Department for Levelling Up. Following the Cabinet reshuffle last week, Michael Gove’s new ministry has been rebranded as the Department for Levelling Up, Housing and Communities (it used to be the Ministry of Housing, Communities and Local Government). The Government claimed the move reflected its “ambitious plans” to reduce regional inequality. The Government’s ‘levelling up’ agenda has been widely accused of lacking in substance, with the Prime Minister’s speech on the subject in July particularly criticised. 

Andy Haldane to head the Levelling Up Taskforce. Andy Haldane, former chief economist at the Bank of England, has been seconded to the Cabinet Office as head of a new ‘Levelling Up Taskforce’, despite being critical of the agenda in his previous role as chair of the Industrial Strategy Council (ISC) before it was axed by the Government in March.

  • Hints at approach. The ISC’s final paper warned that the Levelling Up agenda “appears over-reliant on infrastructure spending and the continued use of centrally controlled funding pots thinly spread across a range of initiatives”. The research looked at four best practice cases from abroad and argued that “sustained local growth needs to be rooted in local strategies, covering not only infrastructure but skills, sectors, education and culture”, where “sustained and large-scale public investment” can spread economic growth to all regions of the UK. See Haldane’s speech to Policy Exchange in June, “Making a Success of Levelling up”, for potential indications of his approach. 

Decentralisation of power. A common thread among those who work on geographic inequality is that the highly centralised structure of government in England plays a big role in perpetuating inequality, and localities and regions need more power if ‘levelling up’ is to be more than a slogan. 

  • Constitutional change. The Centre for Local Economic Strategies (CLES) proposes three principles to reshape local economic development: ”devolve, redirect, democratise”. Outlining a history of regional inequality and English devolution, the authors argue that 'levelling up' will require constitutional change, not "top-down tinkering". The innovation agency Nesta argues for a much greater role for Metro Mayors in leading local strategies. The Centre for Cities calls for more mayoral combined authorities at city-region level. 
  • Tory decentralisation. Ben Houchen, Conservative Mayor of Tees Valley, is attempting an interventionist approach to regional economic development. The New Statesman explains the “Houchenist Manifesto”. 
  • Decentralising regeneration. Centre-right think tank Onward argues that “the Government’s efforts to level up deprived communities are unlikely to be successful without devolution of power to local neighbourhoods.” It calls for the establishment of ‘Community Deals’ to help communities take ownership of assets to regenerate local areas. Director Will Tanner discussed the research on Newsnight here

Levelling up requires government spending. Many commentators are pointing out that the true test of the government’s commitment to levelling up will come in October’s Spending Review. With the Centre for Cities estimating the cost of closing the North-South divide at €2 trillion, comparable to the reunification of Germany), there are questions as to whether Chancellor Rishi Sunak will provide sufficient funding. 

  • Revising the fiscal rules? The Financial Times has reported that Sunak is planning to revise the Treasury’s fiscal rules, with a new target of ceasing to borrow for current spending within three years and a falling level of debt to national income by the end of the parliament. The FT’s Editorial Board has explained why this would be unnecessary and damaging. The Government’s current rules, which place a 3% of GDP limit on public investment, allow for very little additional investment over and above current commitments. 

Preventing a living standards crisis. Pressure to limit public spending is driving the cut to the £20 per week uplift to Universal Credit, a move that will exacerbate regional inequality, as poorer areas include larger numbers of poorer people. NEF’s Sarah Arnold explained why living standards are facing a “perfect storm” of the UC cut, national insurance increases and rising energy bills and food prices. See NEF’s Campaign for a Living Income for more.

Weekly Updates

Supply chains and climate change

Gas price rise sparks crisis in food and energy markets. A rise in global gas prices has led to shortages of the carbon dioxide used in the food industry, triggering fears of food shortages, and the collapse of a number of small energy suppliers. Both industries have called for government intervention.

