Levelling up chief warns inflation will make tackling inequalities harder

The cost of living crisis will make Boris Johnson’s plans to tackle the UK’s regional inequalities much more difficult to achieve, according to Andy Haldane, outgoing head of the government’s levelling up task force.

At the end of his six-month sabbatical overseeing the government’s levelling up white paper, Haldane acknowledged that some of the people who would be hit hardest by soaring inflation would be those living in the “left behind” areas that the prime minister’s flagship policy is meant to help.

The former Bank of England chief economist accepted the government’s 12 key goals to reduce regional inequalities would be negatively affected as a result, but insisted this would not undermine the policy.

“The cost of everything — including borrowing, energy, goods, service, of people — has gone up,” Haldane told the Financial Times. “It’s going to make [the levelling up goals] harder to achieve, and even more important to achieve.”

He suggested that the burden of surging inflation would fall disproportionately on people and places most in need of the government’s levelling up agenda.

“This is why I have a degree of confidence that, far from taking the wind from the sails of levelling up, the cost of living crisis makes [the policy] even more of an imperative economically, socially and politically,” added Haldane.

The chief executive of the Royal Society of Arts joined the Cabinet Office on a six month secondment last year to help provide much-needed substance to Johnson’s levelling up plans.

Haldane, 54, who grew up in a Yorkshire working class household, was picked by Johnson and Michael Gove, levelling up secretary, as a longstanding champion of left behind areas.

He said the government would introduce legislation by June that would make it “difficult to upend” the 12 policy “missions” contained in the 332-page white paper — including increasing business investment and tackling violent crime — by enshrining them in law. The goals are meant to be achieved by 2030.

Labour criticised the white paper unveiled in February for not being accompanied by new government funding: instead ministers pointed to money contained in chancellor Rishi Sunak’s spending review last October.

Haldane suggested that more money for levelling up may be allocated in the coming years. “The missions are 2030 missions that span multiple spending reviews; we’ll have several more bites at this cherry,” he said.

The first marked outcome from the white paper is expected to be further devolution in England via the creation of several directly elected “county mayors”.

These local leaders are expected to have similar powers to so-called metro mayors such as Sadiq Khan in London and Andy Burnham in Manchester, who have a big say over initiatives to boost economic growth in their areas.

Haldane argued that levelling up was about forging a “new model of government”, not merely spending more money.

Whitehall should aim to “to empower and enable others to regenerate their place”, he said.

Haldane added that the civil service, seen by some as a centralising force in London, was “getting” what levelling up was about, although he admitted it was a “work in progress” for certain Whitehall departments.

Critics of levelling up have said Johnson’s plans are a response to cuts to public services introduced by former prime minister David Cameron, particularly reductions in local government funding.

Haldane said rebuilding civic institutions was “absolutely sine qua non of making good on levelling up”.

He supported a call by Gove that control of some taxation — the levelling up secretary has suggested business rates — should be handed to mayors.

“So far the debate about devo has been devolution very largely of powers to spend, but not enough power to tax,” said Haldane. “Do I see the endpoint of this evolutionary trajectory needing to be one in which local areas have greater powers to tax as well to spend? Yes, I do.”

He outlined several initiatives to drive forward the white paper’s objectives.

Gove’s department for levelling up, housing and communities is hiring a dozen “levelling up directors” to focus on ensuring central and local government combine on implementing the white paper’s 12 key goals. Meanwhile, a new committee of cabinet ministers is meeting “almost weekly” to focus on “levelling up considerations”.

Haldane outlined two main types of places that would be targeted by levelling up measures.

He said the first were “city regions that are punching below their potential”, adding that some of the UK’s most successful cities, including Glasgow and Manchester, underachieved compared to European peers.

The second were “stranded towns” that did not form a part of a city region. Haldane said the aim was “less about becoming some hub for business, and culture and finance” but improving metrics such as “life satisfaction, happiness, health outcomes . . . a nice high street with decent shops, reasonable transport”.

Johnson is betting his government will have made enough progress on levelling up in the next two years for it to form a core part of his pitch to voters for a second term in office, particularly in so-called red wall areas that the Conservatives seized off Labour at the last general election.

Haldane said a “downpayment” would have been made by 2024 on some of the white paper’s core goals — including tackling illiteracy and innumeracy — but others, such as improving life expectancy, will take longer.

“What people really want is a sense of the tide having been turned, it’s all about direction of travel rather than destination,” he added.

Source: Financial Times