Levelling Up the UK: If not the Conservatives, will Labour Learn the Lessons from Past Policy Failings?

The 2022 Levelling Up in the United Kingdom White Paper critiques previous governments’ attempts to address the pressing issue of geographic inequality and advocates the case for wholesale reform. However, the Conservative governments of Johnson, Truss and now Sunak are repeating the very pattern of short-termism and ad hoc decision making that was identified in the LUUKWP as the fundamental error of past approaches.

Here we analyse the government's critique of past reforms, the lessons it has set out and why its reform programme is likely to repeat past failings. We then consider the approach of Starmer's Labour Party to levelling up and the issues it needs to confront if it forms the next government.

Levelling up and reforming UK governance

As it stands, the ideological fissure within the Conservative Party remains deep. Divisions tend to distil down to two, somewhat irreconcilable, positions: the party embracing small government, low tax and state deregulation akin to a ‘Singapore-on-Thames’ model; or the levelling-up, ‘red wall’ approach advancing a more interventionist narrative.

LUUKWP was originally heralded by the government as its defining flagship programme. The document set out a commitment to a range of investment, productivity and growth strategies in response to both short-term drivers—notably the Covid-19 pandemic and Brexit—and longer-term pressures arising from the UK economy's relatively poor productivity performance and sclerotic cross-government arrangements. It is the latter that is viewed as key to the problem, as much as the solution, to levelling up.

To break the pattern of centralised, ad hoc, top-down policies, the LUUKWP argues for the ‘root and branch’ reform of government and governance of the UK. Key themes include:

• Policy churn/short-termism, leading to constant shifts in ‘organisational, legislative and programmatic levels’.
• Siloed policy, where institutionally demarcated departments ‘hinder coordination’. Alternative strategies involving a ‘whole system’ approach are recommended, emphasising both cross-cutting policies and funding arrangements.
• Centralisation, which under-utilises local knowledge and local leadership, ensuring that local government continues to lack ‘power, capacity, and capability’. LUUKWP argues for ‘local empowerment’ through the devolution of power and fiscal responsibility, underpinned by meaningful democratic and accountability mechanisms.
• Lack of oversight, transparency and accountability, where there is an absence of data to understand the impact of ‘place-based initiatives’; a lack of ‘comparative UK wide data’; and ‘poor institutional memory’ in central government.

Five pillars are identified as the bedrock of a new framework for UK public policy: medium-term missions; reshaping central government decision making; empowering local decision makers; data, monitoring and evaluation; alongside transparency and accountability.

Yet, in examining the LUUKWP's subsequent recommendations for reform, a disjuncture emerges. The proposals highlight the contradiction between the limited approach to reform of central government as against sweeping proposals for change beyond Whitehall in sub-regional governance. That asymmetric approach is justified by concerns that wholesale reform of central government would lead inevitably to a loss of impetus. The LUUKWP ignores the question of the deep ministerial reluctance to reform the Westminster model.

As such, the LUUKWP will struggle to deliver even on the limited promises it sets out. None of the proposed reforms at the centre challenge the dominance of departments, especially the financial control of the Treasury. Local authorities are unable to borrow levelling-up capital or to issue bonds.

An ad hoc, improvised approach to devolution is advocated whereby combined authorities in local areas must decide for themselves what powers they would like to request from Whitehall. This approach requires new institutions and powers, but merely exacerbates complex and often incoherent economic geography.

Implementing levelling up

Concrete reform proposals are reserved for levels of government below the centre, with most substantive reforms focussed on arrangements for sub-regional and local governance. However, such powers are political rather than fiscal. Furthermore, the LUUKWP acknowledges the trade-off between ‘functional economic areas’—the basis for most devolution deals to date—and those ‘that are locally recognisable in terms of identity, place and community’. Practically, it is difficult to reconcile these different aims.

The LUUKWP thus perpetuates policy churn and institutional instability. Moreover, reform beyond the centre in England still lacks a clear and coordinated blueprint for local governance that is not simply a one size fits all, standardised metro-model approach. How will smaller regions without major cities address pervasive socioeconomic inequalities? And what mechanisms exist to resolve conflicts between regional and local actors, and the centre? There is no over-arching, coherent blueprint for local government reform.

Boris Johnson’s levelling up spoke to the lived identity of places, which helped to win ‘red wall’ seats. Truss briefly replaced this with the overriding pursuit of growth. Sunak’s inheritance was framed as the need to reimpose economic and governing competence. Nevertheless, future reforms look set to perpetuate a familiar pattern of incrementalism and centralisation.

Labour and levelling up

Lisa Nandy, the Shadow Levelling Up Secretary, has claimed that Labour will be ‘a levelling up government’. Crucially, unless the party challenges Whitehall’s power, they risk repeating the same mistakes as the present government.

To that end, the publication of A New Britain: Renewing our Democracy and Rebuilding Our Economy, stemming from the Labour Party Commission on the UK's Future chaired by former Prime Minister Gordon Brown, is a key contribution. In the paper, political and economic reform are regarded as deeply interwoven and the case is made for devolving power downwards and ‘more equally across the country’.

The structures of decision making and governance were key themes in Keir Starmer's first major speech of 2023, in which he said ‘the Westminster system is part of the problem.’ Nevertheless, we have been here many times before.

At present, Labour can articulate a compelling reform narrative because it regards itself as the outsider bringing change to an outdated, anachronistic political system. The real test may come if and when entering government, when Labour would immediately become an insider with a stake in the existing constitutional settlement.