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Infrastructure blog

Why local communities are not yet seeing the benefits of levelling up

16 February 2023

A year on from the UK government’s Levelling Up White Paper, we examine its progress and where work is needed.

Why local communities are not yet seeing the benefits of levelling up
The competitive bidding process for levelling up funding leads to authorities submitting bids based on government criteria rather than genuine local needs. Image credit: Shutterstock

Just over a year ago the government’s flagship levelling up policy was centre stage through the publication of the Levelling Up White Paper.

The paper set out 12 medium-term levelling up missions intended to increase pay, employment and productivity, and boost well-being across the UK by 2030.

Since taking office, Prime Minister Rishi Sunak has committed to following through with levelling up.

But Sunak has come under fire for allocating more funds to the South than parts of the Midlands and North in round two of the £4.8bn Levelling Up Fund.

Projects in London and the South East received £360 million, three times more than schemes in Yorkshire and Humber.

During an ongoing inflation and cost of living crisis, scrutiny of government spending has never been higher.

Progress on devolution

Sunak’s vision for levelling up by ‘bringing the decision-making process closer to local communities’ has experienced some progress.

Devolution settlements in areas include the North East, North Yorkshire and Cornwall, and there have been ongoing negotiations to strengthen powers of combined authorities in Greater Manchester and the West Midlands.

Competitive bidding remains a stumbling block

However, the competitive bidding process to determine which areas received Levelling Up Fund investment, referred to by Mayor of the West Midlands Andy Street as a “begging bowl culture”, pits communities against one another.

It discourages cooperation between areas and leads to authorities submitting bids based on government criteria rather than genuine local needs.

The government had indicated it would start to move away from competitive funding rounds for levelling up in the white paper, yet it seems likely this process will be used in the third round of funding.

With these limits, the already numerous challenges of addressing regional inequality continue to grow.

The added financial red tape suggests a disconnect between policy rhetoric and delivery when it comes to levelling up.

The story so far

The narrative underlying levelling up is not new – addressing regional inequalities is a long-standing challenge in the UK and around the world. The phrase (and the phrase ‘level up’) appears intermittently in the parliamentary records since the 19th century.

In its 2019 manifesto, the Conservative Party said it would be "levelling up every part of the UK".

The Levelling Up and Regeneration Bill was introduced to Parliament in May 2022 and is currently at the committee stage in the House of Lords.

An initial set of top line and supporting metrics for measuring and tracking progress against outcomes was published alongside the Levelling Up White Paper. However, more detailed metrics are yet to be published.

How do we make sure levelling up is not levelling down?

To make sure levelling up occurs, we need specific targets for high-performing areas as well as the lowest-performing areas.

The Mayor of London Sadiq Khan’s evidence to the Levelling Up, Housing and Communities Committee on Funding for Levelling Up highlighted that the way to level up the country is not by making London poorer.

He cited that the poorest tenth of families in London are 30% poorer than the rest of the country.

It’s important to avoid ‘levelling down’, especially when the public mood may be in favour of it.

This is a particular risk where targets are unambitious.

Performance-based targets for the missions

For example, the levelling up missions state that productivity should increase in every region by 2030, with the gap between the top-performing and other areas closing.

London has seen higher than average productivity growth in the last decade. This growth could stall, but London’s productivity could still grow somewhat by 2030, thus meeting the overall target.

Thus, specific performance-based would ensure that projects provide better value for money for communities and can accurately be measured on how they are helping to level up specific areas, without, as Khan highlighted, negatively affecting cities like London.

Where does Labour stand on levelling up?

Shadow Secretary for the Department of Levelling Up, Housing and Communities (DLUHC) Lisa Nandy has highlighted Labour’s commitment to overturn “a century of centralisation” and strengthen economic development.

Instead of the levelling up missions, Labour would establish an independent advisory council which would measure the success of closing the inequalities gap between regions. However, the detail of these metrics has yet to be published.

A ‘Take Back Control Bill’ proposed by Labour would devolve new powers to local communities. The bill would set out frameworks for local leaders to request and negotiate powers over economic policymaking and would seek to move power out of Westminster.

A commission led by previous Prime Minister Gordon Brown on devolution outlines a collaborative approach between central and local government to stimulate growth and share resources across the UK.

How do we measure levelling up in action?

The current near-recession is likely to heavily affect rates of employment and productivity, and impact areas from wellbeing to transport interconnectivity, threatening the possibility of achieving the levelling up missions.

As the ICE previously called for, more detailed metrics for measuring progress on levelling up should be geared towards local outcomes and success in areas such as skills training, higher life expectancy and pride of place set out in the 12 missions.

In general, more weight should also be attached to the whole life benefits of projects and programmes, and the role of improved interconnectivity through enhanced infrastructure investment, instead of fixating on achieving lowest capital cost in delivery.

This is to ensure there’s sufficient value for money for households under pressure due to increasing inflation and living costs.

It’s also imperative that project scoping takes into account additional inflationary impact to mitigate against delivery problems.

Levelling up is a flagship policy – a year on, there is still a lot of work that needs to be done to ensure communities receive the full benefits.

  • Laura Cunliffe-Hall, interim lead policy manager at ICE