Levelling up – an opportunity for coherent regional policy or a constitutional ruse?

  • Levelling up

Graeme Roy, Professor of Economics and Dean of External Engagement, University of Glasgow; David Bell, Professor of Economics, University of Stirling; Dr David Waite, Lecturer in Urban Studies, University of Glasgow. 

This piece asks what levelling up means in the devolved nations, exploring political and economic differences, tensions between devolved and reserved policy, and the issue of where responsibility and influence currently lies.

Introduction

‘Levelling-up’ has largely been presented as the latest policy drive to tackle the economic divide between London and the South-East and the cities and towns of the North of England. But the ‘levelling-up’ agenda has important implications too for the devolved nations. The scarring of the de-industrialisation of the late 1970s and early 1980s impacted just as much upon economic inequalities in these nations, from the urban centres surrounding the shipyards of Belfast and the Clyde to the mining communities of Lanarkshire and the Welsh Valleys. (see Martin R (2015) Rebalancing the Spatial Economy: The Challenge for Regional Theory, Territory, Politics, Governance, 3(3): 235-272 and Tyler P, Evenhuis E, Martin R, Sunley P, And Gardiner B (2017) Growing apart? Structural transformation and the uneven development of British cities. Cambridge Journal of Regions, Economy and Society, 10(3): 425–454).

Tackling these inequalities will require – as others have highlighted in this series – a bold agenda across a range of policy areas from transport, digital, skills, housing and public health. But with devolution, power over effecting change in these areas is now an increasingly complex web of shared responsibility between London, Belfast, Cardiff and Edinburgh.

This adds an interesting dynamic to these debates. One of the criticisms of the UK ‘model’ for regional development has been its overly centralised system of control. But the pattern of regional autonomy in the UK has always been uneven.

For example, even before devolution in 1999, Scotland benefited from more bespoke economic development policies than other parts of the UK. The creation of the Scotland Office in the early 20th century, and the Secretary of State for Scotland (who had a permanent seat at Cabinet from 1926), gave significant power and influence over economic development policy in Scotland.

Indeed, a distinct economic policy agenda has been evident for well over 70 years. In pre-devolution times, the UK Government’s approach to Scotland was generally “light touch”, with the Secretary of State for Scotland largely left to set his own priorities (note that it always was a “he”). The range of policy levers was more limited than now: for example, university finance was determined by a whole-UK body until 1992. However, Tom Johnston, widely regarded as the most successful Scottish Secretary pioneered many innovative policies without attracting the censure of the UK Government, the most successful of which was the establishment of the North of Scotland Hydro-Electric Board, which brought electricity to the Highlands.

Moving to the contemporary moment, it is now the devolved administrations that control many of the long-term drivers of economic development, from education and skills through to infrastructure for housing and transport.

The economies of the devolved nations

Scotland is an interesting case study in the levelling-up agenda.

Like many parts of the UK, it has gone through huge economic upheaval. Heavy industry dominated the industrial landscape for much of the late 19th and 20th centuries. Shipyards, steel plants and coal mines dominated the skyline. Glasgow prided itself as the ‘Second City of the Empire’. But unlike Wales, Northern Ireland, and much of Northern England, Scotland finds itself today in a stronger relative economic position. How much of this is down to good policy or good luck is an interesting question.

Most likely the answer is both. The windfall of oil and gas in the North Sea unlocked a new industrial base and propelled Aberdeen to become ‘Europe’s Energy Capital’. Edinburgh, with its expertise in banking, asset management and professional services, was ideally suited to benefit from the growth of financial services in the UK.

But variations in economic performance exist within Scotland that need ‘levelling-up’. These crossover multiple spatial scales, from the more general divergences in performance between the eastern and western parts of the central belt, to urban versus rural divides. Within small areas, stark wealth divides can be pointed to (as indicated by the micro areas tracked in the Scottish Index of Multiple Deprivation, for example).

Crucially, if the ‘levelling-up’ agenda is to make headway in the Scottish context it needs to focus just as much on the variations within regions as opposed to differences between Scotland and the rest of the UK. The challenge in a Scottish (and Welsh and Northern Irish) context is that many of these powers are not in the gift of one government but multi-tiers of government.

Tensions between devolved and reserved policies

The devolved nations present a tripartite arrangement for the levelling up agenda, with regional policy shaped by both the interests of the UK and Scottish Governments (as has been the case with City and Growth Deals). This is a challenge for local policymakers, where courting both governments in deal-based arrangements has been necessary to date.

The present circumstances engender, indeed, some marked political issues. First, there is no longer clarity about “who is responsible for what”. After a period where the powers of the Scottish Government have been significantly extended, the UK Government appears to be seeking to exert more influence over how money is spent in Scotland. This was first exemplified in the “City Deals”. The UK Government funds aimed at reducing geographic inequality – the Levelling up Fund and the Community Renewal Fund are being administered by Westminster, with, as yet it appears, no effective input by the devolved administrations. Similarly, although its final design has yet to be announced, it seems likely that the Shared Prosperity Fund, which will replace the European Structural and Investment Funds, will also be managed from Whitehall. Second, the 2021 Internal Market Act which sets out how the UK internal market will be regulated also includes provisions for the UK Government to spend in areas that were previously understood to be within the remit of the devolved administrations. Given that these administrations are highly protective of their powers, these developments seem to be leading to a period of “competitive” rather than “co-operative” devolution were intergovernmental conflict rather than cooperation is the norm.

Though this development is independent of the levelling up agenda, it clearly complicates the process. The UK government may argue that its interpretation of levelling up requires redistribution of resources from the devolved nations to England. It may also seek to take credit for favourable outcomes in the devolved nations, arguing that they derive from funding streams which bypass the Scottish and Welsh Parliaments and the Northern Ireland Assembly. Whether setting up such conflict is in the long-term interest of the UK government remains to be seen.

A further backcloth to UK-devolved administration relations, is that the views of economic change adopted by the UK Government and the devolved administrations are increasingly divergent from each other (at least on the face it). That is, a broader commitment to wellbeing, evident in both Wales and Scotland, would seem to promise a wider view of change outcomes beyond traditional growth metrics. This raises further questions on what is meant by levelling up, and on what metrics its success or failure should be judged.

In summary, the levelling up agenda is working over an increasingly fractious constitutional context in the UK. How the levelling-up agenda is operationalised across the UK won’t just impact upon economic and social outcomes but could have significant implications for the very future of the United Kingdom itself.

Photo Credit: Stewart M on Unsplash

About the authors

Graeme Roy is Professor of Economics and Dean of External Engagement in the College of Social Sciences at the University of Glasgow. He is former Director of the Fraser of Allander Institute and former Head of the Department of Economics at the University of Strathclyde.  David Bell has been Professor of Economics at the University of Stirling since 1990 specialising in labour economics and fiscal federalism.  David Waite is an Urban Studies Lecturer at University of Glasgow with an interest in the development of second-tier city-region economies. As a Research Associate with Policy Scotland, David has provided research support to the Independent Commission advising the Glasgow city-region City Deal.