Boris Johnson's Leveling Up Agenda Is Missing Something

(Bloomberg Opinion) -- After delivering Brexit and managing the Covid-19 pandemic, the main focus of Boris Johnson’s government has been on what he refers to as “leveling up” the U.K. economy — doing more for regions and communities that were left behind over the last half century and which provided strong support for leaving the European Union.

But while his aim is clearly to reduce the income and opportunity gap between the wealthier south of the country and the north, the agenda for tackling the problem remains vague. A July speech devoted to the subject was big on generalities and short on policy specifics. So far, the government also has no way of evaluating the impact of its efforts.

Until now, much of the discussion about how to improve areas in the Midlands and north of the country — known as the Red Wall since they were reliably Labour before switching to the Conservatives during the 2019 election — has remained narrowly focused on building bridges and improving rail connections. That, it turns out will be difficult, if not impossible to afford (a new report from the Center for Cities puts the cost of closing the income gap at 2 trillion pounds or $2.76 trillion).

But it’s not just a question of cost. Data gathered for the Legatum Institute’s recently published U.K. Prosperity Index (which I led) paints a very different portrait of the key gaps that Johnson will need to address if he is to deliver on his pledge and retain his hold over the Red Wall.

It’s certainly true that where transport networks are slow or lacking, as they are in some areas in the north or on east-west routes, workers do not commute into cities or neighboring towns for jobs. And yet Red Wall areas are not, as commonly thought, lagging in this respect; they are less congested than the rest of the U.K. and even have shorter travel times by public transport to the nearest major rail hub. And Red Wall areas lead the rest of the country when it comes to accessing broadband and being connected to gas networks. They also already tend to have better quality roads.

Rather than an infrastructure deficit that is holding these parts of the country back, the principle culprits are combination of other factors, including an adult skills crisis, lack of access to business loans for small and medium-sized businesses, health inequalities and crime rates.

In 43 local authority areas that encompass Red Wall constituencies, around a third more adults than the rest of the country have no tertiary education or professional qualification. And while around 40% of U.K. adults have the equivalent to one or two years of studying at university, this falls to 31% in Red Wall areas.

Other gaps also need addressing. On average small- and medium-size enterprises (SMEs) in the Red Wall can access 3,205 pounds ($4,466) of business loans compared to a national average of 4,555 pounds. And the number of small businesses in Red Wall areas that have been successful in raising equity finance is about half as much as the national average. Unsurprisingly, business start-up rates are 17% higher in non-Red Wall areas.

Johnson’s leveling up agenda must also address major health inequalities and high rates of crime. Similar to debates in the U.S. around the Trump vote, those living in Red Wall areas are more likely to suffer from diabetes, disability, alcohol misuse and obesity, leading to lower life expectancy and higher death rates in all age groups. There are 31% more homicides in Red Wall areas compared with the national average. The fear and consequences of crime discourage community building, entrepreneurship, educational advancement and other leveling factors.

Nearly two years after the 2019 election campaign, we now have a clearer picture about what is holding these areas back. The data collected on nearly 400 local authority areas can help academics and policy makers keep track of which local-level metrics are changing and in what geographical areas and will help in holding government to account.

What is clear is that, given the complexities and varying needs of Red Wall areas, leveling-up should not be just a top-down strategy. Instead, the government’s “white paper” on the subject, to be published in the autumn, should set out detailed proposals to help councils build far more supportive investment environments for small and medium sized local businesses, where they can easily obtain capital and skilled local workers. And that must include a plan to measure “leveling-up” over time so that progress can be assessed; without clear tracking, the effort will likely be wasted.

As Johnson likes to say, talent is spread evenly across the country but opportunity isn’t. He has tied his own political fortunes to his ability to address that gap. That will require more than slogans and building bridges.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Matthew Goodwin is a professor of politics at the University of Kent and director of the Center for U.K. Prosperity at the Legatum Institute.

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