Levelling up may be a slogan, but it’s worth fighting for

BORIS JOHNSON’S ‘levelling up’ speech may not have been the definitive answer that some may have hoped for, but it did lay the conceptual foundations for a White Paper in the autumn. The question is how to deliver on that vision.

As the Prime Minister stated, the UK is one of the most unbalanced advanced economies in the world. This divide has grown so much that Germany has gone from being considerably more unequal at the time of reunification in 1990, to being much more regionally balanced than the UK today.

In order to reduce that gap, and to sustainably “level up” opportunity, Ministers will need to address a series of systemic challenges that could spread opportunity across the country.

First, levelling up must address the geographic divides in education. In Grimsby and Hull, around two-thirds of under-25 year-olds do not have a Level 3 qualification or higher; in central London, the figure is only a quarter.

Secondly, Ministers need to support research and development across the country, not just in the Golden Triangle. Innovation is the main driver of long-run economic growth – and the pandemic has shown the real world value of science – but research and development spending is overly concentrated in London and the South East.

Thirdly, ensure a fair share for transport spending. The Government spends three times more on transport per head of population in London (£903) than in Yorkshire (£276). These regional differences are striking.

But as the Prime Minister acknowledged, we need to level up within regions as well. Transport between and within cities (aside from London) is a major weakness in the UK compared to other countries. Leeds is the largest European city not to have any form of light rail or underground system.

The good news for the Prime Minister – and the riposte to his critics – is that the UK’s growing regional divide can be fixed. There are three key policies that the Government could use to address these systemic issues.

To boost regional innovation, Ministers should direct a greater share of public funding for research to areas outside the ‘Golden Triangle’. This would better reflect patterns of private sector investment, which is higher in places like Derbyshire and South Yorkshire.

If this was combined with an extension to the SuperDeduction beyond the current end date of 2023, allowing companies to claim back their investments in plant and machinery from their corporate tax payments, this would drive considerable capital and research investment outside London.

To address regional skills gaps, the Government has already

Ministers need to support R&D across the country, not just in the Golden Triangle.

made a start. The Lifetime Skills Guarantee offers free Level 3 courses to all adults who currently do not have one. But we also need to do more to put technical education on the same footing as traditional university courses on school-leavers’ applications.

Third, to really level up the transport network, Ministers should devolve responsibility for public transport – the county and town deals announced by the Prime Minister will only work if Whitehall is really willing to trust local leaders.

Last, Ministers should back a renaissance in manufacturing. As readers will know, the UK used to be the workshop of the world. But we have lost this status due to the massive wave of deindustrialisation in recent decades.

Onward’s recent report, Making a comeback, showed the folly of letting manufacturing decline. Manufacturing is 20 per cent more productive than the

UK average and average wages are around £1 per hour higher across the country. In Yorkshire, about a third of real-terms productivity growth over the last 20 years is thanks to local manufacturing firms. Add to this the fact that places such as East Yorkshire already have an established manufacturing base and that manufacturing is a key driver in business research, and Ministers will find a pre-mixed recipe for levelling up.

If he is successful, Boris Johnson will be the Prime Minister who not only redrew Britain’s relationship with the world but also reorientated Britain’s relationship to itself, reducing the shameful differences in life expectancy, earnings and opportunity which continue to hold us back, and giving all parts of the country a greater sense of purpose.

If he fails, it will almost certainly be because his Government was not radical enough. Levelling up may be a Whitehall slogan, but it is a slogan worth fighting for.