The UK is in the midst of an economic nosedive, with our industrial heartlands suffering by far the most during this pandemic. You can’t do “hands-on” jobs via Zoom from your spare room. Divisive rifts over regional anti-covid measures, and the starkly uneven impact of lockdown, make reviving all parts of the UK more of an economic and political imperative than ever.

The truth is, however, that, since the election, the Government has given very little indication as to what “levelling up” practically means. Ministers have failed, for instance, to link the two parts of last year’s campaign message by putting Brexit at the heart of the “levelling up” agenda. Outside the EU, Britain will regain control over billions of pounds of “cohesion fund” spending, which can tackle regional inequalities. We should be hearing much more about free ports and enterprise zones, low-tax jurisdictions bringing investment and prosperity to coastal towns and other deprived areas – again, only possible outside the EU. And what about research and development tax credits and other post-brexit regulatory tweaks, again with a regional focus?

Yes, the Government has been distracted, but that’s no excuse. The public longs for leadership, a postBrexit, post-covid vision. After the lockdown battering, entrepreneurs need to rouse what John Maynard Keynes called “animal spirits” – the raw ambition stemming from belief in a better future, so they invest and expand, creating the jobs and wealth upon which everything else depends. Above all, as government debts spiral, “levelling up” must be about boosting growth in all parts of the country, not just spending money we don’t have out of a misplaced belief that red wall voters want handouts rather than genuine economic opportunities.

Infrastructure projects are vital – but much of the cash could come from infrastructure bonds, not more government spending. With gilt yields so low, it makes sense to channel part of the UK’S vast stock of institutional pension savings into physical investments generating a regular income stream, matching long-term revenues with long-term liabilities.

In other advanced nations, regional infrastructure is funded by local government investing directly, having raised money from municipal debt. Bondholders, in turn, are paid from revenues directly stemming from the uplift in land values when planning permission is granted, shared with the state. This mechanism has funded big projects around the world, from the Hong Kong metro to the expansion of Hamburg’s port. But it’s largely absent here, because government is so centralised and the uplift in land values flows almost entirely to landowners.

Then take HS2. Costing upward of £100 billion, the London-toBirmingham super-train will be the most expensive railway ever built – an already obsolete vanity project. Money would be far better spent on Northern Powerhouse Rail, providing decent services into and between our big northern cities. HS2 won’t get beyond the Midlands until the mid-2030s, if ever, and will anyway make the UK ever more London-centric. What better way to signal the regions matter than prioritising Northern Powerhouse Rail instead, developing a growth centre of 10 million people that could rival the capital?

High-speed broadband is probably the most important regional infrastructure project of all – yet Britain is near the foot of the international league table, with just 12 per cent of premises linked to “fullfibre”. Again, more important than state spending is freeing-up the market so private-sector players can compete. Full fibre should be incorporated into all new-build homes, with BT’S Openreach subsidiary finally forced to allow full access to cable ducts and digital maps to rival providers.

More house-building is vital, too – with lockdown exposing, more than at any time in living memory, the impact of our grotesque housing inequalities. The deliberate building go-slow by over-mighty developers should be challenged, stopping them from sitting on planning permissions, so making new homes more affordable. Much more social housing is also needed – again, harnessing both private and public-sector funding, with government sparking residential building booms across the regions.

In short, the emphasis of levelling up must shift to jointly funded infrastructure, tax breaks and, above all, vigorous supply-side reform – for which there is far more scope after Brexit. With unemployment set to surge, we’re in the midst of an economic emergency – and that means radical, growth-boosting reforms, focused on our regions, which would reap political dividends, too.

Cummings and Johnson smashed Labour’s “red wall” because they, like Thatcher, grasped the concerns of “ordinary” voters to an extent senior Tories rarely do. Yet “levelling up” has, so far, been just a slogan, a political strategy that is yet to be fleshed out. But it is the right strategy – for both the Conservative Party and the country. And there’s no time to waste.