Politics

Heed a warning from Manchester: the ‘levelling up’ strategy doesn’t work | Christine Berry


It is hard to imagine a Tory government even five years ago promising to “end the geographical inequality that is such a striking feature of the UK”. In Philip Hammond’s 2016 “northern powerhouse” strategy, the word “inequality” did not appear once. But there it is in the government’s levelling-up paper, released last week, mentioned no less than 35 times.

Buried in the 300 pages, we find an argument that “market forces” cannot simply be “left to their own devices”, and even an admission that the “wrenching structural changes” of the Margaret Thatcher years “caused large and lasting economic damage to significant parts of the UK”.

But old habits die hard. The paper acknowledges – implicitly and occasionally explicitly – that the UK’s growth model is broken, failing to spread prosperity evenly among people and places. Yet it fails to pursue this reasoning to its logical conclusion, and is thus left trying to solve these problems using the same thinking that created them in the first place. Apparently, levelling up is “about growing the economic pie, everywhere and for everyone, not re-slicing it”. Or, in other words, about having our pie and eating it too.

The prescription for areas that are “lagging behind” London and the south-east is depressingly familiar; it’s the same prescription that has shaped cities such as Manchester, where I live, over the past decade. In brief, the government will attract inward investment by private capital in leading-edge, hi-tech sectors and upgraded infrastructure. This will create growth and boost productivity, generating plenty of high-skill jobs and triggering a “virtuous circle” of agglomeration.

There’s just one problem with this: it doesn’t boost living standards “everywhere and for everyone”. It doesn’t work for exactly the same reason that soaring GDP in London hasn’t benefited the rest of the country, or even most Londoners. It doesn’t work because great wealth in a few hands does not trickle down.

Hi-tech sectors such as life sciences and advanced materials have helped drive gentrification in Manchester city centre, while outlying towns such as Bolton and Wigan continue to be hollowed out. Meanwhile, neither the jobs created in these sectors nor the shiny flats that have popped up around them are accessible to people in deprived inner-city areas such as Moss Side. To its credit, Greater Manchester Combined Authority (GMCA) has recognised the problem, creating an independent inequalities commission to tackle it.

The commission recommended that GMCA refocus its economic strategy on achieving “good lives for all”, not just growth and productivity. But, despite central government’s dizzying array of new “missions”, it doesn’t seem to have got the memo.

The levelling-up white paper ponders “why measures of quality of life are often lowest in otherwise well-performing areas of the UK, such as London”, but doesn’t pause to ask what on earth it can possibly mean for an area to be “well performing”, if it is not about better lives for the people who call it home.

The answer, of course, is that “well performing” simply means that someone, somewhere is making a lot of money. In London, this is largely driven by an oversized financial sector and an overheated property market – both of which have been shown to have adverse effects on the wider economy. The idea that it is either possible or desirable for every part of the country to be “levelled up” to the status of London is pie in the sky.

But the very phrase “levelling up” is based on precisely this fallacy. It soothingly reassures Conservative donors that their wealth and power will not be threatened by this agenda. Instead, we will simply raise everyone else up to the same dizzying heights. In reality, we can’t all be billionaires.

This leaves the government with little to say to underpaid workers in “everyday economy” sectors such as retail, hospitality and care. This is perhaps not surprising, since most of the things required to improve these workers’ incomes are anathema to the Tories: securing workplace rights, properly funding childcare and social care, and tackling the extractive ownership models which suck billions out of the system every year. Much easier to repeat tired platitudes about higher productivity being a surefire route to higher wages – a claim that the New Economics Foundation debunked last week. These workers are not failing to prosper because they are not productive enough: the problem is that they are not powerful enough.

At the other end of the scale, the notion that we can all be economic winners conveniently ignores the fact that some of our economy’s biggest winners are gaining at the direct expense of somebody else. They are, as geographer Brett Christophers has pointed out, “rentiers”. Like landlords, they extract rents by controlling valuable assets, be that homes, essential infrastructure, or natural resources like oil and gas. They are not outstandingly wealthy because they are outstandingly productive, but because the value of their assets keeps on climbing – contributing to rising costs of living for the rest of us.

London is the death star of this model of capitalism, which is etched in the skyline of Canary Wharf’s skyscrapers and Kensington’s luxury flats. It has been propped up through the pandemic by measures such as quantitative easing and stamp duty holidays. Once again, the white paper seems more apt to replicate this model than to challenge it. We are promised “transformational developments” of housing, shops and businesses in 20 towns and cities, but nothing is said about who will own these developments or who will benefit.

If the government was serious about doing things differently, it might have looked to Preston, whose much-celebrated “community wealth building” model was sparked by the collapse of just such a development. Instead, it simply promises to repatriate government spending to UK firms – reducing community wealth-building to a sort of performative nationalism. It might even have looked to inspiring experiments in London itself, such as the proposed community-led redevelopment of the Latin Village in Seven Sisters, north London – recently endorsed by the council after a major developer pulled out – for fresh thinking on how to build “beautiful new neighbourhoods” that empower people rather than exclude them.

If “levelling up” is to mean anything, it has to be the start of a national debate about who does well in the UK economy and how we can rewire it to spread prosperity more fairly. Without this, all that will be levelled up are the profit margins of a select few.





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