The communities abandoned by neoliberal economics are said to ‘feel’ left-behind. In fact, the loss they have sustained is real and has yet to be fully recognised, let alone repaired. This is a breach of the common good. The British Government’s Levelling Up White Paper in early 2022 was an impressive and coherent proposal, but despite support across the political divide, it has yet to be implemented. In this thought piece, Tim Thorlby takes a biblical perspective to analyse the failure of successive governments to ‘level up’ the wide regional disparities in the UK. He advocates that an ‘upside down’ approach to economics may deliver better results – an approach that is radical, social-purpose led and decentralised.
I grew up in Skegness, Lincolnshire, a seaside resort with long sandy beaches and a rather short pier (most of it blew away in a storm in 1978 and was never rebuilt). I left when I was 18 years old, along with many of my peers. I miss the sea and the big skies.
Skegness is one of the most deprived areas in the country. Many of our seaside resorts rank amongst the poorest areas in the country – typified by seasonal employment, low qualification levels and low wages[i]. Many of the young who go to university never return, as there aren’t many jobs for graduates. Every now and then, a Government scheme pays for a regeneration initiative here and there, but the story has changed little in my lifetime. If you want to get on, many feel that they have to get out.
The area hit the headlines in 2016 when the constituency delivered the biggest vote for Brexit in the UK – 75.6% for Leave. It was an act of frustration and anger from communities that feel overlooked. The status quo isn’t working for the people of this area; they want change.
So do I. I would like areas like my home town to become places where the younger generation want to stay. Too many towns in our country have been overlooked. If we care about the common good, a crucial element of this is ensuring that all parts of the UK have a fair share of our national enterprise.
1 – The UK’s unequal economic landscape
The UK is the most regionally unequal country in the developed world[ii]. People have talked about a North-South divide in England for my entire lifetime; it has persisted for generations.
In economic terms, London in particular stands out as the clear ‘winner’. Its economic performance is twice that of most other regions in the UK (measured as GDP per head). Over the last decade (2010-2019) its economic growth also outstripped every other region by some distance; it was four times that of the North East (3.1% per year cf 0.7% per year). This means that the economic differences between our regions are not only large but are continuing to widen each year[iii].
In the same way, London, and to a lesser extent, the South East, also have the highest productivity, the highest rates of job creation and the highest household income of all regions[iv]. There’s a clear pattern.
This inequality of jobs and wealth has consequences for social inequalities too. Differences in health and life expectancy now vary across the UK by an astonishing degree. A boy born in Blackpool in 2018 can, on average, expect to live a life nearly 20 years shorter than a boy born in Richmond-upon-Thames in London. For the last decade this divide has continued to grow[v].
Why is this?
Some regional differences are of course inevitable, but the stark divides in the UK go well beyond the experience of most countries. Historically, London and the South East have benefited from the centralisation of many key national institutions within the capital – including Government itself, but also other scientific, financial and cultural institutions, together with a disproportionate amount of the nation’s public and private investment. The way that the City of London operates, as a financial centre, is also an important driver in the ongoing process of inequality.
Organisations like IPPR North decry ‘decades of underinvestment’ by both public and private sectors in the North (and elsewhere), aided and abetted by the overcentralisation of public policy and power in Whitehall, London.
2 – Does it matter?
This is an important question. These regional differences do matter, for three reasons.
Firstly, it matters for economic reasons. There are some who argue that the present imbalance is somehow necessary to ‘UK Plc’ – that London is an ‘engine of growth’ for the UK, delivers wealth for everyone else and should be left alone. There is, however, plenty of evidence that regional disparities undermine the whole country’s economic performance[vi]. Talent and resources outside of the South East are underused, London is congested and its property prices excessive. So, even in purely economic terms, the present status quo is sub-optimal, as it leads to lower national growth than we might otherwise expect.
The ‘engine of growth’ argument also doesn’t work in terms of benefiting other regions economically. It turns out that London’s economy is not as well connected to the rest of the UK economy as it might be and so the wealth doesn’t ‘trickle down’ much to the rest of the UK. Even more telling, wealth doesn’t even trickle down to the rest of London, which is why London is not only the wealthiest region as a whole, but also retains the highest poverty rate in the UK as well – a city of extremes. Wealth is not water, it does not trickle down, people have to be equipped to acquire it[vii].
Secondly, our regional imbalance matters for social reasons. It leaves communities with widely varying opportunities; an historic pattern of injustice. Are the significant differences in life chances between areas really fair or acceptable? Should life chances be such a postcode lottery? It also undermines our local and regional family and social networks by requiring many young people in poorer regions to leave and find work elsewhere. The UK has one of the most geographically mobile populations in Europe because of our national pattern of inequality.
