Cartoon Stacking Coins UK Economy Ladder

What will Levelling Up look like under a new prime minister?

Levelling Up was a flagship policy of Boris Johnson’s 2019 election win. Three years later and the gap between government spending on London and all other regions of the UK has only widened.

In February this year, £11 billion of government funding was announced in a Levelling Up White Paper, however a report from the Institute for Government (IfG) argues that this would not go far enough to address regional inequality. On average it would increase wages outside of London and the Southeast by £400 a year, but this would not create the significant change in the UK’s regional economy that the Government had promised. The selection of a new Prime Minister on Sept 5th therefore provides an opportunity for Levelling Up to regain political momentum and become a priority for policymakers.

If elected, Rishi Sunak has confirmed that he would continue £100 billion of investment in infrastructure to support levelling up, which he approved as Chancellor. Sunak also stated he would carry out the commitment to extending devolution, as outlined in the Levelling Up White Paper. Ben Houchen, the Tees Valley mayor who has been nicknamed the Conservative Party’s ‘Mr North’, has publicly backed Sunak, despite questioning both candidates’ commitment to Levelling Up earlier in the campaign. Sunak’s commitment to Levelling Up has also been criticised by the opposition and press, after he revealed in a speech to Conservative members that he tried to reverse Treasury formulas “that shoved all the funding into deprived urban areas”, when he was still Chancellor.

Liz Truss has also pledged to continue levelling up, but “in a Conservative way”. In contrast to Johnson and Sunak’s preference for infrastructure investments, she has focused on Levelling Up through tax cuts and deregulation. By pledging a series of ‘low-tax zones’ across northern England, along with lower business rates and fewer planning restrictions to encourage investment. The low-tax zones are intended to promote growth and reverse decline in ‘Red Wall’ seats that the Conservatives won in 2019 for the first time. Truss has also conveyed her motivation for supporting Levelling Up, by publicly sharing her experiences of growing up in Leeds, where she felt her peers at school were let down by a lack of opportunity.

However, Liz Truss’s commitment to Levelling Up has already been criticised. At the beginning of August, her campaign team floated the idea of ending national pay deals for public sector workers and instead use the regional cost of living to calculate pay. This would have resulted in £8.8 billion being cut from public sector pay, for those living outside London. Mr Sunak’s campaign were keen to point out that this would leave nurses, police and teachers facing a £1,500 reduction in annual salaries. Due to media pressure and Conservative politicians describing the policy as “levelling down”, the idea was abandoned.

Both candidates to be the new prime minister have run on a platform of significant tax cuts, with growing concern from regional politicians that this may be funded through cuts to infrastructure investment. In the short-term the proposed tax cuts may appeal to Conservative Party members voting in the leadership campaign. However, some fear that the longer-term consequence might be less money for Levelling Up policies. By the time of the 2024 general election, the new prime minister’s record on Levelling Up could be of huge electoral significance. It should therefore be a priority for Rishi Sunak or Liz Truss to re-emphasise the government’s commitment to regional growth.

Better directors for a better world

The IoD supports directors and business leaders across the UK and beyond to learn, network and build successful, responsible businesses.
Internet Explorer
Your web browser is out of date and is not supported by the IoD website. It is important to update your browser for increased security and a better web experience.