REVIEW: The Levelling up White Paper

Much of the coverage of the Levelling Up White paper has focussed on the 12 missions. If anything the 300 page supporting document has been mocked for its historical references, but argues Nicholas Falk, it contains a huge amount of good analysis. 

In a monumental report of over 300 pages (summary is 27 pages) the Conservative government has set out its big ideas for narrowing regional and other inequalities. Elaborate charts and extensive comparisons show the extent of the gaps that need to be bridged. A 100 page introduction seeks to learn from history and the great waves that shaped the fortunes of cities in the past. But strangely little is said about how to turn the tides when so many previous attempts in the UK have failed and people’s faith in planning has been eroded.  In this article I want to go beyond the references to Jericho and Florence under the Medicis to review the valuable analyses in the White Paper.

Diagnosing the causes

…global economic growth dynamics have been mirrored in the UK over recent decades, with long waves of expansion and contraction. But these dynamics appear to have been both more powerful and persistent in the UK than in some other countries. They also appear to have left deep and long lasting economic and social scars. The result has been larger spatial differences across the UK than elsewhere, which have persisted and widened over time.

This is the issue to be addressed, even cities such as Manchester have done relatively poorly compared to the rest of Europe and this despite huge numbers of studies and initiatives. Why should this report be any different?

Most of the first hundred pages reiterates what most of us have known for years, that the economic, environmental, and social performance of a country, and the areas within it, are inter-linked. The report talks about six different kinds of capital, five pillars, twelve missions and 49 indicators. But it still misses some of the underlying causes, despite reference to the ‘sauce’ (which was once called ‘Urban renaissance’). This may be because the White Paper is largely based on what can be quantified and pays little attention to stories of how places can be transformed.

Importantly the report recognises early on that the differences within cities are often as great as those between them. While the incomes differentials appear to be less in London, this is because those with most money live outside Greater London. The pattern of spatial polarisation is crucial and it would have been good to see some maps. However it is also true that the wealthiest areas are not the happiest and the report rightly concludes that there is more to success than economic performance. The happiest people are healthy and older, but housing tenure makes little difference.

Cities and their management still seem to be a black box as far as government is concerned.

These ‘geographic differences are long-lived’ and rooted in history it is not surprising that most initiatives don’t work in the short term. Having personally worked on many regeneration strategies I can confirm that ‘regeneration takes a generation’. The White Paper says that ‘cities are engines of growth’ but my interest has always been in why some places success while other similar places fail. Why did BMW expand in Leipzig while withdrawing from the UK (except for its Mini plant in Oxford)? Why has Bilbao has done so much better than Sunderland?  If the white paper had answered these questions it might have found the key to turning post-industrial cities around.

An important conclusion is that connectivity matters, which is why peripheral places often perform poorly in economic terms:

The UK’s second cities have generally lower population densities and relatively poor local transport infrastructures. Centre for Cities, for example, found that in Europe, on average, 67% of people can get to their local city centre in 30 minutes using public transport, compared with 40% in Britain. This suggests public transport in UK cities may limit productivity by reducing effective density and, as a result, agglomeration.

The report rightly stresses the importance of industrial clusters in explaining economic success (which is why past transplant businesses have generally failed). Different forms of capital are recognised, such as social capital but the economic insights tend to come from the US, rather than European thinkers like Thomas Piketty. What is called the ‘new economic geography’ no longer expects the market to correct failures, so ‘left behind places’ get locked in a downward vicious circle. This has been recognised when the post-war boom tailed off in the 1970s, though the idea of ‘social narratives’, or what I would call the ‘culture of a place’ may be new.

By page 73 the report at last recognises that centralisation may be to blame:

In the UK, the depletion of civic institutions, including local government, has gone hand-in hand with deteriorating economic and social performance.

Fresh insights come in the section on synthesising different approaches, referred to as ‘the Medici effect’ or a kind of ‘sauce’ that transforms the ingredients:

Multiple factors are responsible for driving widening geographic differences in the UK. There are a rich set of capitals – physical, human, intangible, financial, institutional, and social – that explain spatial patterns of growth. These capitals combine as part of a complex, often hyper-local, growth ecosystem. In a complex system, it is impossible to identify one (or a sub-set) of the capitals as the dominant driver of spatial success. Rather these factors are deeply interconnected and interdependent, and it is this rich mix that generates success.

When it comes to prescribing solutions, the White Paper generally follows American thinking. However, it also draws on current work in the University of Cambridge to expand the concept of capital, though in a mechanical rather than an organic way:

Following a multi-disciplinary approach, the framework is defined by six capitals: physical, intangible, human, financial, social, and institutional. The engine of regional growth is a six-cylinder one. These six capitals cross-cut the public, private and civil society sectors. This underscores the importance of partnerships between sectors when growing local economies.

Natural capital is added as a kind of afterthought, despite Dieter Helm’s important work for the Treasury.  The metaphors are further mixed when it proposes to ‘develop a map of the key drivers of the UK’s economic geography’. The picture from successive charts is clear enough; the pattern of decline is circular, and finance tends to favour the rich, not the poor.

