Local government, business leaders and Londoners themselves are left with the task of addressing inequality in the capital, writes the chief executive of Kensington & Chelsea RBC.
The Leveling Up White Paper has changed the landscape for discussions of geographic inequality across our country. It has been criticized for its lack of specific policy instruments and for the absence of a clear resource plan to achieve its objectives, but its general framework contains the right approach to support national economic development.
Firstly, this is an article aimed at the four “nations” of the UK and not just England. Of course, most of the paper focuses on the specific challenges facing towns and regions in England, but not since asymmetric devolution to Scotland, Wales and Northern Ireland, no book White did set a framework for urban change for the whole of the UK.
This clearly reflects the broader political mandate given to Michael Gove compared to previous Community Secretaries. Its role extends across the union, and this may indicate the longer-term reach of the Department of Levelling, Communities and Housing itself.
Second, the white paper attempts to situate economic development policy within a coherent understanding of the interrelation between the complex economic geography of the UK and the complex socio-economic inequalities that exist and persist in our country.
place or people
But it is easier to describe inequalities and geographic variations than to interpret why disparate results arise between, say, different towns and cities. And it is easier to interpret why some places succeed while others fail than to predict which policy interventions are likely to reduce the unequal outcomes between these different cities. These truisms have plagued economic policy for the past 80 years.
Do the jobs go where the people are, or do the people go where the jobs are?
Indeed, economic success is too often described in terms of the comparative advantage of one place over others, when in reality success stems from the comparative performance of people and businesses in those places.
Successful places tend to have better resources, better capabilities, and better business and civic leadership. Some of the ingredients of success are structural and depend on the nature of the place; other ingredients are contingent and depend more on the character of people and companies. Moreover, a dilemma persists in economic geography: do the jobs go where the people are, or do the people go where the jobs are? This is probably a case where both trends are happening at the same time.
The white paper rightly says that while talent is evenly distributed in our country, opportunity is not. And he rightly argues that leveling up requires a focused, long-term action plan and a clear framework to identify and act on the drivers of current spatial disparities. In particular, he points to the market failure that occurs in places that are “locked in a balance of low growth, poor health, and self-perpetuating well-being. Helping places get out of this trap would potentially unlock a place’s growth by boosting skills, productivity, health, income and quality of life.
Two expert commentators have already identified some key issues. First, Andrew Carter of the Center for Cities suggested that the focus for bridging the economic gap between places should be on the potential for improving productivity in each place. Its response to the White Paper report on the “productivity” gap between towns, cities and regions is to propose a “productivity potential target” for each location. Thus, upgrading would consist in identifying for each place, and each spatial scale, what can be concretely achieved to increase economic productivity.
Secondly, Henry Overman of the LSE rightly cautions in his article for LGC against a fixation on policies that focus solely on place and locality. His argument underscores the white paper’s emphasis on the importance of investing in the skills and capabilities of people in these places. It is clear that investment in the physical capital of “left behind” towns and cities is desperately needed. But having a balanced approach is vital for economic renewal; which also invests in human, social and institutional capital.
Cities “being left behind” need to attract significant financial capital from the private sector to help their development – and the white paper has some good suggestions for doing this. But development should aim to connect jobs, businesses and people in clusters across cities and more interconnected urban regions.
Link, connect and regroup
England, in particular, has, by international standards, an extraordinarily high population density. This means that each locality has close ties with other localities. And investments in one location will always trickle down to people and businesses nearby. In this context, bridging, connecting and aggregating strategies will perform better than more limited approaches that are too clearly laid out on the borders of local governments.
This should warn us that London’s continued positive growth is neither predestined nor guaranteed.
The largest center of economic activity in the United Kingdom is in London. The absence of an analysis of how best to support London’s global success speaks volumes. Yes, London was the largest city in the world at the end of the 19th century, but between around 1940 and 1985 London was actually in steady decline and it wasn’t until the mid-1980s, following the financial deregulation of the City, that London’s decline began to reverse.
This should warn us that London’s continued positive growth is neither predestined nor guaranteed. London is a unique global city with an economy based on finance, innovation, services and consumption. It has a global reach due to its role in financial commerce and its rich multicultural vibrancy – it really is the world in one city. However, its over-reliance on goods, food, materials and products from elsewhere, and its challenges to being green, affordable and livable are very significant obstacles to its continued growth. The capital is trying to build a fairer and more sustainable path to recovery from the economic scars of the pandemic and the accompanying shutdown measures.
Amazing variety of inequalities
But a focus on the UK’s second cities is also needed. The major metropolitan areas outside of London (Birmingham, Manchester, Leeds and Glasgow) have each made great strides in reviving their economies over the past two decades. They are very competent and confident city-regions. But they are probably too small. Greater Manchester’s success in better integrating its urban region through transport and civic action points to an approach to achieving scale. Birmingham and the wider West Midlands are developing a parallel, if slightly different, approach.
All of these cities are now considering how to increase their scale and internal economic diversity, so as to further increase their productivity potential.
By contrast, London is so vast and polycentric that it contains a vast internal variety: of economic productivity and economic potential. But London also harbors an astonishing variety of inequalities and life opportunities. Of course, every place contains inequalities; none more so than Kensington and Chelsea, where income inequality is the highest in the UK. But there are more than 2.4 million people living in poverty in London, more than twice the total population of Birmingham. Additionally, more than 800,000 children in London live in poverty – more than the entire population of Leeds.
The white paper acknowledges these inconvenient truths about London and contains a summary of spending in London to date as well as some key private sector investment schemes, such as the Thames Freeport in Tilbury. But it lacks a sustained focus on the massive task of leveling the nation’s capital for the next generation. It seems that this task falls to London’s local government, its business leaders and the creative entrepreneurship of Londoners themselves.
Barry Quirk, Managing Director, Kensington & Chelsea RBC