The New Economy & Levelling Up

Thatcher had the Falklands, Major had Iraq, Blair had Iraq II, Cameron had Libya. All these prime ministers won consecutive terms in office having taken British forces into war. History is littered with their names, painted in such a way even the politically uninterested are aware of their claim to fame (or notoriety). Churchill is an exception because he lost the immediate post-war election and came back for a second term after Attlee. Thatcher inherited a post-war like damaged economy. Major inherited a recession. Blair inherited an economic recovery, as did Cameron. In the words of American political consultant James Carville, “it’s the economy, stupid”. Although those words were originally intended to motivate Bill Clinton campaigners en route to his 1992 election victory, the notion of buying into an economic vision for the price of a vote was well and truly established.

American political commentator John Kingdom surmised for change to happen in government there must be a problem, a solution, and a will or gain to be had (also known as the three fluxes). To stand any chance of being popular, an economic vision must showcase the problem and solution. Thanks to TV, the internet and social media, the British public are more aware of the economy now than at any other time. Generation Z was born in the era where a new opinion could be championed by an individual to millions, instead of being reliant on the political colours of newspaper editors. Regardless of peacetime or war, economic boom or bust, the principle of debt recovery has remained unchanged. Debt collectors operate in a very different world to that a century ago, for example – legislation now exists to support creditors. The North-South divide is intergenerational and has long been used as political, economic and media bait for gaining traction on populist ideas. The divide is something an opportunist opposition party cashes in on, whilst the incumbent government pretend it is not a ‘thing’.

Levelling Up

Historically the manufacturing and mining ‘north’ has seen more decline and less growth than the financial ‘south’ since WWI called a halt to the Second Industrial Revolution. At Advocate we know there is more to the north than coal and car parts – the economies are diverse if not underappreciated. Measuring the economic and social differences between the north and the south is subjective, but it’s hard to deny their existence. The Levelling Up Fund is a £4.8 billion pot of money (launched in 2021) to be invested in areas that could benefit the most such as deprived towns and derelict brownfield sites. Regeneration is enabled through building or rebuilding infrastructure. The fund is an acknowledgement of the north-south divide in all but name, with grants expected to be made predominantly outside London and the home counties. The principle is simple – by creating jobs and economic growth in less affluent areas, communities gain the tools required for a prosperous future. Levelling Up is not just about giving an economically weak area a shot of adrenaline. It is about making sure when businesses do return, they can be serviced and sustained by the local community. Baroness Mone conducted a review and found there are considerably fewer start-ups in deprived areas, something which Levelling Up should help change. Infrastructure is not just roads. It’s broadband, transport, housing, energy, waste, environment, and more. Within Levelling Up there is a Community Renewal Fund, a Community Ownership Fund, and a Towns Fund. At Advocate, we recover debts on behalf of clients from the community to national level. Levelling Up grants are applied for by local authorities through a competitive bid process to ensure value for money. There are several opportunities for bidding over the five-year funding period. Levelling Up has been criticised because decisions are made centrally (Westminster) rather than by local civil servants on the front line in their community. In accordance with Kingdom’s three flux ideas, government funding is providing a solution to the old problems and new political will. Since the last industrial revolution, manufacturing has declined and a thriving service sector has become well and truly established. Futureproofing an economy is a never-ending challenge.

The New Economy

The idea of a ‘New Economy’ (also known as Digital Economy) has been around since the early 1980s. It is defined as the journey of a developed nation away from an economy dependent on heavy industry to one based on digital technology. Technological advancements in the 21st century have swiftly ushered the UK into that new age. Explaining to Generations Z and Alpha how life carried on before the microchip is akin to explaining to Millennials the rationing and hardship of WW2 endured by the GI/Greatest Generation. Debt recovery in the New Economy is not just getting debtors to pay their website build invoice. Online retailers, social media, online advertising, ride-sharing, online education, and digital media subscriptions have become multi-billion-pound industries in the space of two decades. Lest we forget the dot com bubble and cryptocurrencies! There is a whole supply chain of different firms in different industries supplying each other with the common goal of making money and keeping staff employed. A report by Deloitte in 2016 found economies become less susceptible to jobs being replaced by machines as more money is spent on or invested in education (be it college, university and beyond). For a business to survive it must either find new customers or a new product to sell to existing customers. Debt recovery in the New Economy is an existing product used effectively against a constant supply of debtors choosing to withhold payment to creditors just like you.

At Advocate, we have witnessed a significant and continued growth of debt recovery instructions for the digital economy. Post-Brexit, clients are seeing a marked increase in domestic trade and are more averse to trading internationally. It’s worth noting a digital economy faces fewer international barriers compared with the supply of physical goods. The variables of customs and logistics are taken out of the equation. Instead, revenue can be generated from almost anyone with a laptop in their kitchen! The pandemic has proven that a large proportion of digital sectors don’t need lavish city offices with a prestigious address. As the call for high-speed internet access in rural areas is answered, jobs requiring high bandwidth and Zoom calls are more achievable. A centralised bricks and mortar HQ in the South is no longer a prerequisite for success in the New Economy. In the same way, the powers of Westminster have seen decentralisation to regional/local institutions, the most important asset in a company (the workforce) are also seeing devolution. For example – when the BBC relocated from White City to MediaCity in Salford, scaremongers billed it as the beginning of the end. Yet the BBC has arguably flourished at MediaCity and been embraced by Manchester. The move happened in 2011 and you could say the BBC started levelling up before the government!

Closing Thought

Technology and the pandemic have been the mother of recent economic reinvention – perhaps at the expense of other industries. Whether you think Levelling Up is a government façade or a panacea to the north-south divide; whether you love or loath the New Economy – two things are worth bearing in mind. 1) this is not the north-south’s first rodeo. Attempts have been made by previous governments to address the divide. Levelling Up is no quick fix and like those before it, will be measured by historians. 2) the New Economy is just a title, a couple of words. Had it been politically beneficial the Industrial Revolution would have been given the title. Maybe in another hundred years, we’ll have the “New-New Economy”. In all the social and economic changes, policies, preferences and pretentious phrasing one thing remains constant – the need for commercial debt recovery. During economic descent, Advocate helps clients recover payment of overdue invoices so payroll and supplier obligations can be met. During economic assent, Advocate helps clients recover payments vital to their ongoing prosperity. Get in touch with Advocate to see how we can help you.