UK politics - Mayoring up: Labour tackling regional inequalities
The new UK Labour government has pledged to come to grips with Britain’s economic growth problem and to deliver the “highest growth rate of the G7 countries”. It is also committed to reduce territorial inequalities, just like the previous Conservative government had been with its “levelling up” agenda. Regional mayors – administering the 12 biggest metropolitan areas in England – are seen in government as crucial to delivering both objectives. Yet while “local growth plans” are being drawn up, the government in Westminster still seems to be finding its feet. Detailed thinking on housing, skills, investment and further devolution is being uncovered in a recent White paper, but most long-term spending plans are expected to be laid out in June 2025. We ask Pr. Diane Coyle, Bennett Professor of Public Policy at the University of Cambridge, where the problems lie.
Interview conducted by Olivier Marty, President of Sciences Po Alumni’s Cercle franco-britannique, on Monday 23 December 2024
Diane Coyle is the Bennett Professor of Public Policy at the University of Cambridge. (Copyright: Bennett Institute for Public Policy/Cambridge)
Territorial inequalities have long been a structural problem in Britain, which was again made evident during the Brexit vote. What is the current Labour government’s approach to this issue and what makes it different to the Conservatives’ “levelling up” agenda?
All recent UK governments have paid lip service to the need for more regionally balanced growth. After all, the UK is at the extreme among OECD countries in terms of its geographic inequalities of incomes or value added per capita, and this is affecting political outcomes – Andrés Rodríguez-Pose (Professor of Economic geography at the London School of Economics) memorably labelled this “the revenge of places that don’t matter”. The government of Boris Johnson published a policy White paper on “Levelling Up” that was well-regarded for its analysis, but no actions resulted, either by him or by his two Conservative successors.
The Labour Government is promising action now, both in the form of further devolution of political authority in some areas (but not fiscal powers), and in making the geographic dimension central to its “growth mission” and industrial strategy. The intent looks serious, but the real test is still to come. Will there be significant public investment in transport infrastructure or skills outside the South East of England? Will there be genuine devolution of power to the metro mayors or will the Treasury still tell them how to spend the funds they are allocated from the centre?
““The Labour Government is promising action now, both in the form of further devolution of political authority in some areas, and in making the geographic dimension central to its “growth mission” and industrial strategy.””
The Prime Minister, Sir Keir Starmer, arrives at Number 10 Downing Street upon his appointment, on the 5th of July 2024. (Copyright: Kirsty O'Connor/ No 10 Downing Street/CC)
Last July, Prime Minister Sir Keir Starmer asked twelve metro mayors to draw up “local growth plans” by next March, in view of those feeding into broader national industrial and growth strategies: do we have a sense of the work that has been done so far?
Thanks to the lengthy political debate about “levelling up”, most of the mayoral combined authorities will have started with a good sense of local strengths, and needs – although there are different levels of capability around the country to develop economic strategies. Greater Manchester and the West Midlands have had much longer to do so. The challenge for all of them is the lack of the granular information needed for an effective local growth plan. The UK economy has been managed in such a “top-down” and centralized way for so long that all the discussion about growth and industrial strategy is very broad-brush, in terms of sectors or large regions rather than specific manufacturing or services strengths and specific locations. There is a paucity of useful official statistics for the analysis required, which puts a lot of weight on local know-how, and the time and resources local officials have available. Still, I would expect the plans to be sensible; the issue will be implementation.
““The UK economy has been managed in such a “top-down” and centralized way for so long that all the discussion about growth and industrial strategy is very broad-brush...””
It seems there is a risk that the efforts of mayors are in danger of stalling unless local and national strategies are carefully sequenced. Is there sufficient clarity about the government’s broader approach at the moment?
Not yet, although the challenge of reversing decades of underinvestment and regional inequality shouldn’t be underestimated. I think there are three parts to the challenge, sequencing being one of them – and that isn’t just a matter of national and regional decisions but also, in many parts of the UK, involving multiple overlapping authorities. The second is co-ordination between central Whitehall departments, as unlocking local and regional growth will involve multiple policies, from tax and trade to education, universities, health, transport, utilities regulators, and so on. The third is policy stability, given the experience of extraordinary policy churn. UK governments have expected businesses to make long term investments while themselves frequently overturning key supply-side policy frameworks.
Tackling these challenges will require overcoming some of the structural dysfunctions of the UK’s political system: extreme centralization, “first-past-the-post” voting that encourages polarization, and ministers’ accountability (in Parliament and the media) for everything that goes wrong in their brief. Although the main parties, including in the devolved nations, all accept the need to address economic inequalities and enable growth more broadly, it’s hard to be optimistic about building a consensus around implementation when politics here – as elsewhere – is polarized. I think this government’s best chance of succeeding lies in embracing devolution in a more wholehearted way and building consensus from the bottom up, on the local specifics.
““I think this government’s best chance of succeeding lies in embracing devolution in a more wholehearted way and building consensus from the bottom up, on the local specifics.””
The Prime Minister has promised to enshrine devolution as the default option. How do you assess the latest White paper on the topic published on 16 December? What would be a sensible set of new powers granted to metro mayors in view of achieving the local growth objective?
The promised English devolution White paper was released in time for Christmas. It focuses on further devolution to mayoral combined authorities, with enhanced powers over planning, housing and spatial development. However, there is some discretion over spending but no fiscal devolution, and no new significant powers for Greater Manchester and the West Midlands, which were the first combined authorities.
““The immense reluctance of the Treasury to see any weakening of its own grip over financial matters is clear.””
The immense reluctance of the Treasury to see any weakening of its own grip over financial matters is clear. One excuse is always that regions and localities lack the capabilities to manage their finances, and the White paper recognizes the need to invest in this kind of capacity.
It also addresses the highly complex governance arrangements in some parts of England, announcing a plan for local government reorganization – much needed but very complicated to achieve. The bottom line, though, is that local government has been squeezed financially for decades, local services are crumbling, and many councils are approaching bankruptcy at worst, or only being able to deliver statutory services. Devolution is toothless without a reasonable funding settlement, and a path towards true financial devolution.
Capacity, or expertise in local economic development, may be one of the weaknesses of metro mayors when it comes to setting out a credible and holistic regeneration strategy. How can this problem be tackled? Is there some middle ground to be found between local hires and centrally affected, floating resources?
I tend to think the capacity problem is real but over-stated. I was involved in the analysis that helped pave the way for the first English devolution deal for Greater Manchester in 2009. The local authorities in the city-region had invested a relatively modest amount in that work and a secretariat. The analytical capability has grown along the devolution journey and the Combined Authority’s expertise is highly regarded. Other combined authorities may be behind on the journey but there’s no magic involved. Local hires, returning talent and secondments from the centre can build the necessary capacity. I’d also love to make it a condition of appointment to senior grades in the central Whitehall civil service that a candidate has to have had at least two years’ experience in another part of the country.
