This blog post was produced for inclusion in the Birmingham Economic Review for 2021.
The annual Birmingham Economic Review is produced by City-REDI, University of Birmingham and the Greater Birmingham Chambers of Commerce. It is an in-depth exploration of the economy of England’s second city and a high-quality resource for informing research, policy and investment decisions.
This post is featured in Chapter 1 of the Birmingham Economic Review for 2021, on Birmingham’s economic recovery and resilience following the coronavirus crisis.
Click here to read the Review.
The Levelling Up Agenda
Since their election in 2019, the promise to ‘level up’ the country has been at the centre of the current UK government’s political agenda. The idea of levelling up is to reduce the rising place-based economic and social inequalities in the UK, without compromising growth in already successful places. The recent Covid-19 pandemic has intensified these inequalities, with agile responses to its health and economic impacts seen partly to depend on targeted interventions at the local and regional level. However, the crisis has revealed a number of weaknesses in the existing sub-national governance structure to respond. These should provide important lessons for the UK government as they turn their attention to levelling up, with major economic transformations in ‘left behind’ places relying heavily on the capacity and capability of sub-national delivery mechanisms to implement these.
An Ambiguous Idea
Despite its widespread use, levelling up remains a largely ambiguous phrase with no clear objectives. There are, however, some things that we do know about levelling up. Firstly, the focus is on place and tackling inequality at the sub-regional level. Secondly, outcome measures are likely to go beyond the commonly used abstract measure of productivity to include also measures relating to, for example, education, health and crime. However, it is still unclear what is meant by ‘place’ and, therefore, where sub-regional boundaries will be drawn, as well as what more precise measures will be used across a wide range of policy areas. Furthermore, central government is yet to reveal whether levelling up is to be delivered from the centre or via more sub-national powers and resources. This is a key point that needs addressing since without more control over policy and local budgets, the potential of local and regional institutions and leaders to build on regional strengths and deliver targeted interventions in areas such as skills provision, housing, transport and the delivery of public goods and services will continue to be restricted. While the recent call from the Prime Minister for greater devolution across England during his recent flagship levelling up speech in Coventry could be an indication of better things to come, this was scant of new policy or signs of any major reform to the existing governance structures and processes that research shows will hinder the UK’s chances of levelling up.
Research carried out by the LIPSIT project finds that the current system of subnational governance is unsuited to the task of levelling up, revealing a highly ineffective arrangement. A core challenge links to the way places are funded, with the heavy use of funding competitions found to be an extremely inefficient mechanism to deliver place-based interventions. This is because the short-term, fragmented and overly specified nature of competitive funding streams leads to wasteful processes, money not being spent on what places need, an inability to plan long-term, and strategy not being implemented. Other system problems were also identified in relation to a complex institutional architecture leading to unclear organisational roles and responsibilities, as well as a lack of local visibility and accountability. Together, these significantly reduce the collective capacity and capability of subnational institutions and hugely undermine the delivery of the UK’s levelling up agenda built on place-based interventions. The aim of strengthening subnational institutions with a commitment to transform central-local relations must therefore be placed at the forefront of the government’s plan.
Opportunities for the West Midlands
Despite these challenges, levelling up presents a number of key opportunities for the West Midlands. Given its leading role in the English devolution journey so far and as the region emerges from the pandemic a stronger and more united force, the West Midlands is uniquely positioned to present a powerful voice to the government for facilitating a discussion on the structural changes needed. There has also never been a better time for the region to lobby the government for more regional powers, having demonstrated its competency to work together to deliver effective regional interventions quickly in response to the pandemic. While much of this will, of course, depend on the form that levelling up will take and the UK government’s appetite to deliver this via more devolution to English regions, it is important that the region also focuses on what can be achieved irrespective of the system. The region must ensure they continue building on their existing infrastructure, relationships and good practice for working together closely and remaining ambitious in their plans for improving the lives and livelihoods of all residents across the West Midlands over the medium- to long term. Businesses in the West Midlands will also benefit from the increased prosperity this will bring to the region and can help by setting out their own plans to support these wider ambitions, for example, by providing more training opportunities to low skilled employees and capping the top to bottom wage ratio. All of this must be supported by a strong, collective vision of what levelling up means for this region.
The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI / WMREDI or the University of Birmingham.