Will the next Tory prime minister forget about levelling up the UK?

The old riverside customs and excise office in South Shields, once one of the world’s most important shipbuilding hubs, boasts a mosaic that tells the port’s maritime story. In the middle there is the River Tyne teeming with salmon, in the days before it was blackened by shipyards and coal.

“There was a time when they used to say ‘if you fall in the Tyne you’ll be poisoned before you drown’,” says Ray Spencer, executive director of the arts centre that now occupies the Customs House. Now, he says, once again “it’s the best salmon fishing river in England, the Tyne.” 

The river’s restoration can be seen as a symbol of what the region aspires to, after the collapse in heavy industry across the North East from the 1970s created an economic shock that still reverberates here.

Spurred on in part by a Conservative government in London that made “levelling up” former industrial regions its signature issue, South Shields and other towns in the North East have been busy developing their own plans for economic renewal, many of them built around clean energy. Some believe green jobs could replace what has been lost through the decline of shipbuilding.

Roughly 130km out to sea from South Shields, the world’s biggest offshore wind farm is about to be built. Over the next four years, Dogger Bank is expected to create more than 1,000 jobs during construction, retaining a little shy of 400 once operational, half of them at the Port of Tyne in South Shields.

It is part of a growing green economy in the North East upon which local leaders are pinning their hopes of revival, from the planned Britishvolt gigafactory up the coast at Blyth to green hydrogen production by BP further south in Teesside, at the UK’s biggest freeport.

Jonathan Tew, chief executive of South Tyneside council, the local authority covering South Shields, believes it is “absolutely critical” for the government’s net zero ambitions, and for the region’s economy, that the North East now “becomes essentially the battery of the country, in terms of providing the energy of the future”, not least in the face of rising energy prices.

“If that happens, the potential for us really is dizzying, isn’t it?” he says. Tew can see it “being more than what we saw through coal or through ships, in terms of future industrial opportunity”.

These ambitions hinge not just on the efforts of regional authorities but also the government in Westminster, currently gripped by political turbulence as members of the Conservative party spend the next six weeks choosing a new leader — and British prime minister — to replace Boris Johnson.

There are two important audiences for the debates now taking place between the remaining candidates, foreign secretary Liz Truss and former chancellor of the exchequer Rishi Sunak.

The first is the 150,000 or so party members who get to vote on the next prime minister — and for whom the candidates are presenting themselves as the rightful heir of Margaret Thatcher and a legacy of tax-cutting, small government conservatism.

But there is another audience — the voters in the former industrial towns of the Midlands and North of England who shifted to the Conservatives, first under Theresa May and then under Boris Johnson, on the back of a promise to narrow chronic regional divides.

The Tory candidates find themselves, therefore, pointing in two different directions: promising lower taxes to the party faithful but also pledging to deliver substantial economic regeneration — the agenda that has become known as levelling up.

Several influential figures have already warned against forgetting that agenda, particularly after the sacking of former levelling up secretary Michael Gove, seen by many in the regions as a focused minister who understood the economic arguments.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Research by the left-leaning think-tank IPPR North this week warned that since Johnson first uttered the phrase levelling up three years ago this week, government had in fact been doing “business as usual”, with public spending rising fastest in London and slowest here, in the post-industrial North East.

A prime candidate for levelling up, the region routinely performs worst in terms of economic and social indicators, as the gap between the South East and other places grows. New research from the End Child Poverty coalition shows the North East is now the UK’s child poverty capital, overtaking London.

“We are all very nervous about the current position we’re in,” says Tew of the existing socio-economic picture as the cost of living rises.

In South Shields, 8.3 per cent of people have no qualifications — compared with a UK average of 6.6 per cent — and only 29.5 per cent are educated to degree level, against a national average of 43.5 per cent.

When the think-tank Onward visited South Shields to carry out research on “levelling up in practice”, it identified “green shoots of economic revival” in the potential of industrial projects such as Dogger Bank. But it also identified obstacles: small businesses felt “unsupported”, struggling to “network and grow”. Attempts by local councils to secure funding from various government levelling up funds had largely failed; and “visible closures of public services” during austerity had hit public confidence, Onward said.

