Levelling up is the way to beat Reform

Last week’s £5bn Pride In Place initiative, disbursing £500m a year to 339 disadvantaged neighbourhoods for the next 10 years and putting responsibility for spending money on local social revival firmly in the hands of community leaders, is important. Not only because it will prove popular, but the approach – unleashing the bottom-up energy of local social entrepreneurs and community founders – potentially taps into a rich vein of social creativity.

It is to be emblematic of the prime minister’s response to Reform, which is a fight, he says, for “the soul of the nation”. The 311 seats that last week’s Sky poll predicted Reform would win in a putative general election almost entirely included one of those 339 devastated neighbourhoods. But he should beware. Pride in Place, after all, was just one of 12 missions, together with accompanying metrics, that Boris Johnson’s powerful levelling up white paper in March 2022 identified as the totality of actions required to turn around Britain’s disastrous and poisonous geographical inequalities. Reform is not just a popular revolt against unchecked immigration: it is a revolt against neglect.

The white paper, one of the best government diagnoses of regional inequality and prescription for change I have read, should be disinterred. The expunging of even the term “levelling up” from the government’s language on the day after its election was the first of a succession of terrible mistakes. Yes, it had been turned into no more than a slogan by chancellor Rishi Sunak’s ruthless opposition and so robbed the Tories of the story of regeneration they had told the “red wall” – but that should have alerted Labour to its value.

The big idea, mocked but correct, was to transplant the factors that have propelled urban vitality since Renaissance Italy – the Medici effect – to “level up” urban Britain beyond London to the standards of the capital. At the heart of disastrous regional inequality, which shows up in everything from pay to life expectancy, transport connectivity to personal wellbeing, life chances to education, is the vicious circle of urban decay and stagnation. What is required in response, argued the white paper, is coordinated investment in six great “capitals”: physical, human, financial, institutional, social and intangible (innovation, ideas and patents) that together have always made towns and cities hum. The aim, for example, would be for each British region and nation to have a globally competitive city, and there would be 12 “missions” with accompanying metrics – ranging from the issues above to R&D spend to numbers receiving high-quality training – which would eventually drive equality with London.

Pride in Place is just one step towards that vision, but it does not even match New Labour’s network of regional development agencies nearly 30 years ago. It is much more local, limited and small scale. But it is based on two progressive assumptions. First, if the money is made available, it is right to have faith that there are always going to be social entrepreneurs and founders in every disadvantaged neighbourhood who will come forward to use it well. Money brings forth innovation in the social sphere just as it does in the economic. Secondly, the whole dispiriting and wasteful paraphernalia of having multiple funding pots that neighbourhoods have to bid against each other, often to win scraps, has been discarded. Instead, every one of the 339 will have up to £2m a year as of right to spend on choices that a particular neighbourhood prioritises, say, bringing a derelict pub into use, reopening a youth club, creating a CCTV camera network or piloting new usage for shops in the high street. The helpless drift to third world status felt by many neglected neighbourhoods will be partially staunched. It is a smart investment in social capital.

But what of the other five “capitals”? Take human capital. The “opportunity escalator”, developed by the Royal Society of Arts, is an imaginative digital tool that shows when, where and what skills are in demand locally, how big the shortfall and thus a guide to workers in what direction to steer their career – and to employers about how to find them. It is to be adopted by Labour’s mayor of the East Midlands. If copied elsewhere, two of Johnson’s 12 missions will begin to be addressed.

Yet it all needs more scale, more coordination, and more intellectual coherence – none of which are Labour’s strong suits. Consider transport connectivity, integral to the white paper’s joined-up thinking (it was written by Andy Haldane, former chief economist of the Bank of England). The go-ahead for the Liverpool-Manchester high speed link, central to Northern Powerhouse Rail, has been deferred again out of concern about long-term cost. Yet one of the biggest constraints on the north’s growth is abysmal public transport. Has no one matched costs with returns?

Levelling up should never have been allowed to wither into a mocked slogan. Done right and with conviction, it could yet lift the UK’s national output by £2.5tn by 2050 as the productivity gap with London is closed – a phenomenal prize. Marry the programme to the ambition of creating a £1tn tech economy by 2040 (as I argued when writing about the Growth Trilogy reports a fortnight ago), which involves a commitment to dynamising two other levelling-up “capitals”, finance and intangibles, and Labour really would have a plan for change. The country would be on a path to a transformation to which Reform would have no answer. In a desperate corner, who knows? Starmer might even go for it.

Photograph by Christopher Furlong/Getty