Indeed there are surprisingly few surprises, the diagram showing a vicious cycle is just a more complex version of one I produced at McKinsey nearly fifty years ago for a report called A Total Approach to the Problems of the Cities whichkicked off the Inner Area studies under an earlier Tory government. While Productivity comes up again and again, other concepts such as poverty and polarisation are missed out, and the general approach is to take a wide angle lens rather than the area focus that previously prevailed.  The idea of city regions and county metros are making a comeback.

This in turn leads on to the recommendations set out under four admirable themes:

  1. ‘boost productivity, pay, jobs and living standards by growing the private sector, especially in those places where they are lagging;
  2.  spread opportunities and improve public services, especially in those places where they are weakest;
  3.  restore a sense of community, local pride and belonging, especially in those places where they have been lost; and
  4.  empower local leaders and communities, especially in those places lacking local agency.’

As with most of the conclusions it is almost impossible to disagree with them. The big question is how to turn visions into reality, that is how to deliver what is promised. DoSpatial strategiesto tackle market failure justify government intervention in the marketplace? The lessons from international examples should be particularly instructive, especially as some of these have been recognised by the AoU, such as Rotterdam, Malmo and Lille, as well as references to East Germany, though they receive little space:

One of the common themes from all of the examples considered here is the need for a shift in the policy regime which rejuvenates growth in the six capitals, thereby kickstarting economic dynamism. In most cases, central or subnational government made significant and sustained investments in human, physical and institutional capital, which served as a catalyst for higher growth.

The keys to success are finally summarised in terms of clarity of vision, consistent policies, coordinated investment, and collaboration between stakeholders.  But there is little to explain the ‘narratives’ of collaboration, and why some city regions manage to switch direction while many others do not. Because the section on international lessons is so brief, there is little on the process of strategic  planning or how the resources were mobilised. Cities and their management still seem to be a black box as far as government is concerned.

Implementing reform

The response to the problems at first looks impressive:

This transformation in the system of government, and in the governance of spatial policy, is supported by five pillars: a. a mission-oriented approach to setting policy; b. a reorientation of central government decision-making; c. greater empowerment of local government decision-making; d. a revolution in data and transparency at the subnational level; and e. enhanced transparency and accountability of this new regime.

The useful review of a hundred years of failure to ‘arrest the rise in geographic disparities over the second half of the 20th century’ is blamed on five key shortcomings:

  • longevity and policy sufficiency;
  • policy and delivery coordination;
  • local empowerment;
  • evidence, monitoring and evaluation; and
  • transparency and accountability.  

In short, there has been an abundance of initiatives but a shortage of resourcing, an inevitable product of a centrally driven system. The exception is a ‘whole systems’ approach taken to health. Poor ‘institutional memory’ is another consequence. The White Paper rightly argues that: Reversing geographic disparities will require a fundamental rewiring in the system of decision-making, locally and nationally, across the UK. Learning the lessons of past experience, the following five pillars should underpin this policy regime:

  • medium-term missions;
  • reshaping central government decision-making;
  • empowering local decision-making;
  • data, monitoring and evaluation;
  • transparency and accountability

A cynic might contrast the model that the report uses of the moon landing is inappropriate because it had a single objective and the US committed whatever resources were required. The White Paper by contrast has a multitude of missions and no new resources. The transport mission of raising connectivity across the country closer to the standards of London is particularly wishful. Simply specifying outcomes is little different from setting targets if there are no means of mobilising resources. Spatial information on its own does not seem to have achieved much in the past.  

The stress on ‘place-based analysis’ must surely be welcomed.  For example

Public procurement is worth £300bn every year, a third of all public expenditure. But the current regime creates too much red tape for buyers and suppliers alike. This results in attention being focused on the wrong activities rather than outcomes, value and transparency

This huge sum contrasts with the £12 billion spent through 15 different regeneration programmes which all have  laudable aims but limited impact. It is not clear how a simpler system can ever be secured without local government regaining the capacity to raise its own funding. The government is said to be preparing a plan for ‘streamlining the funding landscape’, but alas too often this ends up in cutting red tape lengthwise. Will it be enough to relocate central government offices to outposts such as Stoke and Wolverhampton through what is called Places for Growth or even more ambitiously the Leadership College for Government? Crucially the White Paper recognises that only 35% of public investment was carried out by subnational levels of government in the UK, compared to almost 60% on average across the OECD.

So, by far the most important proposals in the White Paper relate to devolution. The preferred model is ‘directly-elected leaders covering a well-defined economic geography with a clear and direct mandate, strong accountability and the convening power to make change happen’.  While flexibility is said to be fundamental, Combined Authorities are expected to have a minimum population of 500,000, which means that outside the core cities they would almost certainly need to be formed out of County Councils. Alas the powers to be devolved will hardly transform the situation, such as the power for a combined authority to add a supplement to the Business Rate subject to a ballot, or to establish Mayoral Development Corporations (with consent of host local planning authority). Partnerships with Great British Railways and Homes England seem obvious possibilities could be seen as a start in the absence of any other proposals for generating local funding. Reorganisation is only to come from local initiatives.

Responding to the challenge

If we really want to fill the gaps, let alone reverse the tides, we will need far more than is provided by the White Paper. An adversarial system must be replaced with something more consensual in which the public, private and voluntary sectors work together for the common good. The Academy of Urbanism has seen this at work in places like Leipzig or Ljubljana and should have a role in sharing this experience. A small amount of funding to aid this learning could do a lot more good than more policies and proposals to add to those already on the shelf.