Levelling Up White Paper is a welcome first step in addressing problems and finding solutions

Dr Ian Jackson, Senior Lecturer in Economics and Finance at the University of Wolverhampton Business School blogs about the government’s flagship Levelling Up White Paper.

In 1776, ‘An inquiry into the nature and causes of the wealth of nations’ by Adam Smith was published which helped establish economics as a separate discipline.  The book remains a remarkable account of how competitive markets can supply goods and services at lower prices, especially if many efficient firms specialise commercially and employ techniques relating to the division of labour.  Smith even mentions how the great manufacturing centres of Birmingham, Manchester and Wolverhampton can prosper through free trade at the dawn of capitalism.

Almost two hundred and fifty years later, following the great transformation resulting from the Industrial Revolution the United Kingdom is a very different place.  London, which benefited the most through the nation industrialising, is effectively a city state set apart from many other parts of the country.  The capital city is the epicentre of political, economic, financial, social and cultural life while other areas struggle at the margins in a post-industrial era adversely affected recently by the global pandemic.

This is the context of the “Levelling Up the United Kingdom” White Paper published in February 2022 by Michael Gove MP Secretary of State for Levelling Up, Communities and Housing.  The aims of the proposals are motivated in part by economic, social and moral reasons according to the documentation and seeks to unite the country through the combined efforts of all-tiers of government, devolved administrations, civic society and the private sector.  Wolverhampton is a cornerstone area in the agenda to create a more prosperous and less unequal future.

There is no doubt whatsoever that there is a problem with the economic geography of our country.  The scale of lagging regional productivity, educational inequalities and health disparities is significant and the country ranks amongst the worst of any major industrial economy.  Compounding the problems are complex issues relating to what the American economist Paul Krugman defines as unequal growth such as the North-South divide in England, poor east-west communications and inadequate transport links to the periphery thereby isolating areas such as Cornwall and Norfolk.  

Hence, this Levelling Up White Paper is a welcome first step in identifying these problems formally and seeking to find address through practical medium-term solutions. There are various specific missions aimed at boosting the regional economy through clear policies in education, skills, health and well-being.  In addition, setting targets to the year 2030 to be reviewed periodically thereafter means that there is potentially sufficient time to make a difference.  Finally, there are boosts to the local economy such as the second headquarters of the Department for Levelling Up, Housing and Communities (DLUHC) being located in Wolverhampton.

This is an appropriate time to reflect on the economics of the White Paper.  Firstly, the lack of any meaningful proper definitions of levelling-up is truly a major oversight.  How do the metrics show a levelled-up United Kingdom?  What happens to London while the rest of country is levelling-up as it competes internationally with cities like New York, Paris, and Singapore?  Also, without any new and substantial funds to finance these proposals then the plans are at risk of drifting.  In other words, the White Paper is neither the free market supply-side boost advocated by followers of Adam Smith; nor the demand-side pump-priming government intervention as promoted by supporters of John Maynard Keynes who wrote about economic problems and solutions during the Great Depression of the 1930s.

The entire country needs a strong capital supported ably by robust, independent, well-connected, skilled and educated regions and cities contributing purposefully and resiliently to the wealth of our nation.  The United Kingdom has already achieved global success before in the late eighteen and early nineteenth century.  To succeed again in the future, there should be more detail on how this outcome is to be fully achieved; otherwise, the White Paper will be consigned to history as an exercise in wishful thinking.