Adam Hawksbee, Onward’s deputy director who carried out the research, says “the future appears to be right there”, referring to green jobs. “But there’s really no link between people’s perception of the area and that reality,” he adds.

A green revival?

There are already some early signs of a green energy industry developing in the North East. Energy group Equinor has built the operations base for its new Dogger Bank wind farm at Port of Tyne, just metres from Customs House.

Tom Nightingale, an Equinor executive involved in the project, says there has been no shortage of job applicants, with more than 450 people vying for just 10 initial offshore technician roles. Equinor aims to recruit at least half of its staff from the North East.

“Definitely these are places that have got quite a lot of deprivation and a lot of the industries that people are proud of just aren’t actually offering that many jobs anymore,” he says. “So what’s next?”

The Port of Tyne, one of only two deep seaports in the region, owns 17 miles of river through South Shields and was once one of the world’s biggest coal exporters. It has now cleared 200 acres of prime development land for green industrial anchor tenants. It houses the only maritime innovation hub in the country, a partnership including Nissan and the Offshore Renewable Energy Catapult, which researches and develops decarbonisation technology for the sector.

Matt Beeton, chief executive of the Port of Tyne, believes green industrial opportunities need to be grasped quickly.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

“If you look at the amount of gigawatts that are needed in this energy transition it’s phenomenal, but lots of these opportunities are going elsewhere,” he says, in particular to western Europe.

“There’s a real timing issue,” he adds. “There’s a real sweet spot between 18 months and two years to land lots of this stuff. If we were able to invest more in the opportunity, in the land that’s available, we could definitely fit more into the UK.”

But while the plans for a green industrial revival have started to take shape, local officials say they have not received the sort of support from the government in London that they had hoped for — even before Johnson’s resignation.

Although South Tyneside has put green energy at the heart of its latest bid for levelling up funds, previous bids to the various government programmes that are dispensing funding to councils in the Midlands and North of the country were rejected, Onward noted in its report; support had been “limited”, it said.

The Department for Levelling Up, Housing and Communities says it has supported “a number of high-profile cutting-edge projects in the North East”, including Britishvolt at Blyth and plans for a carbon capture “cluster” at Teesside. “Across the UK, government action will support up to 190,000 green jobs in the middle of the 2020s and up to 480,000 in 2030, including hundreds of thousands in the North East.”

But with much of the focus of the Tory leadership contest on issues such as tax cuts and migration, little has so far been said about levelling up. Asked about it in Monday night’s BBC TV debate, Truss promised a series of low-tax investment zones in the North and Midlands to stimulate growth, while Sunak hinted at cuts to tax on business investment.

Rachel Wolf, co-author of the 2019 Tory manifesto and an advocate of the levelling up agenda, last week warned candidates that domestic policy progress has been “glacial” since the election, arguing towns that felt like they had “decayed year on year” were looking for delivery.

If that continues, the party risks a backlash from some of its newer voters. “Imagine you were promised better public services, green jobs and a nicer town centre,” she said. “What would you think right now?”

Business leaders in the North East are worried that the region is becoming less of a priority for the government and that tax cuts will further limit funds for investment.

It is “imperative that any tax-cutting agenda in no way undermines the resilience of public services”, the North East England Chamber of Commerce warned the candidates in a letter last week, noting that a region-wide plan was also needed for green investment. Any cuts “must not harm investment” in public bodies that “play such a central role in the economic success of the North East”.

Tew at South Tyneside council points out that it was Thatcher who brought Nissan to the region — still a huge employer nearby — with a “very bespoke incentivised deal”.

“Just look at the effect over decades. What does this government take from that if they want to attract that global capital and do something that’s almost equivalent?” he asks.

“You just don’t get that same sense of urgency nationally; that there’s a mindset that wants to be bold enough to take those risks.”

