If the overriding ambition of levelling up is to change the economic geography of the country, this means raising standards to the levels of those attained in the three net contributors to the Treasury – namely the east of England, London and the South East.
In his ruminations ahead of the White Paper’s publication, levelling up secretary Michael Gove invoked the ‘Matthew effect’ and the need to reverse the impact of agglomeration, which have seen, on the face of it, more given to those parts of the country which already possess and less given to those who have less.
From the Prime Minister down, ministers have emphasised that although money will be channelled upwards in an act of fiscal irrigation, this isn’t an exercise in decapitating the tall poppies. But still the Government must rethink its assumption that merely directing investment away from an ‘overheated’ South East would cool intense living pressures affecting the region and benefit the rest of the country.
In a Localis report issued this week, Resetting the South East: levelling up after Brexit, Covid and climate change, we make the case that the inherent strengths of the region, which leads the country in export-led growth, demand a greater devolution of economic control, infrastructure investment and transport coordination.
The broad south east, stretching from Oxfordshire and the fringes of the Midlands down through the home counties to the maritime embrace of the south coast represents a rich and diverse economic geography. But it’s not always happy hour in the beautiful and prosperous South. Intra-regional inequality within functional economic areas is something the White Paper acknowledges as being as notable as disparity between our regions. And the South East contains notable pockets of deprivation, especially in coastal areas, which are as left-behind as anywhere else you’d find in the country.
The region is pivotal to our hopes, at a time of increase trade turmoil, of spearheading export-led growth through ‘Global Britain’. At the same time, the South East has the natural capital to deliver strategically, regionally and nationally on net zero and food security. However, its local authorities are hemmed in by financial restrictions that mean they are unable to respond adequately to demographic demands, growth challenges and service pressures.
A more nuanced devolution settlement for the South East would empower local councils to alleviate deprivation, improve quality of life for residents and boost government’s net zero and Global Britain ambitions.
Here’s how. As it should be, this starts with local government finance. Localis is calling for the establishment of a South East Finance Commission – along the lines Boris Johnson did as London Mayor – to investigate how appropriate fiscal levers could help the region as a net contributor to the Exchequer self-fund investment to boost the regional economy and fund local services.
There is ample room for councils in surplus-generating areas of the region to raise funds for capital investment towards levelling up goals. They should be able to raise additional levies to fund investment, using powers like those afforded to the Mayor of London in the Business Rates Supplement Act or the ability to use expansive Tax-Increment Financing for pro-growth schemes.
Local leadership must be to the fore. Ministers have derided the chances of any chinks opening up in the armour of the devolution framework, which currently offers nothing for district councils working in partnership with counties, LEPs and each other to achieve local goals across a functional economic area. The devolution framework should extend the powers offered under ‘level 2’ to joint ventures, providing they are incorporated as a single body with a nominated leader to be the point of contact for and accountability to Whitehall. And in revising the framework, given the vital importance of increasing export intensity to achieving the government’s Global Britain ambitions, government should review the role of local government in exports.
While it is far from being too late for government to correct devolutionary course, it is also incumbent on the south east’s local leaders to present the incoming Levelling Up Director with a unified and coherent approach.
To co-create a unified and bottom-up framework for devolution, Localis is recommending the south east’s local authorities should come together later this year in a major ‘Summit for the South East’. This convention would meet to decide upon the preferred structure of local government in the South East; to set broad regional priorities for levelling up and define key regional assets. This could be done in concert with, or as a report submitted to, the forthcoming Levelling Up Director.
Finally, this has to connect the South East, which, as a whole region faces numerous unique transport challenges relating to decarbonisation and pandemic recovery. Transport for the South East should be made a statutory body with strategic responsibilities and be a pivotal part of the plans for reforming the rail franchise system.
Jonathan Werran is chief executive, Localis