Thirdly, significant regional inequalities matter for political reasons. It has been called a ‘geography of discontent’ and has been identified as a key driver in recent political turbulence, including shocks like Brexit[viii]. Such depths of political division are not healthy for our politics in the long run. It will continue to be a source of political unrest, with further upheaval, unless addressed.
3 – What is being done to fix our regional inequalities?
Almost every Government in my lifetime has paid lip service to addressing the UK’s regional issues, although rather less has been achieved in practice, as disparities have continued to widen.
Most recently, successive Conservative Governments have sought to address the agenda, under various labels. The current strategy (launched by Boris Johnson) is ‘Levelling Up’. The 2022 Levelling Up White Paper included a comprehensive analysis of the problem.
Since 2010, Government has launched various national funds, including the Levelling Up Fund, the Towns Fund and the Shared Prosperity Fund. They have approved ‘devolution deals’ (ceding some powers from Whitehall to local authorities) and also initiated the setting up of ‘free ports’, soon to be complemented by ‘investment zones’.
A recent report by the NAO counted over £28 billion of UK and EU funds directed directly at this agenda in the UK from 2011 – 2020 through these various initiatives. Although this sounds like a lot, it boils down to £3-4 billion per year, which is a small percentage of national public expenditure. The NAO were less than flattering about the programme when they reviewed it in 2022, noting that its architects hadn’t made much effort to check ‘what works’[ix].
The disproportionate channelling of these public funds into Conservative constituencies, rather than those most in need of them, also sadly brings into question the seriousness with which this agenda is being prosecuted, as well as undermining the chance of success[x].
The most interesting innovation is perhaps the creation of a new UK Infrastructure Bank, which may yet help to boost investment beyond London in the longer term, although it is still being set up, so is one to keep an eye on.
4 – Taking a longer view
Successive Governments, of all stripes, over the last 40 years have tended to approach regional development with the same toolkit. It usually boils down to a mix of business support, funding for training and skills development and investment in infrastructure like roads and broadband, usually delivered through a package of programmes:
- Boost R&D – Provide tax incentives, and sometimes extra public funds, to boost R&D investment in both public and private sectors outside of London
- Promote investment – Set up area-based initiatives, like enterprise zones or investment zones, to boost job creation in disadvantaged areas through tax incentives and looser planning rules
- Area improvements – Provide pots of funding (like the Towns Fund) to improve various aspects of local life – town centres, marketing initiatives, business support, training and skills
- Devolution – Devolve some powers to local authorities to enable the delivery of local services in a more joined up fashion
- Relocation – Plus relocate a few Government agencies and offices out of London
Has it worked? No.
We know it hasn’t worked because regional differences continue to widen, even today; interventions help a little, but the problem remains.
Some interventions like enterprise zones or investment zones are often just not very effective; evidence suggests that benefits are small or result in existing businesses and jobs moving from place to place, without often achieving the intended goals[xi]. Such programmes can just make Government ‘look busy’.
The scale of intervention is also modest. Government expenditure in 2019-20 (pre-pandemic) was just under £900 billion. So, interventions of £3-4 billion each year amount to less than 1% of government spending. It barely moves the dial.
So, ‘business as usual’ – just dishing out a few more pots of government money – doesn’t work. Much more significant change is required which affects the very structure of our national economy.
5 – A biblical perspective: upside down economics
If we are serious about tackling wide regional imbalances then we need to be prepared to take more radical action than we have been used to – tinkering round the edges clearly does not work.
But the approach itself – the toolkit we use – also needs rethinking.
In particular, the problems we face are not just economic, but social and environmental too. Simply boosting GDP pc each year won’t actually be enough, as there are social and environmental issues we need to address too. As the failure of ‘trickle-down theories’ shows, just making a region wealthier overall actually does nothing for many of its residents, as they don’t end up sharing it.
We need a more radical and a more rounded approach to tackling our national disparities. An approach to Levelling Up which delivers for the common good will look quite different to current strategies.
A biblical perspective suggests an approach which is not just narrowly focused on increasing material wealth, but which also grasps the wider realities of how society actually works.
The biblical view of markets and enterprise is that they are important and have their place, but they also have their limits. The Bible is clear that land, people, and capital are too important to be traded freely as though they were just commodities[xii]. Markets operate within a broader social reality: our relationships with each other are covenantal, not just contractual; in God’s view, we have mutual obligations to each other, going beyond economics. Markets therefore need to be designed to serve, and support, healthy families and rooted communities, not the other way round.
These ideas are not new and are deeply embedded in Catholic Social Thought featuring in papal encyclicals from Rerum novarum (1891) to Fratelli tutti (2021), all of which emphasise the importance of human dignity and healthy social relationships as the framework for the market to operate within.
