The real economic problem with the levelling-up con job

Levelling up is back, and so is the controversy about North-South fairness. The Tories just can’t seem to shake that, even with slickly professional Rishi Sunak at the helm.

The latest fuss has been sparked by Labour accusations that more of the £2.1bn second round of the government’s levelling up fund is going on projects in the prosperous South of England as opposed to the economically disadvantaged North.

“Levelling up” was adopted as a manifesto pledge by Boris Johnson to reward red-wall voters with cash for schemes to help economically disadvantaged communities.

It has lots going for it as a slogan. It is essentially positive, and says to voters in affluent areas: “We’re not opposed to you being rich and successful. We just want them to be, too. Now let’s sit together and sing a big-tent Tory Kumbaya.”

Of course, the problem is that levelling up has fallen far short of being a coherent policy. The levelling up fund is about as good as it gets, and even that now appears to be spending not just on projects in Tory seats – especially Tory marginals – but on those in the prosperous South East. Even in London, of all places; the overheated capital.

Michael Gove says critics are missing the point. More is being spent per capita in northern England, he declared while on media rounds promoting the policy. Which, of course, makes it seems as if he is playing games with numbers.

Does he have a point? It is quite true that northern England lags behind the South on almost every measure you care to look at – wages, health, educational outcomes, life expectancy, etc. This has long been known.

But that doesn’t mean that there aren’t pockets of dire poverty in the South, and especially in London. Take a wander around a council estate in Tower Hamlets, a borough overlooked by the City of London’s soaring temples of finance. You’ll see it right in front of you.

However, this goes beyond a North-South issue. The real problem with the levelling up fund is less where the money is going than what it is being spent on, and what the government is neglecting at the same time.

“Landmark levelling up fund to spark transformational change across the UK,” trumpeted the announcement of the successful bids, one of which is Eden Project North, since renamed Eden Project Morecambe.

The Eden Project in Cornwall, with its distinctive multifaceted domes, is a hugely popular attraction. Its aims, such as the preservation of biodiversity, are laudable. A second base will be a big deal. The government cash will unlock external sources of funding for a project that will draw hordes of visitors, and their wallets, to the town. What’s not to like?

Morecambe falls within Lancaster City Council, which covers a fair chunk of northwest England. Per the Lancaster Guardian, the local authority is grappling with a £2.4m hole in its 2023-24 budget as a result of ballooning costs, the increasing demands being placed on its services, and – ding ding ding! – “government underfunding”.

The council has vowed to protect frontline services (collecting bins and the like). It has also imposed a recruitment freeze, cut down on management costs, consolidated office space, and increased council tax, all of which are sensible steps. But this won’t be enough.

Anne Whitehead, the councillor with responsibility for finance, told the paper: “The reality is that we will not be able to provide all our services at the current level, so we all need to prepare ourselves for some tough decisions.”

Which is code for cuts, of course. To what?

Councils’ discretionary spending includes everything from leisure centres to libraries to parks – services that residents, and sometimes also small businesses, rely on, which play an important role in community life.

Eden Project Morecambe could be an important economic engine. But what will be lost in the interim? How much economic damage will be done? That deficit? It is projected to hit up to £7.6m in future.

Therein lies the con job at the heart of the levelling up fund: lots of flashy projects the government can tout, even as the everyday stuff declines and local communities decay.

It really doesn’t matter whether the money is spent in the North, or the South, or in London: the net result of the government’s austerity policies, rebadged and reheated and forced upon it by its own dreadful financial mismanagement, is the same.