How Can Your Business Gain from Levelling Up?

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How Can Your Business Gain from Levelling Up? | Future Business

Healthy Scepticism?

In the UK, a suggested government policy of ‘levelling up’ pay by aligning it to regional living costs was embarrasingly dropped after it was suggested that this would only result in pay cuts for public sector workers in more affluent areas; in other words, ‘levelling down’.  

So be under no illusion; there’s a fair degree of scepticism on the UK Government’s levelling up agenda in general. Open Democracy writes that Rishi Sunak’s UK Infrastructure Bank (UKIB), set up by the former chancellor to tackle climate change and promote ‘levelling up’, has earmarked £550m for firms linked to tax havens, a repressive regime and a Tory donor.

The trouble, it seems, is that UKIB announced plans in December last year to invest up to £250m in the solar energy fund NextPower UK ESG, managed by a firm called NextEnergy Capital Ltd that in turn is owned by a Luxembourg parent company: NextEnergy Capital SARL. Essentially levelling up a foreign firms’ bank account.

Further, last month, UKIB announced it would loan £200m to the UK broadband company CityFibre to help roll out broadband to towns and cities in England and Scotland. But one of CityFibre’s largest owners, Antin Infrastructure Partners, manages its stake in the firm through the Luxembourg company Connect Luxco SARL.

Meanwhile, Goldman Sachs owns a substantial stake in CityFibre through a complex chain of ownership that stretches to the US state of Delaware. Corporations registered in Delaware that do not do business in the state do not pay corporate income tax.

The northern English think tank IPPR North has been critical of ‘levelling up’ rhetoric that has delivered little for deprived communities in the UK.

Marcus Johns, a research fellow at the organisation, said the use of tax havens, “Hollows out our economy, keeps wages low, holds communities back, and enables money to be syphoned away into a globalised system of extraction.”

He said UKIB, “Must look seriously to prevent the use of tax havens and avoidance among the firms it supports,” if it is to help achieve the levelling up agenda.

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Can Levelling Up Stay on Track?

In more from IPPR North, Sky News recently reported it said that, despite Boris Johnson’s repeated pledges to level up the country, ‘money simply hasn’t followed the rhetoric.’

Analysis of ONS figures found that per-person public spending in the north went from being £246 higher than the England average in 2019, the year Mr Johnson took office, to £86 under the average in 2021. So, the levelling up agenda appears patchy. Vast change needs to happen and Government may not be as transparent as some would like. Contrastingly, promises of money for the green economy and other areas do exist. Public and private sector could together achieve a lot.

In the US, the $20 trillion economy relies on a network of infrastructure, from roads and bridges to freight rail and ports, to electrical grids and internet provision. Some of these systems are decades old, and now demand expensive maintenance which economists say is holding back nationwide economic performance. there are also safety concerns, as civil engineers have plenty of evidence of structurally deficient bridges and deteriorating drinking water and waste systems. Studies have found that delays and avoided trips due to the poor state of the nation’s airports cost the economy over $35 billion per year.

According to the World Economic Forum’s Global Competitiveness Report, in 2019, the United States ranked thirteenth in the world in a broad measure of infrastructure quality, down from fifth position in 2002. Certiainaly there’s a perception that international rivals enjoy more efficient and reliable infrastructure, and that US spending lags behind. This form of international ‘levelling up’ is what prompted Congress to approve in November 2021 a historic investment in U.S. infrastructure that included hundreds of billions of dollars in new spending. Skeptics of federal spending have pushed for new models of private sector involvement, which they say is more efficient and cost-effective. Others argue that increased public spending will be necessary to meet the country’s growing needs. Uncompromising transparency and ongoing events to drive partners together would seem the right approach, if levelling up is to gain traction and success.

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