  • “Bad bank”, underwriting debt or nationalisation? The FT reported that the government is examining options to prepare a “multibillion-pound emergency support package” for the energy sector, such as the creation of a “bad bank” to take on unprofitable customers from failed suppliers, government underwriting debt for larger suppliers, or Ofgem administering suppliers through the crisis “effectively leading to [their] nationalisation, with the government on the hook for any losses”.
  • Creating a greener, more resilient energy market. The Tony Blair Institute’s Tim Lord outlined the causes of the crisis and lessons for market design in the gas sector, suggesting that future crises can be prevented with measures to reduce demand through improved energy efficiency. Green Alliance’s Dustin Benton outlines a “3 point plan for unhooking the UK from fossil fuel volatility”. We Own It’s briefing on energy explains the case for public ownership of the National Grid, arguing that this would allow scaling up of renewables and lower bills for consumers. Torsten Bell explained how energy price rises interact with cuts to Universal Credit to create a “cost of living crunch” this Autumn.

Ranking national decarbonisation policies. Climate Action Tracker have released a global update to their rating system of national climate commitments (from “critically insufficient” to “1.5C Paris Agreement compatible”) which now includes assessments of current policies and developed countries’ climate finance commitments. The UK ranks as “almost sufficient”.

Climate finance update. The OECD has published its latest analysis of developed countries’ climate finance disbursements. The total in 2019 was $79.6bn, still $20bn short of the $100bn a year promised in the Paris Climate Agreement. Developing countries have warned that a failure to achieve the $100bn pledged risks bringing down COP26 next month.


Pandemic profits. Tax Justice UK has published research by Laurie Macfarlane and Christine Berry which identifies six companies in finance, outsourcing, retal, real estate, mining and pharmaceuticals which have made £16bn in excess profits over the pandemic. The report calls for a one-off windfall tax on pandemic profits, amongst other proposals to equalise taxation of capital gains and more. (Twitter thread summary here.)

Can taxing wealth help fund social care? Economists from the Progressive Economy Forum discuss their views on the government’s plans for financing social care and how to shift the balance of taxation towards wealth. A blog post details the discussion between economists Stewart Lansley, Danny Dorling, Josh Ryan-Collins, Will Hutton, Stephany Griffith-Jones, Geoff Tily, Jan Toporowski, Guy Standing and Sue Himmelweit.

Reforming property taxes. IPPR’s Shreya Nanda outlines the case for a proportional property tax to replace council tax and stamp duty. The report calls for a 0.5% tax on property values, resulting in lower bills for 75% of council tax payers and a reduction in regional and wealth inequalities. Fairer Share is the cross party campaign for a proportional property tax to replace council tax. 

Local government funding formulas. Onward analysed the local government funding formula and called for a funding floor of 90% of the core spending power of local authorities to provide needed funding for 30 local authorities, at a cost of £300 million per year. This would update the “highly regressive” and outdated funding formula based on 1991 property values (amongst other outdated data) and would rebalance local government funding in favour of poorer regions.

Labour proposes closing wealth tax loophole. The UK Labour Party has announced plans to raise up to £440m a year by changing the rules on “carried interest”, a tax loophole enjoyed by a small number of private equity managers

Work and macroeconomic policy

The economic benefits of social infrastructure. As the US Congress begins debating President Biden’s plans to boost spending on ‘social infrastructure’ (health, education, social care and childcare), the Washington-based Center for Equitable Growth brings together the evidence on why social infrastructure is a good investment for the economy

Jobs and wellbeing. Autonomy has published the first part of a report “reopening the debate” on the relationship between work and wellbeing. Authors David Frayne and Max Maher examine the evidence and claims around the effect of employment on wellbeing. The authors outline principles for “a less job-centred policy agenda” which “recognises the importance of job quality and the right to work, but also stresses the possibility of reconstructing unemployment, increasing the potential for time outside work to be secure, dignified and rewarding”.

Paradigm shift

Prosperity and justice after Covid-19. The IPPR is hosting a webinar this Wednesday (16:00-17:30) to relaunch their Centre for Economic Justice, with speeches from Heather Boushey, member of the Council of Economic Advisors to President Joe Biden, amongst others. The accompanying report looks at “how the government can deliver structural economic reform to build back better from the pandemic, in particular in the areas of good work, regional inequality, wealth, and the role of business.” Sign up here.