Harvard tackles levelling-up
+ Northern Gritstone podcast + Yorkshire Dales landlord + frozen food
Hello and welcome to the latest edition of Off to Lunch…
Some of the brightest minds in the world are thinking about how to level-up the UK economy. The Harvard Kennedy School, the branch of Harvard University that focuses on public policy, has published a paper today looking at the issue.
There is a familiar name among the authors of the paper - Ed Balls, the former shadow chancellor and a research fellow at Harvard. The other two authors are Anna Stansbury, an assistant professor at MIT Sloan School of Management, and Dan Turner, a researcher at Harvard Kennedy School and a senior adviser to Oliver Coppard, the Labour mayor for South Yorkshire.
The three authors have written a summary of their paper for The Times, which you can read here. Their proposals include more focus on science, technology, engineering and maths in the education system, more investment in regional transport - particularly in “highly congested urban areas with potential to benefit from agglomeration economies” (ie the Northern Powerhouse) - more investment in science and innovation outside the south-east, and a drive to lower the cost of housing in the south-east.
These proposals will be familiar topics to Off to Lunch readers and anyone tracking the health of the UK economy outside London. But there is much, much more in the full 69-page paper, which you can find here.
The paper has been published as more evidence emerges that the government is making slow progress on levelling-up. The Financial Times has a story that the Department of Levelling Up, Housing and Communities is going to spend nearly £2.5 billion less than intended on regeneration projects this year due to delays. You can read the story here.
The Harvard paper doesn’t actually mention levelling-up in the title, instead it is called Tackling the UK’s regional economic inequality: Binding constraints and avenues for policy intervention. It’s not a catchy title, but don’t let that blind you to the relevance of the paper. The introduction starts with a paragraph that lays bare the challenge of levelling-up:
For most of the 20th century, inequality in GDP per capita between UK regions – while not insignificant – was relatively low by European standards (Rosés and Wolf 2018). In the 1980s and 1990s, however, regional economic inequality began to rise in most industrialised economies (IMF 2019). The UK stands out for how far this has developed: by the 2010s the UK had become one of the most regionally unequal of the world’s industrialised economies in terms of GDP per capita, productivity, and disposable income (McCann 2020).
These economic inequalities are mirrored by inequalities in life expectancy and educational attainment, the authors say.
Lower productivity outside of the south-east of England is the driver of this inequality, they add. This graph from the paper shows the shocking difference in productivity among UK cities. Productivity is measured in this graph by the contribution a worker in each city makes to the economy. The most productive areas are at the top, the least at the bottom. The biggest cities are on the right, the smallest on left. So the top-right means big and productive…
The paper also tries to answer the question of whether the government can actually do anything on levelling-up. The answer seems to be “Yes, but…”
The UK had a particularly steep legacy of deindustrialisation, and was particularly affected by London’s rise as a global centre of financial and professional services. The effects of major global economic trends are unlikely to be able to be countered fully even by major policy efforts. But our analyses of UK and international policy decisions suggest that much more can be done.
The paper concludes by talking about the importance of stable and powerful local governments, pointing to the success of London and Scotland. The authors are going to publish a second paper involving interviews with national politicians, local politicians and civil servants, which will look at this in more detail…
Podcast…
Talking of levelling-up, the next episode of Business Studies goes live on Tuesday and features an interview with Duncan Johnson, chief executive of Northern Gritstone. The episode looks at whether Northern Gritstone, which invests in university spin-outs from Manchester, Leeds and Sheffield, could be the answer to the conundrum of how to level-up the economy and boost the north of England. It’s a fascinating episode.
Off to Lunch subscribers will get the episode sent to them directly and it will also be available on all other podcast platforms. You can listen to last week’s episode on electric cars here on Substack, here on Apple and here on Spotify.
Other stories that matter…
An 18-mile train line between Newcastle and Ashington that closed in the 1960s is to reopen next year with six new stations (BBC)
The Financial Times has published an interesting summary of a debate among readers after it published a piece about whether the London property market was an inheritocracy which relies on inherited wealth of money from parents. The comments from readers go beyond the scope of the article, criticising the lack of protection for people who are renting, comparing London unfavourably to other global cities and looking at whether the cost of the London property market is a key reason for a lack of social mobility in the UK (FT)
A pub landlord in the Yorkshire Dales wants to build accommodation for staff on an old school playing field because he is struggling to find workers (The Yorkshire Post)
The inventor James Dyson has written a letter to Jeremy Hunt, the chancellor, in which he says: ”The government has done nothing but pile tax upon tax on to British companies.” Hunt has replied (The Sun)
An update on the Mercedes F1 team from Friday’s Off to Lunch lunch. I flagged that what is going on with that team is an interesting case study for businesses. What do you do after your bold idea fails? Be cautious or try to be bold again? Well, it looks like their decision to double-down on a bold idea was a mistake. Forget the talk of marginal gains and finding an edge, they are now talking about throwing their strategy in the bin and starting again, potentially writing off a year in the process “To catch up we need to make big steps, not the conventional ones,” said team boss Toto Wolff (The Times)
Check out Off to Lunch’s Sunday press review for a round-up of the business news and analysis that mattered, including the John Lewis Partnership, London v New York, busy Saturdays on the high street and a cracking Rolls-Royce profile. You can sign-up to read it here
And finally…
Apologies for the drop in restaurant and hotel recommendations recently. Having a new-born baby at home means that travel is largely restricted to during the day at the moment, meaning I haven’t had much opportunity to sample different establishments around the country. There are some interesting trips coming up though…
Instead of eating out there have been a lot of quick-and-easy frozen ready meals recently. However, this is a market where the quality has improved dramatically in the UK - you can get restaurant-quality food for supermarket prices if you shop around. So, a recommendation for you. Having sampled a few since our second child was born in December I reckon Cook is the best. I particularly recommend their chilli con carne for adults and their pasta bolognese and chicken paella for kids, which have been a big hit in our household. Cook is based in Sittingbourne in Kent but do home-delivery and has a small collection of shops across the UK. They regularly have special offers on. More here.
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Best
Graham