How Labour can win the argument on ‘levelling up’ with its own set of policies

It has been a long time coming. Five years ago, a devolution framework was promised in Theresa May’s manifesto. After that, a ‘devolution white paper’ became a running joke. Two years ago, ‘levelling up’ formed a major part of Boris Johnson’s manifesto. Finally, a white paper was published this week.

“Is this it?” asked Lisa Nandy. Labour has savaged the document as a mish-mash of pre-existing policies. The Conservatives have clearly tried to do regional policy on the cheap, and we can expect them to fall short on delivery, given their record. But what could Labour take from the white paper, and elsewhere, to develop its own set of policies?

From other quarters, the white paper has received some positive reviews. It is a partial return to the common sense of targets and regional coordination – and therefore it has many echoes of New Labour. It mostly contains the right ingredients, with some exceptions, and it is rightly multi-faceted and broad, involving all of government in its “missions”.

For many, it apparently clears the low bar that we have set for regional policy in this country: it is better thought-through than the tokenistic and half-baked initiatives we had got used to since 2010, when a man called Eric Pickles decided he didn’t much like the word ‘region’. It surpasses expectations – but expectations that were set very low. Being kind, we could call it ’Version 1’.

So, what would Labour do in government? Labour feels a natural affinity for regional policy, and actually started the ball rolling with combined authorities when in government. In the mayoralties, councils and Wales, Labour has of course been delivering regional policies, but in very restrictive circumstances. But UK Labour’s contribution to this agenda since 2010 has been notably slim. There are three avenues for Labour to explore, in order to bring forward a better plan for ‘levelling up’. 

First and foremost is devolution. The last Labour government should have built in England a set of devolved institutions to last, so that they could endure the damage of the last 12 years. That needs to be the starting point for Labour thinking: an opportunity to deliver a powerful, effective and permanent devolution settlement in England; and an insurance policy against future Conservative governments that protects the communities Labour cares about.

The Conservatives know devolution is a weak spot – and the white paper sets out a ‘devolution framework’. This is positive and a long time coming. But it leaves devolution decisions to central government, rather than a more objective or collaborative process. More disappointing, it mostly retains a process of competitive short-term bidding for central government funding – the antithesis of real devolution. Labour should set out a better plan. 

Labour should pledge to establish local government in England, and its funding streams, on a more permanent, even constitutional, basis. They should allow councils and mayoral combined authorities to raise new funds so that they can take on more fiscal responsibility (rather than devolving current taxes, which is highly problematic).

This would enable places to genuinely plan for the future, without spending time and resources, going cap-in-hand to the government. But it would also protect good Labour policies from the inevitable future Conservative governments. It would mean councils wouldn’t be forced to do the Treasury’s dirty work on austerity, like they have since 2010. It would mean things like SureStart centres, that Labour worked so hard to establish, could be better protected in future. It could unleash a wave of public sector innovation, enabling the local state to be interventionist and entrepreneurial – as they often are, when given half the chance.

There are some obstacles, but they aren’t insurmountable. Fiscal devolution must be accompanied with redistribution, as it is in other countries. Checks and balances, and lines of accountability, do need to be clearly established. Finally, we will need reform at the UK level, and between nations and regions, to enable partnership and cooperation – instead of the antagonism we often have now. If Labour can find workable solutions to these, they will unlock significant, important long-term change to how we are governed – and ultimately, enable people to live better lives.

Second, Labour needs its own foundation of evidence and theory. The government’s white paper is an interesting read. Between references to the Medici and the history of Jericho, it does make an attempt to engage with theories of economic geography. Not long ago, this would have been unthinkable.

But the white paper’s section on economic geography is quite superficial. At its heart is an understanding of geography that is overly enamoured by cities. It is littered with the typical language of agglomeration, sorting, matching and ‘deep labour pools’ – it is full of jargon that was all the rage 10-15 years ago, when places like Manchester were making their case for devolution. It is very ‘mainstream’ economic geography, that people who only dabble in it tend to pick up on. The ‘common sense’ argument runs: ‘cities drive growth, just look at London – so let’s make places more like London’. Though manufacturing does get a nod, the implicit logic of the white paper is that only city-region economies are worth the real effort.

Things have moved on. The evidence base has developed, and so have the arguments. While cities remain incredibly important, productivity benefits to agglomeration are overhyped, and isolated to certain small sectors, like digital and finance. The downsides of cities are patently obvious to those of us living in them: costs, anxiety, congestion and pollution. They attract the young to university, entry-level professional jobs and, of course, the social life. But people tend to leave when they can – usually to live nearby, where they can have their cake and eat it.

This is now acknowledged even in the cities themselves, who see their role as increasingly regional: as hubs for regional activity, serving places that need business services, and benefitting in turn from the assets that the wider region can contribute. Manchester’s universities and professional services, work with biotech firms in Cheshire, for example. There is plenty of evidence, theory and policy for Labour to draw on, particularly in the rest of Europe – and with it a broader set of jargon, like ‘smart specialisation’, ‘smart diversification’ and ‘polycentricity’. As others have said, the white paper draws mostly on American literature, not European, or even British – and is the poorer for it.

Labour must develop a more open-minded view of the advantages that different places can offer – and in a way that is genuine, not tokenistic. Labour’s regional policies could underpin serious investment in any place where there is genuine opportunity.

Finally, Labour must make ‘levelling up’ real to people. The party must have an optimistic but grounded conversation with people about the hard work needed to improve living standards in their community. Their agenda should mean something positive but deliverable to people living each day as it comes: waiting for a once-an-hour bus, packed into a crowded (delayed) train, or looking desperately for work within commuting distance.

Labour has a real opportunity to win this argument. Surveys have shown that the public trusts Labour more than the Conservatives to deliver on levelling up and tackling regional inequalities. Labour must now reward that trust.