Dr Glenn Athey argues that the UK’s national policy system is itself a primary, structural cause of the regional economic disparities it repeatedly promises to fix — and sets out how national and local leaders can break the cycle. This blog draws on his Local Policy Innovation Partnership (LPIP) research at the University of Birmingham, “Addressing Local Economic Disparities: Learning From Policy Failure“.
A problem we keep failing to fix
For more than four decades, successive UK governments have launched policy after policy to close the gap between our strongest and weakest local economies. On most measures, the gap has not narrowed — it has widened. The UK is now one of the most interregionally unequal countries in the industrialised world.
The numbers are stark. In 2020, eight of the UK’s twelve regions and nations recorded Gross Value Added (GVA) per worker below Thuringia, the weakest-performing of the former East German states. In 2023, 144 of 350 local authority areas in England, Scotland and Wales — home to 42% of the population — had GVA per head at or below 75% of the UK average.
The question we rarely ask
Those of us working in local and regional economic development tend to ask whether our analysis of the local economy is right, or whether we could deliver better. We wait for the latest national initiative and resolve to make the best of it. What we rarely stop to ask is whether there are systematic features of the national policy system itself that have prevented progress — and, if so, what we can do about them.
My research set out to test exactly that, drawing on the established academic discipline of policy failure. The conclusion is uncomfortable: national policymaking is itself a structural cause of the disparities we have witnessed, rather than a neutral backdrop to them.
Ten failure characteristics that recur with striking consistency
I assessed eight major policy instruments enacted since the late 1990s — from Regional Development Agencies (RDAs) and Local Enterprise Partnerships (LEPs) to the Levelling Up Fund and the UK Shared Prosperity Fund — against a framework derived from the policy failure literature. Ten characteristics recurred again and again:
- Misdiagnosing deep structural problems as short-term shocks
- Launching without rigorous appraisal or testing
- Chronic under-funding relative to the scale of the problem
- Eroding local capacity through austerity
- Competitive, fragmented funding that creates a “begging bowl” culture
- Centralised control dressed up as devolution
- Poor coordination between departments and tiers of government
- No long-term, cross-party strategy
- A funding dependence that discourages local challenge
- An “implementation doom loop”
These are not the failings of any one instrument or any one party. What unites them is that an acute framing of the problem — a credit crunch, a tired high street, a governance gap — was always more politically convenient than a structural one, because acute problems can plausibly be solved within a single electoral cycle. A century of industrial restructuring cannot.
The doom loop
The most corrosive of these dynamics is what I have called the implementation doom loop, adapting a concept from the business writer Jim Collins. Short-term political pressure produces under-investment in institutional capacity; under-investment produces delivery failure; delivery failure produces fresh pressure for visible, short-term fixes; and those fixes preclude the long-term investment that would break the cycle.
The UK compounds this with a habit of dismantling each predecessor government’s flagship institution, which consumes hard-won capacity faster than it can be rebuilt. Austerity sharpened the trap: the £10 billion-plus cut to local government spending power since 2010 — with the deepest cuts falling on the poorest areas — hollowed out the very councils later expected to deliver national growth funding. The Institute for Government has described public services more broadly as caught in just such a doom loop.
A new era — but two real risks
England is now entering what may be a genuinely new chapter. The English Devolution and Community Empowerment Act 2026 codifies universal coverage by Strategic Authorities, provides multi-year single-pot funding, and replaces competitive bidding with Local Growth Plans. This is a welcome return to a strategic, formula-based model.
Two risks stand out. The first is capacity: institutional reform is moving faster than the workforce and capability needed to absorb it. The vision is coherent; the workforce strategy beneath it is not yet clear. The second is reversibility: there is no constitutional framework protecting local devolution. Powers granted by ministerial direction can be withdrawn, integrated settlements can be quietly shrunk, and the “hollowing out” of subnational institutions has ample historical precedent.
Devolution must deliver to survive
This is where the message for local and regional leaders is most pointed. Changing the national system is, at present, unlikely. The greater scope for progress lies in how we manage, navigate and negotiate within it.
That means building powerful, professional, evidence-led institutions; setting targets that genuinely matter locally rather than chasing national-scale ambitions; and being honest about the trade-offs. Above all, it means delivering demonstrable economic progress fast enough that dismantling these new institutions becomes politically costly. Capability and results — not legislation — are what make new institutions too valuable to fail. If devolution is seen to fail, further centralisation is the inevitable next step, and the doom loop closes once again.
None of this is comfortable reading, least of all for national policymakers. But the purpose is constructive. Recognising national policy as a structural cause of failure, rather than a fixed constraint to be endured, is the essential first step towards designing something that finally works.
This blog was written by Dr Glenn Athey, an independent economic development adviser, Author of The Local and Regional Economic Development Handbook (www.lredhandbook.com) and an LPIP Research Fellow at the University of Birmingham. You can find out more about his work at www.mylocaleconomy.org.
Find out more about the Local Policy Innovation Partnership Hub.
Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI or the University of Birmingham.