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Is this the end of levelling up? by Dr David Jeffery for Unherd - 22.07.22

Where does the government stand on levelling up now Boris has gone?

In the first in a series of articles on the subject, we begin with an article by Dr David Jeffery who assesses the chances of its implementation in the context of the two rivals' campaigns for the keys to Number 10.

With the front-runner and current favourite Liz Truss keen to burnish her neo-Thatcherite credentials, the initial omens do not look promising:

“The hugely-successful London docklands regeneration programme has, for instance, been described by Dr Jack Brown as “an extremely un-Thatcherite mechanism for achieving urban regeneration”, since it saw the state (via the London Docklands Development Corporation) acquire land, spend money on infrastructure, intervene in the market and expand public sector employment.

Hardly the free market free-for-all promised by Truss. Neither is Eighties Merseyside a great example of Thatcherite levelling up. All Michael Heseltine as Minister for Merseyside could manage was to prettify Liverpool’s docks and inaugurate a garden festival, neither of which had any long-term impact on the rest of the city.”

And her rival?

“Sunak can certainly talk the talk when it comes to levelling up — he has won the support of Tees Valley mayor Ben Houchen and signed the Northern Research Group’s levelling up pledge sheet — but when it comes to walking the walk the former chancellor is immobile.

During his time at the Treasury, he was a significant barrier to spending more on what should have been the Government’s flagship policy, including granting more money to levelling up when the policy was relaunched in November 2021 and placing his own leafy constituency – in the bottom 20% on the index of multiple deprivation – in the highest category for levelling up funding.

If this is counts as having “readily embraced levelling up”, as Seb Payne wrote in yesterday’s FT, then I would love to see what Sunak would do if he were opposed to it. In reality, his instincts are more suited to the austerity era than today’s political context.”

According to Dr Jeffery

“Neither of them — nor the party at large — recognises the true scale of the problem that levelling up seeks to address; even fewer people in government realise just how expensive the policy will be."

To make any real difference, the sums required are enormous.

The scale of spending needed goes “far beyond anything currently being contemplated” by the government, says the Resolution Foundation; it is on par with the reunification of West and East Germany, says The Centre for Cities, and so is the cost: around £2tn.”

Current spending doesn’t even touch the sides:

“Yet the Government’s Levelling Up Fund is currently at a paltry £4.8bn, roughly the same as the spending on “Project Gigabit” (roughly around 0.25% of what Centre for Cities say is needed).”

However, argues the author, there is a chance for the newly elected leader to fully embrace the policy and of the two, Truss would appear to be the better bet:

In fact, one of her existing flagship policies might also provide the way forward for levelling up: “Covid bonds”.

This is her proposal to package up Covid debt and repay it over a much longer term than the traditional government debt repayments of between 10 to 30 years, and separate it from traditional borrowing on the government’s books.

It is an approach that could also be applied to the funding of levelling up.

Consolidated annuities (or “consoles”) — ie bonds that pay a fixed interest rate but have no fixed repayment date — could be used to fund proper levelling up at the scale required to truly tackle the problem.

This would allow the government to separate levelling up borrowing from day-to-day borrowing, lock in current low interest rates, and free them from a set repayment date. Putting control of this money in the hands of Department for Levelling Up would also liberate the project from the straightjacketed thinking of the Treasury.

The best time would have been when interest rates were truly rock bottom, but the second-best time is now.”

The full article can be read below with a link to the original here:

Article for Unherd by Dr David Jeffery - Is this the end of levelling up - 22.07.22
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Done properly, he estimates the total cost to be around £2trn.

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