Senior Tories in “red wall” seats have warned Conservative leadership candidates that the party will lose the next general election unless they re-commit to level up the country and boost investment in the UK’s deprived regions.
The warnings come as economists and business figures who are pushing the levelling up agenda in the north of England say the entire project – which was at the heart of the 2019 Conservative manifesto – risks being downgraded as candidates to succeed Boris Johnson compete to offer more generous tax cuts, and money to ease the cost of living crisis.
In Friday evening’s Channel 4 television debate between the contenders, levelling up was barely mentioned. Instead, much of the debate focused on the importance of tax cuts, which economists say would, if implemented, leave little room for necessary investment in poorer areas.
Last night, the Tory backbencher Jake Berry, who chairs the 50-strong Northern Research Group (NRG) of Conservative MPs and was minister for the northern powerhouse from 2017 to 2020, told the Observer that if the next prime minister did not deliver on the 2019 manifesto promise, his party would be severely punished by red-wall voters. Berry agreed that if the party now departed from its 2019 manifesto, there would be an understandable clamour for an early election.
“These votes were lent, they were lent against a promise of performance and a promise of action,” he said. “If performance and action are lacking, do not be surprised when they don’t appear in two years’ time.
“It depends if we want to win the next election. Of course we can become a party that only concentrates on rebuilding the blue wall in the south of England, but [if we do that] we will lose.”
John Stevenson, the Tory MP for Carlisle, added: “We must not forget that the part of our last manifesto on which our large majority was based was the levelling up agenda. It is essential that the next leader is committed to that agenda.” Berry and Stevenson are backing Tom Tugendhat, who is calling for tax cuts as well as a wider national growth strategy to create a less economically divided country.
The NRG has called on all the leadership candidates to sign a general statement committing themselves to the levelling up agenda, including plans for a minister for the north, greater devolution and a new spending formula to ensure that poorer areas are not left behind. By Friday, all the candidates except Kemi Badenoch had signed the statement.
Despite this, economists see little sign of a coherent economic policy which would make a success of levelling up. Jim O’Neill, the former Goldman Sachs chief economist who served as a minister under former Tory chancellor George Osborne, said: “I would like to see, and the country desperately needs, a coherent economic strategy, and there isn’t much sign of one being offered yet.
“Rishi Sunak has a fiscal framework and a desire to boost investment, which is better than all the others, [who are] obsessed with tax cuts which would merely serve to add to inflationary concerns and result in faster and higher Bank of England rate hikes.
“But they need much more serious plans to boost productivity, raise skills, improve education and stop pretending on devolution and actually do it. Levelling up, even as a slogan, appears to be absent from the debate, but they need to seriously address these issues. Otherwise growth will not recover much, and the next leader will struggle as much as the last two.”
Henri Murison, director of the Northern Powerhouse Partnership, whose chair is Osborne, said levelling up had already been a disappointment, with promises over rail and other investment plans broken. If the Tory party was to downgrade it, that would amount to a changed manifesto and would require a general election, he claimed.
“The mandate Boris Johnson got was for levelling up. If this government is not prepared to level up with the new prime minister, then they should call a general election.”
Ben Zaranko, senior research economist at the Institute for Fiscal Studies, said: “The question for any candidate who wishes to cut taxes as a fraction of national income over the longer run is where the accompanying spending cuts are going to come from. An ageing population means that we’ll almost certainly need to spend more on health and social care just for those systems to stand still. There seems to be general agreement that defence spending should rise or, at a minimum, remain at the Nato target of 2% of GDP.
“It is hard to see how the size of the state could be meaningfully reduced without a substantial paring back of the welfare state, the range and quality of public services, or major ambitions like levelling up.”
New analysis by the IPPR thinktank showed that cutting the basic rate of income tax from 20 to 19% would cost the exchequer more than £5bn with little of the this reaching those on lowest incomes. The analysis shows that about half the total tax reduction would go to the fifth of households with the highest incomes, with just 2.6% finding its way into the pockets of the poorest.
Labour’s shadow levelling up secretary, Lisa Nandy, said all five candidates were “vying for the mantle of Margaret Thatcher” in a way that was “reminiscent of the 1980s.”
In areas such as her Wigan constituency, she said this was “going down very badly”.
“Now you have got a group of people stepping forward to take over who look very much like traditional Tories, cut in the cloth of the 1980s, which was the worst period in living history apart from now. Anyone who wins is going to have a big challenge on their hands.”
