What next for Levelling Up?

Parliament returned on 6 September after an eventful summer recess. Although the continued fallout from COVID-19 and the Afghanistan withdrawal are expected to dominate proceedings in the House, at least initially, many of our clients will be looking ahead to what this autumn will bring for the Levelling-Up agenda.

It’s set to be a busy time for Levelling-Up – indeed the Northern Agenda newsletter has launched a “Levelling-Up Watch” feature, charting the use of the term in Parliament and assessing its impact across the North.

The Levelling-Up White Paper, the Spending Review, the Integrated Rail Plan, the LEP Review… all of these are expected to be published over the coming months and will hopefully answer enduring questions about the substance of Levelling-Up beyond the soundbites. We look ahead to what this season of Levelling-Up could mean…

The Levelling-Up White Paper

The Prime Minister has made Levelling-Up the centrepiece of his domestic policy agenda and, in a high-profile speech on 15 July this year, set out his vision for what Levelling-Up could deliver.

Focusing on the huge gulf in life expectancy between different parts of the UK that has been cruelly exposed by COVID-19, the PM decried the fact that “for too many people geography turns out to be destiny.”

As yet, however, there has been little clarity on how this vision for Levelling-Up will be delivered and precious few initiatives that offer a meaningful chance of closing the gap between London and the South-East and less prosperous parts of the country.

Those initiatives that have been brought forward have garnered criticism. Just two weeks ago, the High Court granted campaign group, the Good Law Project, permission to challenge the Government’s £4.8 billion Levelling-Up Fund which, it claims, has unfairly benefitted Conservative constituencies to the detriment of others with greater need.

Indeed, a question that’s dogged the Prime Minister is whether his desire to promote Levelling-Up “throughout the UK” might, in fact, continue to perpetuate the same unlevel playing field – albeit at a higher level of economic performance.

The Levelling-Up White Paper should answer these and other questions, while also setting the policy context for this year’s Spending Review.

Devolution

Before Levelling-Up, “devolution” was the buzzword of choice. Not so very long ago, it seemed as though every part of the country would eventually have its own metro mayor and accompanying devolution deal.

Enthusiasm for metro mayors, however, has waned noticeably among the Johnson Government since the 2019 General Election and, at best, devolution is now seen as one mechanism among several to deliver Levelling-Up rather than a goal in and of itself. Earlier this year, the Government ditched its long-awaited Devolution White Paper in favour of the aforementioned Levelling-Up White Paper. Even the Local Government Association has switched its lobbying position from advocating explicitly for devolution to showcasing “local government’s ability to deliver effectively and at pace and to make a real difference in people’s lives”.

New funding streams, such as the Towns Fund, Levelling-Up Fund and Community Renewal Fund, are being controlled by Whitehall and administered by local councils rather than mayoral combined authorities. Meanwhile the Government expects that local MPs will be consulted closely on the allocation of these funds, potentially diluting mayors’ authority.

Why has devolution fallen out of vogue? In one word: politics. Of the 10 metro mayors across England, all but two of these are from the Labour Party and political commentators have speculated that the success of high-profile Labour mayors such as Greater Manchester’s Andy Burnham, could be the key to the Party regaining prominence after successive general and local election losses. It’s hardly surprising that a Conservative government might not want to hand greater powers and investment to opposition mayors, who then use these for political advantage.

However, the Government faces a conundrum: mayors have proved popular among the people they represent. The devolution genie is now out of the bottle.

Burnham and Conservative Mayor Ben Houchen in the Tees Valley are probably the two most powerful examples of the Mayoral Effect in action. Houchen, who was returned with an astonishing 73% of the vote in the May 2021 mayoral elections, is credited with Teesside’s recent success in attracting government investment: a new Treasury Economic Campus in Darlington, a Freeport, an industrial decarbonisation cluster in Redcar, and a long-campaigned-for direct train line from Middlesbrough to London.

Many would argue that Teesside’s resurgence is long overdue. But will city regions with Labour mayors see similar levels of investment? Will areas like West Yorkshire, which has only just elected its first mayor (and the country’s first female metro mayor) secure greater powers in areas like bus franchising, which was the cornerstone of Mayor Tracy Brabin’s election manifesto? Will areas which don’t yet have a Mayor, like North Yorkshire, get one or have we already passed Peak Metro Mayor? Are the Government’s more recent centralising tendencies a COVID-induced blip or the start of a trend towards recentralisation?

The Levelling-Up White Paper will need to answer these and other questions about the future of English devolution and the role of local places versus Westminster in building back better from the pandemic.

LEP Review

Local Enterprise Partnerships (LEPs) have been an integral part of the regional economic landscape for 10 years.