A biblical perspective on the economy suggests turning some of our assumptions upside down in order to get a better sense of a way forward:
- We are more than just economic units, so work should be meaningful and dignified, fairly paid and available to those who want to work. We cannot treat people as though they are expendable, or just robots, if we are made in the image of God (Genesis 1). This means ensuring that all jobs, of the ‘head, hand or heart’ are all treated as valuable and decently paid. High skill/high tech jobs are great for some, but the rest cannot be left with low skill/low pay, there must be meaningful and fairly paid work for all, and it should support family life, not undermine it[xiii].
- Economic performance matters. We should not waste resources, viability is essential and enterprise is a wonderful thing, but narrow calculations of economic value cannot be allowed to drive decision-making, the social and environmental issues need to be fully considered too. Businesses need to recognise the valid interests of all stakeholders (employees, customers, neighbours, future generations) not just shareholders, so that social and environmental purposes are designed into business activities and not afterthoughts. The covenantal relationships between us demand nothing less. Every business should be purpose-led, not profit-driven.
- We should value, and invest in, small and medium-sized local enterprises, not put our trust in large transnational businesses which are so footloose that their operations are here today and gone tomorrow. Too many communities have been hollowed out by the sudden departure of a big business in hunt of greater profit margins elsewhere. The Bible suggests deep scepticism about centralised power, as it usually leads to the abuse of power and injustice, whether in business or in government (see Leviticus 25 for a case study in how to prevent the centralisation of wealth). Decentralised power is an important way for individuals and communities to fulfil their potential and exercise agency, and it protects against monopoly pricing and excessive rewards. In practice, this means ensuring that national government can hold ‘big business’ to account for things like tax, and recognising that smaller businesses are more likely to be locally accountable and rooted and to contribute to social wellbeing.
- The communities in every town and city matter and have value, together with their local heritage and character. Everywhere is ‘somewhere’. When did we decide that markets were more important than communities? The Old Testament ‘jubilee’ elevated the idea of ‘rootedness’ and continuity as a basis for healthy communities. This is an agenda the church should be well placed to grasp. It means giving local government the powers it needs to invest in its localities, ensure houses are built for local people and protect local character. It means valuing, and investing in, local civic society in all its diversity. It also has implications for how we manage housing markets – houses should be homes first and foremost, not investments for distant landlords. This is not nostalgia, it is about what makes for vibrant and prosperous local community life. We should not be apologetic about wanting to build more rooted and settled communities to which people feel proud to belong.
A biblical perspective points to a vision which offers a revised set of priorities – an ‘upside down economy’.
The vision is of a vibrant, active market that creates jobs and allows enterprise to flourish, going hand in hand with action to strengthen our social fabric and protect our environment. We want to see healthy families, strong and rooted communities and a planet that breathes easily. Greater local control and agency must also be part of the approach, unlocking community-level initiative and creativity. We should harness the power of markets but ensure that those markets serve social purposes. This approach is radical, social purpose-led and decentralised.
6 – Ideas for renewing our regions
In practice, what tools might we use to renew our regions and our ‘left behind’ communities? Here are some suggestions for the sorts of policies and practices that might take this forward. This is by no means a comprehensive list, nor is much of it new – it is presented for discussion:
- Living Wage-based employment floor – A move towards ‘decent jobs for all’ needs to address low pay as part of its approach. We are a wealthy 21st Century country with Dickensian poverty in some quarters – it is not beyond us to fix this. Raising the employment floor could include:
- Raising the Minimum Wage for all jobs and for all ages to match the real Living Wage.
- Statutory Sick Pay should be modernised to match the real Living Wage, and be paid from day one of any sickness
- Zero hours contracts for jobs earning below £30k pa should be outlawed
This would pose significant challenges for some low-pay sectors (like hospitality, retail and social care) but we need to grasp the low-pay nettle and work it through. Sectors that rely on poverty pay will need to rewire themselves, in partnership with Government. The economic and social dividend across the UK would be enormous. Good businesses are already moving in this direction, ahead of Government.
- Decentralised government – Local government should have serious and substantial decision-making powers and budgets devolved, to cover planning, development, infrastructure and public services, as well as tax-raising, borrowing and investment powers. This will empower localities to make better decisions for themselves and develop places with character and pride. The same principles should apply to other public services too – decisions should be taken as close to those affected as possible. It works well in many other European countries, so why not here?
- Local and regional purpose-led banks – This may not set the pulse racing for many, but locally-rooted and accountable financial institutions charged with supporting business creation and growth in their own areas, could help to accelerate growth in many parts of the country which our current national (and international) banks won’t touch with a bargepole. Maurice Glasman has written elsewhere about how our German cousins get this right. These new banks could initially be pump-primed by public funds (or the National Lottery), but would be independent and would have a remit to support small business and social enterprise in all sectors with venture capital, loans and grants, as well as investing in larger businesses, improved local infrastructure and the transition to a ’green economy’. They could potentially play a lead role in ramping up renewable energy generation across the country, investing in new facilities and creating skilled jobs across the country.
