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  • Geoff Mulgan

Does 'levelling up' match up - or why we should think of this as Version 1

Updated: Feb 4

It’s easy to be dismissive of the government’s long-awaited plans for levelling up, published this week. Earlier statements were feeble. Political rhetoric ran far ahead of action. And any moves now come after a decade of severe cuts, many concentrated on precisely the areas that are meant to benefit from levelling up. Nor is it wise of the government to claim that the White Paper sets ‘out a complete ‘system change’ of how government works that will be implemented to level up the UK’. It doesn’t; indeed it doesn’t even come close.


But any strategy to level up is bound to be hugely difficult. There are so many factors involved – physical, economic, social, cultural and institutional; so many parts of government to align; and so much that can’t be changed overnight.


My view is that its best to think of this as Version 1; and that new White Papers will be needed to improve on it and flesh it out. The team have done an excellent job of analysis and bringing together materials, but it was always going to be hard to match the strength of the diagnosis with equally strong prescription given the government's distractions. That much of it is cut and pasted from departments policy plans – not synthesised or joined up - is not surprising given lack of cross-cutting capability in the system right now, but again that could be improved in the future. So here in a constructive spirit are some things we might look for in Version 2.


Cosmetic or real devolution?

The most important is to address the paradox of a national plan for local change. The big lesson of place is that places are different. National programmes are always likely to be clunky, ill-suited to local conditions, prone to parachuted schemes and quick fixes. They are bound to be tone deaf to specifics, or to default to using beauty contests to allocate money. This White Paper is no different, offering a familiar confetti blizzard of small, probably low impact initiatives.


I don’t oppose the further, modest steps, towards devolution, with some more Mayors and some more powers. But they are a continuation of the trends over the last 25 years, and much less radical than what was done for Scotland and Wales in the late 90s.


The alternative is to truly mobilise local power and intelligence – but this requires a fundamental remaking of the British state with genuine devolution including of tax-raising powers. Having overseen one earlier attempt to do just this (an unpublished and unimplemented set of proposals from the Strategy Unit) I know how hard it is politically. But this is the great elephant in the room of any strategy of this kind, especially since local government has been so hollowed out over the last decade. At some point a government will have to grasp the nettle on this.


Infrastructure v everything else


The strategy rightly focuses a lot on infrastructure. UK infrastructures are remarkably uneven and have to be a central part of any levelling up strategy, with local infrastructures arguably more important than national connectivity such as HS2. That they are not everything does not mean that are not important. There is no shortage of evidence confirming their role in economic growth, or that the UK has seriously underinvested over many years (see for example the many excellent analyses by Tom Forth).


That said it is always easier to direct money to physical improvements which are easy to see and measure, and give ministers something to open. There is a big bias in the department to housing – not unreasonably given the squeeze on affordable housing. But the right approach has to be both and rather than either or, and my guess is that the visible will squeeze out the invisible.


You can see this very clearly in the discussions of social capital and wellbeing in the White Paper. In each case there is some good analysis of the patterns (though the social capital section misses key insights, such as the vital role of relationships between local government and civil society). In the case of wellbeing there is a useful observation that wellbeing doesn’t correlate with growth and GDP. But amazingly there are then no policy proposals on either – none on how to grow social capital in areas without much, none on how to address population mental health, commuting times and other factors in areas with low wellbeing (these are both primary topics for IPPO over the next few months).


General v targeted


The big concern with this strategy is that the goals are rightly general, applying to large swathes of the UK, but the means are targeted. This means a return to the policies of the 1980s that used the Single Regeneration Budget and its successors to fund packages of action in particular areas.


Back then the SRB was a welcome alternative to Thatcherite neglect. But the limitations of this model became very clear. Applying for funds soaks up an inordinate amount of management time and the partnerships they promote are often cosmetic as are the metrics. The really big shifts come from general and more comprehensive policies (indeed the White Paper mentions examples like the policies on health inequalities). So the very predictable list of little schemes, from regeneration to education, that pepper the White Paper, feel like a throwback.


Missions v devolution


There are good reasons to organise around missions – which have a very long history in government as a means of keeping everyone focused on the things that the state believes really matters. Governments love lists of this kind.


But in recent years – precisely because they are such an easy thing for governments to do rhetorically – they have become an aerosol sprayed over many things, often with surprisingly little real impact on behaviour. And of course there is a direct choice between emphasising top-down missions and bottom-up autonomy. My guess is that Version 2 would emphasise much more tailored solutions to the needs of different places, albeit within a framework that emphasises a small number of national strategies.


Money, power, knowledge and steering


This links to a more fundamental failing of the strategy – the failure to think and design systemically. The default for traditional policy was to focus on spending – and as mentioned, despite the White Paper announcing lots of spending initiatives - there appears to be no appetite to seriously rewire how public finance is organised.


But money is never enough. We are now in an era when our economy and society are shaped just as much by knowledge and data (just look at the world’s most valuable firms). Recent work I have been involved in on steering – and how a national government and municipalities can move in the same direction on important issues- emphasises these newer tools to enable whole systems to learn in tandem. This may be easier in Scandinavia (which has smaller and perhaps now more competent states than rather distracted UK one).


