Devolve to deliver levelling up?

By Paul McDermott | 24 January 2022

The highly anticipated levelling up White Paper is tipped to be released in February following previous delays. So far levelling-up has seemed more of a 'feel good' political philosophy rather than a clear programme. The White Paper is expected to change this by proposing clear objectives and delivery details.

To succeed, on its own terms, levelling up has to rectify the underlying structural problem of England having a regionally distorted and unequal economy. The White Paper is likely to emphasise promoting: ‘left behind’ towns, poorly served rural areas and new/emerging centres. Mr Gove, at his party's conference, also identified his key objectives of strengthening local leadership; raising living standards; improving services and giving people the resources to enhance local pride. What is less clear is how economic disparity within English regions, including relatively prosperous ones, will be addressed.

Many in local government together with bodies such as the All Party Parliamentary Group on Devolution, have expressed strong views that strengthening English local government/devolution is necessary to enable diverse and vibrant local economies. Others have concerns that the price of levelling up might be the imposition of combined authorities or involuntary local government reform.

There is nothing in ministerial statements which indicate that levelling up cannot be delivered in partnership with combined and local authorities.  MPs may also be sympathetic to their localities playing a meaningful role in taking the agenda forward, if only to avoid the ‘we are sick of things being done to us’ sentiment which exists in many of those areas likely to be targeted. After all, local empowerment has underpinned a strong regionally based German economy. Germany may also have useful lessons for England, as it spent decades investing in and 'levelling up' East Germany which was a much poorer territory than the affluent former West Germany.

If the White Paper endorses a local/regional approach then the Department for Levelling Up, Housing & Communities (DLUHC) is likely to set funding conditions which are tied to broad parameters such as economic development, sustainability, infrastructure, and programmes to develop skills and opportunities for people.  The decisions about how to deliver these outcomes would ideally be devolved to the local level.

DLUHC has options about how it applies levelling up funding. The ten Combined Authorities and the Greater London Authority are structured to receive devolved budgets, have existing aligned economic development objectives, and broadly the powers, to fund and be accountable for locally based levelling up programmes.  If the Government had some reservations about urban combined authorities favouring core cities over suburbs/towns then, no doubt the funding criteria could specify priority areas.  The other category of authority for which there is some experience of devolution is unitary authorities, such as Cornwall.  In principle large unitaries and some counties could be devolved responsibility for allocating funding to suit local conditions based on national objectives.

There are several options for the remaining local areas. The Secretary of State could introduce a new power permitting authorities to 'come together' for the sole purpose of overseeing and providing governance for levelling up funding in their area. Alternatively, some councils may come together as combined authorities or, as some commentators have suggested, economic prosperity boards for the primary purpose of delivering the levelling-up programme locally. As a possible last resort for areas unable to agree any of these options, DLUHC could itself (or through an agency) administer funding with the relevant local authorities acting as accountable bodies. 

We do not anticipate that DLUHC will use levelling-up to ‘force’ authorities to join combined authorities or embrace local government reform, as either of these routes are likely to risk local resistance, or the use of Parliamentary time and delay the programme. Levelling up was a key Government manifesto policy in 2019 and we expect DLUHC will prioritise delivery rather than become mired in involuntary local government reform or change for change's sake when the alternatives are feasible.  

If they haven't done so already authorities should start seeking a consensus with their neighbours about the best local route for devolved/local input into the levelling up programme. The alternative to consensus is to risk the imposition of either or both a more centralised delivery programme or have levelling up governance structures imposed on them.

Paul McDermott, Partner and Julian Jarrett, Associate – Trowers & Hamlins' Public Sector Group 

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Local economies Devolution Michael Gove DLUHC Levelling up
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