They’ve achieved a lot in that time. According to the LEP Network, the 38 LEPs across England have collectively supported over 1 million businesses, leveraged over £15 billion of private sector investment and created over 180,000 jobs. They have also given the private sector a greater role in economic policy and decision-making than ever before. As an agency that is proud to support several LEPs across the country, we have seen their positive impact first-hand.

However, after an earlier Strengthening LEPs review in 2018, which saw many LEPs – including all four LEPs in Yorkshire – review their geographic boundaries to remove overlaps, among other governance changes, LEPs are being reviewed again. The outcomes of this LEP Review were initially expected before the summer recess but are now due this autumn, with the Levelling-Up White Paper again expected to define the context and scope of LEPs’ future work.

No decisions have yet been made, but the business community will want to ensure that LEPs still have teeth and that the private sector continues to have a central role in shaping regional economic policy and investment. Building back better is going require closer public and private sector partnership-working than ever before and LEPs’ well-established role in bringing businesses, councils and other local partners together means they are uniquely placed to provide strategic local leadership on economic issues such as the future of urban centres, skills and business support.

The Northern Powerhouse

It was former Chancellor, George Osborne, who coined the term “Northern Powerhouse”, but the 2019 General Election is when northern prosperity truly became a national issue, after the Conservatives seized many traditional Labour seats.

Delivering jobs and opportunity for the North is going to be critical to the Conservatives holding onto those northern “Red Wall” seats, and the North certainly did relatively well out of the March 2021 Budget.

One could argue that the Northern Powerhouse has moved from rhetoric under the Cameron-Osborne administration to action under Johnson and Sunak. However, despite the recent riches bestowed on areas such as Teesside, actual investment and on-the-ground-delivery of the Northern Powerhouse vision still falls short of what our client, the NP11, and northern political leaders called for in their joint Manifesto for the North in 2019.

There’s also been a recent pushback from London, with Mayor Sadiq Khan and others warning against redirecting investment from South to North. In last week’s Northern Agenda, Dr Nick Bowes – Chief Executive of the Centre for London and former Director of Policy for the Mayor of London – warned of the dangers of “levelling down” the capital, suggesting that London and the North instead join forces to “unleash local potential to solve local issues”.

The Levelling-Up White Paper is likely to be a plan for the Union, not just England, and staving off a second Scottish Independence Referendum will no doubt strongly influence the Government’s investment plans. The North will need to put forward a strong case for why – as the NP11 Chair, Sir Roger Marsh, has consistently argued – the North should continue to be seen as the solution to UK prosperity in a post-COVID, post-Brexit world.

The Integrated Rail Plan

As our Leeds Associate Director, Victoria Starkey, wrote recently, transport is key to Levelling-Up and the much-anticipated Integrated Rail Plan is expected to confirm what the future holds for major rail projects including the HS2 Eastern Leg from Birmingham to Leeds and York, the cross-Pennine high-speed rail link, Northern Powerhouse Rail (NPR), and the TransPennine Route Upgrade (TRU).

Speculation has been mounting over the summer that the HS2 Eastern Leg could be axed as a result of the escalating COVID-19 recovery bill. Northern business leaders and politicians have been united in their opposition to any scaling back of HS2, warning that the whole east of the country north of Birmingham could be left behind if the Eastern leg is scrapped – jeopardising the Government’s Levelling-Up mission. The value of HS2 to Leeds alone is estimated at £500m and 40,000 jobs, and the Director of the Northern Powerhouse Partnership, Henri Murison, argued that instead of halting work on the Eastern Leg, HS2 Ltd should start building from Leeds to unlock these economic benefits. With significant business and wider public sector investment at stake, clarity is needed urgently.

The Spending Review

Last but most importantly is the Spending Review, where the funding to make Levelling-Up happen will be confirmed. The Treasury has confirmed that the Spending Review will take place on 27 October and will be a multi-year settlement. It seems certain that this Spending Review will see the Chancellor rein in spending (and raise taxes?) to tackle the deficit, which has now risen to 14.5% of GDP thanks to the pandemic.

Ultimately, the question of whether Levelling-Up can be achieved will come down to pounds and pence. Last month the Centre for Cities think-tank suggested that the budget needed to close the North-South divide could be £2 trillion – a similar level of public investment to that spent by the German government in rehabilitating the former East Germany post-reunification. Although not the only funding attached to delivering on Levelling Up, the UK Government’s dedicated Levelling-Up Fund totals just £4.8 billion in comparison.

Health and social care are areas that are most likely to receive a spending boost this autumn, meaning tough choices elsewhere. The ultimate test of the Government’s commitment to Levelling-Up will be its willingness to match warm words with cold cash.