Labour has struggled to deliver regional growth and is at risk of squandering the best opportunity in a generation to address regional inequalities, a new report authored by Ed Balls and four other economists has argued.
The primary failure of the Keir Starmer government, they argue, is that it has not developed a consistent growth and productivity strategy. The report claims “early announcements were fragmentary or maintained a ‘Golden Triangle’ focus on the greater South East of England; and the links between Local Growth Plans or other ambitious bottom-up plans such as the Northern Investment Prospectus and different national plans remain unclear”.
The report praises certain implementations of pro-regional growth policy, including Angela Rayner’s work as Secretary of State for Housing, Communities and Local Government. But it condemns the continuing absence of an “underlying theory of growth” or a “central sense of how the different economies of the UK relate to one another”.
“Regional Growth Two Years In: Is the government on track to boost UK growth by closing regional divides?”, is published today (8 July), in association with Harvard, King’s College London and the Gatsby Foundation. It outlines ten recommendations first made by these authors in 2024 in a preceding study. Of the ten, the government is on track to accomplish only three.
Mixed progress is very much the defining tone of the report – successes seem to be the result of an individual politician’s will, not decision-making infrastructure or any guiding vision. The report emphasises the need for political leadership and a clear plan for radical devolution. “The new prime minister and chancellor need to be far more forceful in their commitment to decentralise, making plain that advancement through the government’s ranks depends on a willingness to take on Whitehall’s centralising instincts and devolve power within England.”
One of the report’s more novel suggestions is to automatically elevate all sub-regional mayors and first ministers to the House of Lords. In 2022, Starmer had pledged to scrap the second chamber, a pledge that was later watered down to abolishing hereditary peers. According to the report, “Lords reform has been reduced to symbolic, minimal changes” and by giving sub-regional and national leaders peerages, the parliamentary estate would be forced to provide support to the devolution agenda.
Andy Burnham’s success in Greater Manchester is held up as an example of what devolution has the potential to do. Britain’s second city is mentioned no less than 29 times in the report. Since devolution, it is noted, Greater Manchester’s economy has grown at roughly twice the national rate, and Andy Burnham has used local powers to deliver in ways Whitehall could not. The Bee Network and Manchester’s £1 billion Good Growth Fund are two projects that the authors want to see emulated elsewhere.
The authors claim the government has not done enough to reallocate capital spending, which is key to materially supporting devolution. “The Green Book Review 2025 [a Treasury document] promised to support ‘place-based business cases’ and to stop Treasury guidance being ‘wielded against’ any region,” they write, “but stopped short of the compensatory reallocation we called for.”
John Major, Tony Blair and George Osborne all told the report that they all regretted not introducing a decisive regional inequality strategy when they were in government. Effective delivery will require renewed central leadership, and cabinet unity behind decentralisation despite the short-term political risks. But with Britain’s most well-known devolved politician set to shortly become prime minister, radical projects like this will surely be on the agenda.
[Further reading: Nigel Farage, the confidence trickster]
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