Levelling up risks becoming less than the sum of its parts

8 March 2021

By Zoë Billingham

4 minute read

Zoë Billingham writes for The MJ and argues that the levelling up agenda will only be successful if the government shores up the foundations of local service provision.

Another month, another fiscal event and we’re not much further ahead on the levelling-up agenda. Post Budget 2021 local areas face years of competitive bidding for an array of capital funding pots. But piecemeal physical infrastructure spend will not transform regional inequality. Unless the government rethinks its approach, levelling up risks becoming less than the sum of its parts.

Levelling up was central to the Conservative election win in 2019 and it is an idea that has stuck. A recent survey for the IFS Deaton Review by King’s College London, suggests regional inequality is now the inequality Britons care most about. Rachel Wolf, co-author of the Conservative party 2019 election manifesto, recently and candidly stated 'levelling up - like most political phrases - is completely meaningless' but ultimately it speaks to the determination to demonstrate that 'places and therefore lives will be tangibly better than they were two years ago, five years ago'.

Last week’s Budget announced, or re-announced, an array of mainly capital funding pots for levelling up, which local areas have to bid for competitively. This included the latest round of £3.6bn Towns Fund, the £4.8bn Levelling Up Fund and £4bn from the UK Infrastructure Bank.

Capital funding alone is unlikely to provide the change government says it is seeking to achieve. Treasury accounting methods lead to a preference for capital spend, but this can ring hollow against scant budgets for essential day-to-day services and a lack of investment in social infrastructure. The government has done well to respond to calls by CPP and others to support local government for COVID-related costs, but the Budget did nothing to fill the gaps in public service revenue budgets. Meanwhile, calls are mounting for the government to tackle the social care elephant in the room.

Bidding processes at a relatively small scale take time and money and are unlikely to lead to transformational outcomes. Large in overall scale, but divided into c.£20m bids, creates a piecemeal approach to physically upgrading the UK. The Levelling Up Fund does allow for bids to be joined up to increase the scale of investment, but in reality this will be difficult given the tight timing of the Fund. Competitive processes can also be costly. Acknowledging this, the Levelling Up Fund provides all eligible local authorities with £125,000 to help pay for people to write the bids. Meanwhile, studies have shown the high cost of bidding processes and the proportionally higher costs of making smaller bids.

We also know that competitive processes can lead to less-than-transparent outcomes. The National Audit Office heavily criticised the allocation of the first round of the Towns Fund and the second round has already been accused of pork-barrel politics. The methodology behind the decision to prioritise 123 local authorities for the Levelling Up Fund is yet to be published and is notable in its absence. Bad luck, levelling up.

To level up, we first need to shore up the foundations of local service provision: social care, libraries, youth services. We then need to invest in both the social and physical infrastructure of a place, reflecting what has been illuminated during covid – that inclusive economic growth relies on the health of its people as well as investment in their education and skills.

There will always be political appetite for short-term infrastructure projects that are visible and can help give the impression that an area is going places. But this will only make sense if the government shores up the foundations of local government. We need transparency and transformational change to level up.