Training is key

Part of the idea behind levelling up is an effort to generate jobs where people live, rather than seeing more of them move to the biggest cities. One of the greatest obstacles to achieving this — and the area where help from Westminster is most sought after — is in training.

John McCabe, chief executive of the North East England Chamber of Commerce, believes there is “massive potential” in green jobs, but skills remain the “single biggest challenge” — in part because of limited funding.

“Further education budgets per pupil are going to be 10 per cent lower than they were in 2010,” he points out. “If you’re talking about building the economy around new technology and industry, it’s self-evident you’ve got to enter that with the right skills to unlock that potential.”

Karen Burgess, who works at the North East Local Enterprise Partnership, the region’s network of councils and businesses, agrees, although she says the greater flexibility of the government’s green skills “boot camps”, which will be launched shortly, “gives us hope”.

The six to 16-week short courses provide the ideal opportunity for people to reskill, she believes. “If you’re a gas fitter at the moment, you could use the boot camp that enables you to fit heat pumps, for example.”

Shipbuilding used to employ 32,000 people across the region, she points out, 5,500 of them in South Shields. There may now only be a few hundred such jobs, but she believes the industry’s residual assets remain relevant.

“One of the strengths in the North East is we have got the legacy of that industrial workforce in our population,” says Burgess, who spends her time linking businesses with schools, colleges and training providers.

“When the shipyards closed, we were left with a huge amount of infrastructure around the Tyne and a skilled workforce that lent itself to oil and gas, to subsea engineering,” she says.

Green industries can, she insists, provide the same range of employment that shipbuilding once did. “Even if you just look at offshore wind, you need welders and fabricators but you also need super-specialist precision-trained engineers with masters and PhDs — and everything in between.”

South Tyneside college is moving from its dilapidated 1960s building on the outskirts of South Shields to a new site on the high street. Mandy Morris, the principal, hopes it will make opportunities more visible. “I was shocked when I met some adults and they said ‘College, me? No chance’,” she says. “In the centre of town I want something outside that’ll say anyone can come in this building.”

Green jobs are not a panacea

Business leaders in the North East acknowledge, however, that greater assistance from Westminster is not the only obstacle.

The region as a whole, which has a messy jigsaw of councils and mayors, also needs to get better at seeing the bigger picture. “I think we need a more holistic view of the North East and the part it can play,” says Beeton, chief executive of Port of Tyne.

McCabe, of the chamber of commerce, agrees: “I’ve talked to a lot of local leaders about this and keep saying to them, time and time again, that as businesses we don’t recognise local authority boundaries or mayoral boundaries or constituency boundaries because business doesn’t work like that.”

While potentially “transformative”, he does not believe green jobs alone should replace the old industries. “We wouldn’t want a return to things built around one or two sectors in the way that historically we’ve done before with shipbuilding and coal. We need a bit more diversity,” he says.

Hawksbee at Onward says that “the green economy is not going to generate the same level of medium-level and technical jobs that industry did a century ago,” meaning many people will still need to get on the Metro line to the nearby cities of Newcastle or Sunderland.

John Tomaney, professor of urban and regional planning at the Bartlett School of Planning at UCL, agrees there is “massive potential” for South Shields in green jobs, which could be held back by lack of skills and domestic finance.

“The needs of a place like South Shields are complex and are going to require a more multi-faceted set of solutions than supporting the emergence of green industries,” he says.

He is unsurprised at the scepticism among residents, describing “widespread cynicism” after decades of regional policy promises that have failed to deliver. “There have been a series of waves of optimism and each time they are getting shallower and shallower.”

For the arts centre’s Spencer, South Shields has already moved on, beyond what is understood by Westminster. “We are pushing ahead, but I sometimes think the South East is slow at catching up with us, about knowing.”

“Investors still think it’s dark satanic mills and shipyards and flat caps here,” he says, gesturing to the mosaic. “But in that river, we’ve changed.”

This article has been amended to make clear that John Tomaney is a professor at UCL, not Newcastle University as originally stated.