- Rewarding work not ownership – our economy has become increasingly ‘rentier’ in nature in recent decades, with ever more income accruing to the owners of assets (like property and shares) and less to those who earn an income by working[xiv]. For example, you will have read stories of banks making eye-watering profits from shuffling money around in clever ways – well someone has to pay for these profits, and it turns out that it’s often you and me. This is a complex area but it needs urgent attention as it is part of the problem as to why wages have not been rising much in recent decades. These systemic abuses of economic power need to be addressed through market regulation.
- Taking vocational education seriously – We write off many young people who don’t belong in our universities. This is a national tragedy. We need to rebalance public investment so that vocational education and FE are properly funded for the first time in generations, and so that a slightly smaller HE sector is better plugged into local and regional life and contributes to more settled communities. Young people should not have to leave their regions, if they don’t want to, to make their way in life – every region should have a future.
- More purpose-led businesses – Every business should be a social-purpose business. The shift of more enterprises towards purpose-shaped operations would deliver significant social, economic and environmental dividends right now, regardless of Government action.
7 – Closing thought
For all of the towns and communities in our nation which feel overlooked and left out, there should be hope. The current status quo is not inevitable. Maybe one day the pier in Skegness will be rebuilt. Change requires imagination and courage. Are we up to it? Is this the right way to go? What do you think?
© Tim Thorlby
Tim Thorlby is Director of Beautiful Enterprise where he publishes monthly blogs exploring business, faith and purpose. He has spent much of his career in the private sector, but has also worked in the charity and public sectors. He has been CEO of Clean for Good, a pioneering social business in the cleaning sector established by a group of churches and charities, Director of the Jubilee Centre and Development Director at the Centre for Theology and Community. His background is in research, management and building purposeful organisations.
[i] Skegness is part of East Lindsey, one of the 10% most deprived areas in England, according to the ONS. For data, see: Beatty, C et al (2008) England’s Seaside Towns: A benchmarking Study, DCLG | Access here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/7624/englishseasidetowns.pdf
[ii] The UK ranked top out of 27 developed nations. Data taken from: Bourquin, P. et al (2020) The IFS Green Budget 2020, IFS | Access here: https://ifs.org.uk/publications/ifs-green-budget-2020
[iii] Tobin, J. (2021) Inequalities of region and place, House of Lords Library Briefing | Access here: https://researchbriefings.files.parliament.uk/documents/LLN-2021-0027/LLN-2021-0027.pdf
[iv] Raikes, L. et al (2019) Divided and Connected: Regional Inequalities in the North, the UK and the Developed World, IPPR North | Access here: https://www.ippr.org/research/publications/state-of-the-north-2019
[v] The Health Foundation (2020) Regional differences in health are large and growing | Access here: https://www.health.org.uk/news-and-comment/charts-and-infographics/male-healthy-life-expectancy-from-birth
[vi] Cingano, F. (2014) Trends in Income Inequality and its Impact on Economic Growth, OECD Social, Employment and Migration Working Papers, No. 163, OECD Publishing, Paris| Access here: https://www.oecd-ilibrary.org/social-issues-migration-health/trends-in-income-inequality-and-its-impact-on-economic-growth_5jxrjncwxv6j-en
[viii] McCann, P. & Ortega-Argilés, R. (2021) The UK ‘geography of discontent’: narratives, Brexit and inter-regional ‘levelling up’ in Cambridge Journal of Regions, Economy and Society, Volume 14, Issue 3, November 2021, Pages 545–564 | Access here: https://academic.oup.com/cjres/article/14/3/545/6366312
[ix] National Audit Office, (2022) Supporting local economic growth, NAO | Access here: https://www.nao.org.uk/wp-content/uploads/2021/06/Supporting-local-economic-growth.pdf
[x] The first two rounds of the Towns Fund allocated £3.6 billion to 101 towns, of which 89 had Conservative MPs. News story reported in May 2022: https://www.yorkshirepost.co.uk/news/politics/almost-90-per-cent-of-ps36bn-towns-fund-cash-winners-represented-by-tory-mps-3687377
[xii] The theology of this has been set out in numerous publications from the Jubilee Centre over the years, for example: Schluter, M & Mills, P (2012) After Capitalism: Rethinking Economic Relationships, Jubilee Centre
[xiii] A fuller theological case for the role of fair pay and dignified work in supporting family life can be found here: Williams, M (2022) Insight Paper: A biblical response to working poverty, Jubilee Centre | Access here: https://togetherforthecommongood.co.uk/leading-thinkers/a-biblical-response-to-working-poverty
[xiv] For a basic introduction read: https://www.bennettinstitute.cam.ac.uk/blog/rentier-capitalism-uk-case/
This article was featured in T4CG’s November 2022 Newsletter. An earlier version was previously published on http://www.beautifulenterprise.co.uk.