But it’s disappointing that there is no hint of this here. Specifically the discussion on data (despite welcome commitments from the ONS) is utterly anachronistic, seeing it as a means for central government to monitor progress rather than seeing data as the lifeblood of problem-solving.


Even worse is the lack of anything on better ways to coordinate the different tiers of government. Here the UK now seriously underperforms other countries (as became very evident during the pandemic). At a minimum we should be learning from countries like Germany and south Korea, or for that matter Canada and Australia, which have much more systematic means of coordinating the different tiers of government, sharing knowledge and data.


R&D v adoption?


The last few decades have seen a surprising upsurge in dynamism in many places around the UK, despite the overwhelming concentration of public money in the southeast (private spending is more evenly spread). It’s hard not to be encouraged by the commitment to more funding and innovation accelerators (for background see this piece commissioned when I was at Nesta), though the sums are modest (and the claim that they are learning from the lessons of Boston and Silicon Valley is not exactly plausible).


The risk though is not just a gap between rhetoric and action but also that, yet again, this gets things slightly the wrong way round. In an open global system, although there will be some spin off benefits from dynamic R&D, these will be limited (the rest of the world may be just as good at exploiting, eg, new inventions like graphene which originated in Manchester). Much more important will be the ability to quickly adopt and adapt the best technologies from the rest of the world (see, for example, this recent piece by Paul Nightingale). But this always gets downplayed or ignored in strategies like such as this. All of these can be addressed in future versions, whoever is in power.


Although many business leaders are quoted in the report there is still a gap in terms of linking the broad analysis to decisions within firms - in other words how the real economy works, rather than the aggregate economy of statistics. This matters a lot because in many areas it won't be enough to boost skills unless there is demand which will in turn depend on thousands of decisions made within firms.


Analysis: the US and everywhere else


I’ve mentioned how extensive and impressive most of the analysis is. This is Whitehall, and the very smart Andy Haldane, at their best. I have just two main caveats.


The first is that the great majority of references are American. So on clusters for example they quote the pretty thin work of Michael Porter rather than the much more sophisticated work of people like Peter Hall. There is no mention at all of Europe’s approach to ‘smart specialisation’, which has been quite successful in helping cities and regions to find new niches in the 21st century economy. I guess in a Brexit government it’s hard to acknowledge European thinking. But given that Europe has done rather better than the US in alleviating imbalances it’s odd to be quite so Anglophone in bias.


The other oddity of the analysis is the attempt to explain everything in terms of types of capital – social, human, institutional, natural etc. This move became popular at the end of the last century as one way to get economists interested in things they had previously ignored. But most of these things aren’t really like capital in any meaningful way. They are much better understood as flows, relationships and networks, and indeed this is where the serious academic analysis has moved.

Measurement and accountability


How will we judge success? The paper has some ambitious commitments to both absolute and relative improvements, many of them very like similar targets back in the 2000s (and very like a similar exercise I was involved in to level up 2000 neighbourhoods – which ten years on had met most of its objectives). Some of the goals are vague and all are oddly detached from the discussion of funding, or means. But at least they show some ambition and they cover broadly the right things.


However the bold claims that these goals will somehow be embedded in the constitution are at odds with how the British state works. If a successor to Boris Johnson wants to dismantle this framework, it will be dismantled, just as the equally grandiose industrial strategy of a few years ago (which had much of the same rhetoric, such as missions) was dismantled with barely a murmur of protest.


The serious alternative would be to create a much more serious, statutory and independent body to report regularly. This, too, could be disbanded, but it would be harder.


Evidence?


Finally, it’s unclear what evidence the paper draws on. The world has seen half a century of both successful and unsuccessful attempts to reverse de-industrialisation and spatial inequality, from the US rustbelt to east Germany. As mentioned the paper draws heavily on a small number of popular US-based writers.


The NAO is rather damning in criticising failure to use evidence: ‘the Department therefore lacks evidence on whether the billions of pounds of public funding it has awarded to local bodies in the past for supporting local growth have had the impact intended. And it has wasted opportunities to learn which initiatives and interventions are most effective.’ Henry Overman from the What Works centre on local economic growth is also highly critical.


This is definitely more a craft than a science. But a bit more honesty about what is and isn’t known – and how the whole system might learn along the way would have been very welcome, since the man in Whitehall doesn’t know best.


So in a Version 2 I would to see more about how the whole system might learn better - this should involve what I call 'intelligence assemblies' that combine data, evidence, tacit knowledge, the findings from experiments and peer learning.


One part of the answer in the White Paper is yet another announcement of a grand new leadership centre for government skills (I’ve lost count of these announcements over the last decade, ever since the Cameron government dismantled the system that had been in place for many decades previously). I do hope this time something actually happens.


In conclusion: I can’t really blame the team who have worked on this. They have done their best to pull together a serious analysis and at least some policy moves under a Prime Minister who was never going to interested in policy or detail and will shy away from any choice that involves trade-offs (notoriously he wants to have his cake and eat it). But let’s see this as a first cut rather than a finished strategy, and hope that future ones have less of a gap between the high octane rhetoric and the practical actions.



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