Labor has struggled to deliver regional growth and is in danger of blowing the best opportunity in a generation to tackle regional inequality, a new report authored by Ed Balls and four other economists has argued.
The main failure of the Keir Starmer government, they argue, is that it has not developed a sustainable growth and productivity strategy. The report claims that “early announcements were fragmented 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 various national plans remain unclear”.
The report assesses several implementations of pro-regional growth policy, including the work of Angela Rayner as Secretary of State for Housing, Communities and Local Government. But he deplores the continuing lack of a “fundamental theory of growth” or a “central sense of how the UK’s different economies relate to each other”.
Regional growth two years on: Is the government on track to boost UK growth by closing regional divides?, published today (8 July), in association with Harvard, King’s College London and the Gatsby Foundation. It describes ten recommendations first made by these authors in 2024 in a previous study. Out of ten, the government is on track to meet only three.
Mixed progress is largely the defining tone of the report – successes seem to be the result of the will of an individual politician, not of decision-making infrastructure or any guiding vision. The report highlights the need for political leadership and a clear plan for radical devolution. “The new Prime Minister and Chancellor must be much stronger in their commitment to devolve, making it clear that progress through the ranks of government depends on a willingness to take on the centralizing instincts of Whitehall and devolve power within England.
One of the report’s newest suggestions is the automatic elevation of all sub-regional mayors and first ministers to the House of Lords. In 2022, Starmer had pledged to abolish the second chamber, a promise that was later reneged on to abolish hereditary peers. According to the report, “Lords reform has been reduced to token, minimal changes” and by giving sub-regional and national leaders similar ratings, the parliamentary estates would be forced to provide support for the devolution agenda.
Andy Burnham’s success in Greater Manchester is seen as an example of what transfer has the potential to do. Britain’s second city is mentioned no less than 29 times in the report. Since the devolution, it notes, 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 the £1bn Manchester Good Growth Fund are two projects the authors want to see emulated elsewhere.
The authors claim that the government has not done enough to reallocate capital expenditure, which is key to materially supporting the transfer. “The Green Book Review 2025 (a Treasury document) promised to support ‘country-based business cases’ and stop Treasury guidance being ‘used’ 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 strategy on regional inequality when they were in government. Effective delivery will require renewed central leadership and cabinet unity after decentralization, regardless of short-term political risks. But with Britain’s best-known devolved politician soon to become prime minister, radical projects like this are sure to be on the agenda.
(Further reading: Nigel Farage, the confidence trickster)
