Whether it is called “levelling up”, “rebalancing” or “regeneration”, politicians have been promising to fix regional inequality for as long as it’s been a problem. But they have often felt as if they were “pushing water uphill”, in the words of Clare Foges, who was a speech writer for former UK prime minister David Cameron.
It’s true that powerful economic and technological forces have propelled the rise of cities and the decline of post-industrial areas. But Covid-19 has opened up a new possibility: that people could disperse from overcrowded and expensive metropolises into other areas, taking their good jobs with them. Politicians who want to reduce regional inequality have a once-in-a-generation opportunity to help this trend along. They just need the imagination to seize it.
The previous tipping point for geographic inequality happened about 40 years ago. One academic study of 173 European regions shows that an era of regional convergence between 1900 and 1980 gave way to one of divergence as the shift from industry to services led to a concentration of jobs, productivity and opportunity in big cities. Winning localities, such as London and Paris, have become increasingly disconnected (politically as well as economically) from post-industrial regions such as Hainaut in Belgium and Teesside in England.
Policymakers’ approach to “levelling up” has often consisted of trying to lure jobs into struggling areas, either through “enterprise zones” with lower taxes, bespoke financial incentives to attract big employers, or by moving civil servants into the areas. There have been some successes, but more failures. Multinational employers drawn by tax breaks can have shallow roots, as Scotland’s “Silicon Glen” discovered in the early 2000s when the vast electronics plants it had enticed decamped en masse for lower-cost labour elsewhere. When Motorola shut its plant in Bathgate in 2001, 3,100 people lost their jobs.
Meanwhile, UK civil service jobs have been moved out of London, but the mix is skewed to lower-paid roles which have less knock-on impact on local economies. Almost 40 per cent of non-London roles are at the lowest grades, compared with 13.7 per cent of London roles. When the Office for National Statistics moved to Newport in Wales, 90 per cent of London-based senior staff chose to quit rather than move.
But Covid-19 could usher in a new and more organic form of rebalancing. The pandemic spurred a largely successful experiment in remote work. Perhaps employers don’t need to be cajoled out of cities at all; instead, employees could choose to move to cheaper areas and work from home, or a co-working space, and only travel to the office a few days a week. Young people could stay in their hometowns and still get a good city job. About 85 per cent of employees would like to work remotely at least two to three days a week after the pandemic is over, according to a survey by CBRE, the commercial real estate services company. Employers, keen to cut expensive office space, seem happy to oblige.
Let’s not be Panglossian. Plenty of city dwellers will stay put. Of those who move, it’s likely that more will go to fairly affluent areas within an hour or two of big cities than to former mining towns with poor transport links. Employers might decide that some roles can be done fully remotely, and move them offshore to cheaper countries.
But with the magnetic pull of cities finally on the wane, now is the moment for local and national policymakers to think creatively about how to attract professionals into areas that need them. Many are in beautiful parts of the country, with clean air and handsome houses built by wealthy industrialists. Old mills make great co-working spaces.
Installing superfast fibre broadband is an obvious place to start. Geography doesn’t have to be a barrier: the fastest broadband speeds in Great Britain are in rural Lancashire, where a group of residents pooled their resources to dig their own trenches to lay fibre.
The bigger challenge is to repair the basic public services that help determine whether a place is a good place to live and raise a family, such as schools and transport links. This is a necessary precondition for any kind of levelling up, and should have been the government’s priority all along. Instead, spending cuts in the UK since 2010 have averaged 31 per cent per person in the most deprived tenth of council areas, compared with 16 per cent in the least deprived tenth.
Reducing regional inequality will not be easy. But for the first time in 40 years, “levelling up” has an economic tailwind. Time to hoist the sails.
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