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Andrew Dunlop: Why English ‘levelling up’ matters to Scotland

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CABINET reshuffles are great political theatre. The personal drama of political high-flyers suddenly laid low by the indignity of losing their ministerial red box and Toyota Prius hybrid. New faces elevated. Full of promise. The hope of unearthing a nugget of gold amongst a pan-full of pebbles.

Reshuffles rarely live up to expectations. Could this one be different? Just maybe. Michael Gove’s been appointed Secretary of State for Levelling Up, Housing and Communities. He’s also Minister for Intergovernmental Relations – managing engagement with devolved governments – the first time the role’s been recognised formally.

He’s tasked with fleshing out the ‘levelling up’ agenda and responsibility for local government and English devolution. He also keeps the role improving how the UK union works. This could be a rare example of imaginative, strategic, joined-up government.

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The Govester’s a restless soul. Easily bored. With huge capacity for hard work. Who comes alive when presented with knotty policy questions. A genuine reformer with solid achievements in the bank.

The department he inherits is one of the least glamorous in Whitehall. Important. Worthy. Dull. Can you name three previous occupants of the job? If anyone can provide it with colour, it’s Mr Gove.

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From this unpromising berth, he has the opportunity to tackle one of the UK’s most intractable problems of the last 30 years – regional economic inequality. Holding back the UK’s economic performance and undermining its cohesion.

Tackling it should be the Johnson Government’s defining mission. Providing post-Brexit Britain with a renewed sense of purpose and the economic strength and credibility to remain an influential force for good in the world. No pressure, Michael.

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For ‘levelling up’ to have real meaning, ministers must accept two propositions. First, the UK will be more prosperous if prosperity across the country is spread more evenly. Second, prosperity will be spread more evenly if UK governance becomes less centralised. The scope of Mr Gove’s responsibilities is a sign, perhaps, of pennies dropping in Whitehall.

Consider the evidence. The UK’s one of the most economically unbalanced countries in the industrialised world. Disposable incomes in north east England, Wales and Northern Ireland are more than 40% lower than in London. And a recent NIESR study concluded, “as well as having some of the OECD’s most productive and dynamic regions and cities, in the UK today approximately one half of the population live in regions whose productivity is no better than the poorer parts of the former East Germany”.

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London and the south east are seen as the drivers of the UK’s economic success. The places where returns from public investment are highest, generating resources to fund better public services and support less prosperous regions. The priority’s to ensure the golden goose continues to lay its eggs.

So a course correction shouldn’t be about bashing London or the south east. However, the plentiful research, demonstrating in normal times the UK economy will grow more strongly and faster if regional disparities are reduced, needs addressing.

OECD evidence points to more decentralised governance leading to better balanced patterns of regional growth. Despite devolution to Scotland, Wales and Northern Ireland – to unprecedented levels by international standards – the UK remains one of the OECD’s most centralised states.

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International experience suggests where communities – with superior local knowledge – have greater control over resources, policies are better tailored to needs, public investment is more effective and beneficial ‘yardstick competition’ develops. Why is Manchester doing better than Newcastle? What can we learn from Birmingham or Glasgow? All leading to more transparent and accountable government.

One of the ‘northern powerhouse’ architects Jim O’Neill – former Goldman Sachs chief economist and Treasury minister – recently told a parliamentary committee that the earliest English devolution deal pioneers, Greater Manchester and the West Midlands, are showing tentative signs of “performing better than other parts of the country and, for much of (the) period, better than London”.

This matters for Scotland too. The Fraser of Allander Institute finds Edinburgh produces 2.5 times more economic value per head than East and North Ayrshire – Nicola Sturgeon’s home patch. “The poorest areas of Scotland have incomes that are much closer to north east England, one of the UK’s poorest regions, than to the richest parts of Scotland, in the east coast” the FAI concludes. The SNP promised to close the gaps. 14 years later they haven’t.

In his foreword to the Smith Commission Report, Lord Smith called for more devolution within Scotland. A call ignored by the SNP Government. Power is instead hoarded in St Andrews House. Local authority budgets are falling as a proportion of Scotland’s budget. And increasingly councils are funded by grants provided by Edinburgh HQ to spend on its – not local – priorities.

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Mr Gove’s responsibilities don’t extend to Scottish local government. And asserting Scottish exceptionalism is central to the SNP’s separation agenda. But Scotland’s regions can’t afford to be left behind when similar economic disparities apply here. City and Growth Deals show the UK and Scottish Governments can co-operate. Nicola Sturgeon says she’s willing to co-operate further. Actions speak louder and time will tell.

Dispersed power makes more difficult life for ministers and civil servants. Contending with stronger voices from the UK’s more peripheral regions, when establishing national priorities and allocating resources. Good news in my book. Perhaps then reducing regional inequalities will receive proper attention.

Negotiating successfully with and mediating between the demands of different tiers of government should be a core UK Government capability. And would certainly improve fast if devolution within the UK is extended. UK governance standards would rise with more challenge and competitive decision-making.

What’s needed is not devolve and forget, but devolve and support. Making best use of a more regionally-based civil service. Helping build local capacity and forging new partnerships with collaborative funding. Who better to lead the charge than the new Minister for Intergovernmental Relations? So be brave, Mr Gove. Level up by devolving down.

Our columns are a platform for writers to express their opinions. They do not necessarily represent the views of The Herald.

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