Levelling up

Mike Hedges MS

The Institute for Fiscal Studies defines “levelling up” as:

“A ‘left behind’ area, in need of ‘levelling up,’ is characterised by broad economic underperformance, which manifests itself in low pay and employment, leading to lower living standards in that area. Behind these factors lie other considerations such as poor productivity, which in turn may be associated with a low skill base. The health of the population may also be relatively poor: in some cases, this could be a legacy of deindustrialisation or long-term unemployment, as well as deep-rooted socio-economic issues.”

The areas which are considered “left-behind” or in need of “levelling up” are often old industrial towns in Britain which were strongly affected by deindustrialisation with the number of people employed in manufacturing industries between 1979 and 1990 declining by 30 percent.

The pace of job losses was severe between 1979 and 1983 with two million jobs lost in the industrial sector. The worst affected industry was coal mining which employed 220,000 people in 1985 falling to below 10,000 at the end of the 20th century followed by steel which lost 200,000 jobs. Both coal and steel were major industries in Wales and the job losses were devastating to the Welsh economy.

The UK government published The Levelling Up policy paper on 2 February 2022 stating levelling up will require:

1. boost productivity, pay, jobs and living standards by growing the private sector, especially in those places where they are lagging.
2. spread opportunities and improve public services, especially in those places where they are weakest.
3. restore a sense of community, local pride and belonging, especially in those places where they have been lost; and
4. empower local leaders and communities, especially in those places lacking local agency.

Due to its relative economic position Wales received just over €5 billion in European funding between 2014 and 2020 which was targeted toward those disadvantaged regions in need of levelling up. Some of the projects which were funded by the EU to improve local areas were:

• Funding for apprenticeships and traineeships, amounting to £233 million in West Wales and the Valleys and £48 million in East Wales.
• Funding for the Communities4Work, Bridges2Work and Active Inclusion Wales programmes that support the long-term unemployed into work, consisting of £45 million in West Wales and the Valleys and £9 million in East Wales.
• The Wales Business Fund which provides financial support to small and medium sized businesses (via Finance Wales), with a £75 million contribution for West Wales and the Valleys and £10 million for East Wales.
• £81 million for road and rail schemes in West Wales and the Valleys.
• £38 million for town centre regeneration in West Wales and the Valleys.
• £28 million to promote tourism by creating “must visit” destinations in West Wales and the Valleys.

The Welsh government should continue to support the relocation of civil service jobs from London to the different regions of the UK. As of March 2021 484, 880 people were employed in the home civil service. The median pay across the whole of the civil service was £28,180, for senior civil servants, it was £81,440, and for administration officers, £20,500. The primary income per head in Wales was £17,972 in 2019 which shows that these jobs would be paying higher than the average primary income. However, the decision about where to relocate civil service jobs must be based on the skills of the local economy.

The benefit of relocating public sector jobs to new areas is each job creates between 0.25 and 0.37 additional jobs in the private sector in the area.

We need the Welsh Government to continue to push for tidal lagoon projects to be approved by UK government. The UK has around half the potential wave and tidal resources of Europe and could have met around 20 percent of the UK’s electricity demand in 2018. There was potential for six tidal lagoons to be built around the coast of Wales at Swansea, Newport, Colwyn Bay and Cardiff.

Below is a series of actions that I believe will improve the relative economic position of Wales.

1. Replace the EU funding without taking into account funding that is allocated but unspent from previous rounds of European funding.
2. Relocate more civil service jobs from London and the south east to Wales.
3. Support the tidal lagoons across Wales starting in Swansea.
4. Following the Swansea tidal lagoon look to create an array of tidal lagoons around Wales.
5. Increase spending on schools. colleges and adult education to increase educational attainment.
6. Treat Universities as hubs for economic growth.
7. Create science parks in collaboration with the Universities but crucially led by the universities.
8. Create schools of entrepreneurship in universities available to everyone.
9. Support fast growing industries that are not location dependent such as ICT and life sciences.
10. Support fast growing companies.

Mike Hedges is the Senedd member for Swansea East

This a summary of a pamphlet published on https://mikehedges.org.uk under articles