CPP Director Charlotte Alldritt looks back at the run up to the government’s spending review, COP26 and what this all means for the future of levelling up and green, inclusive growth.
After a rocky summer – the world stunned by the botched evacuation in Afghanistan, fears mounting over rising inflation, and labour shortages threatening our post-Covid economic recovery – Boris Johnson’s mid-September reshuffle sought to bring order to the growing sense of chaos. Levelling up would be the defining purpose of a rejuvenated Cabinet, with Michael Gove taking on the newly christened Department for Levelling Up, Housing and Communities – supported by the intellectual heft of Neil O’Brien MP and former Bank of England chief economist, Andy Haldane. As we emerged out of the pandemic, this government would be bold – not only delivering on regional inequality, but climate change, crime and social care, even if it meant breaking its own manifesto commitment by raising National Insurance.
By the time of his party conference speech, the Prime Minister was bolder still, holding steadfast to the idea that supply chain shortages would not be filled by resorting to cheap foreign labour. Instead his government “had the guts” to pursue a high skilled, high productivity and high wage economy by British firms training workers at home. Having dominated the news cycle the week before, Labour’s internal battle for a £15 minimum wage was cast into the shadows. Bolstered in his unassailable authority as party leader, Boris had a free rein to assert his vision and look to capitalise on key set pieces in the domestic and international arena – notably next week’s Spending Review, COP26 summit and the Levelling Up White Paper.
But what are the political battles the Prime Minister will be contending with as he seeks to level up and build back greener?
- The battle with business: No one would disagree that a high wage, high productivity economy is the right destination, but Boris’ “**** business” approach to labour market shortages is a risky strategy. Yes, business and industry can and should invest more in the skills of the workforce. But persistent policy failures in our vocational education and training system, as well insufficient labour market enforcement, have hollowed out our economy. Reliance on cheap UK or migrant labour might be morally unjust, but it hasn’t always been irrational.
- The battle for the Union: We can almost guarantee that Nicola Sturgeon and her Cabinet will make the most of COP26 in Glasgow. This will put yet more pressure on the UK government to affirm its relevance to – and for – the Scottish electorate. Even its flagship domestic levelling up agenda, explicitly designed to tackle inequalities “between the regions and nations of the UK”, is falling flat. Recent polling by the Centre for Cities shows the public in Scotland and Wales is least likely to understand what levelling up means (at 29% and 31%, respectively).
- The battle for pride of place: Rarely is there such consensus across the policy, media and commentariat community as on the need for more devolution to local and regional leaders – especially as a means to deliver on levelling up and net zero. The PM’s July levelling up speech talked a good game on County Deals, but further devolution to mayoral combined authorities (or their equivalent) seems unlikely. Andy Haldane’s appointment could unlock more sympathy here, but there seems little appetite within No.10 or elsewhere to push it. Expect much on the importance of local leadership and pride of place in the white paper, but with little to translate that into meaningful action.
- The battle with the clock: An election in spring 2023 means that Boris could have little to show for all the talk on levelling up and a green economy. He’ll have to rely on the power of the narrative, the hope that events don’t derail things and the faith amongst the electorate that another term in government will give him time to deliver. He’ll also have to trust that his base will tolerate the push beyond Thatcherite economics into a more State interventionist model of government, which is easy whilst he’s consistently ahead in the polls, but more Chesham and Amersham by-elections will quickly drain momentum.
- The battle for the former ‘Red Wall’. Assuming no great Labour or Conservative revival in Scotland, seats in the North of England and Midlands will be where the next UK election is won or lost. Here is where levelling up needs to deliver to do right by those who lent the Conservatives their vote in 2019 (and before that). But on the day the government launched its plan for achieving net zero, it also needs a plan to avoid compounding inequalities in the very same communities its levelling up agenda is trying to appeal to – i.e. those who bore the burden of sectoral change and dislocation in the 1980s, who bore the burden of the Global Depression in 2008, who carried the weight of economic shutdown during Covid-19 and who could again bear the burden of transition away from high carbon intensive industries.
Tomorrow, CPP will convene leading thinkers and practitioners at our annual conference on ‘acting now for clean, inclusive growth’. There seems to be a rare moment for change and an ever rarer consensus on what we are aiming for. Call it levelling up, call it inclusive growth or building back a fairer, greener economy – this is our biggest battle yet.