Rebecca Riley looks at what might come next for ‘levelling up’, suggesting the current system of competitive bidding for central funds is counterproductive and that long-term investment and local capacity are key to addressing regional inequalities.
Levelling up is not a new problem. Successive governments have tried and failed to a greater and lesser degree to solve it under different names. Yet the real key to ‘levelling up’ is tackling the long-term, persistent structural issues which have been embedded in places left behind by the demise of heavy industry.
There have been a wide range of programmes and policies introduced by governments to tackle these issues over time. These range from the 1920s Industrial Transference Scheme, the urban programme in the 1960s, City Deals, government offices and Regional Development Agencies in the 1990s, to the competitive process we have now with the Levelling Up Fund. As can been seen in the chart below, there has been a plethora of interventions since the late nineties alone.
There is, however, often a disjoint between what people see on the ground and want to fix in their local areas – which can often be met with small pots of money and ‘quick fixes’ – versus the things which need to happen to change places for the long term. This is a difficult balancing act for government, as seen in UK in a Changing Europe’s report on what people think about levelling up.
Realistically, to improve places we need consistent and coherent funding over the long term to change large scale structural issues – it’s not about small pots of ‘hanging basket’, competitive investment. Yet under the current system, local authorities – who have had a 20% reduction in real funding since 2010 – are bidding for a centralised pot of money for the opportunity to build something in their area. 74% of the 834 bids submitted nationally were not funded.
And though most of the funding that was awarded went to ‘left behind’ regions, it did not necessarily go to the most deprived areas within this group. For instance, of those in the least deprived group of local authorities, more than 300 had a per capita spend of £544.62. Meanwhile, the fifty most deprived local authorities had a spend per capita of £57.75. The nature of the competitive process is still creating a gap between winners and losers, when funding should be inclusive by design.
More widely, constant change to funding systems, on top of institutional reorganisation, are making the application process difficult to navigate for people, businesses and the public sector.
This is compounded by a lack of resources: local institutions don’t have the levers they need to deliver levelling up, lacking decision making powers, budgetary capacity and the institutional capabilities to make transformative policy interventions in the drivers of productivity. There are some important areas of delivery – such as skills and education – that local organisations have no control over at all.
If we’re to ‘level up’, investing in the knowledge and confidence of local leaders to take strategic decisions, allowing them to design creative responses to challenges, and giving them agency in how they deliver is key.
Levelling up is not merely a North-South issue either. It is also a story of hyper-local disparities that may be disguised at the national level, and which data does not always reveal. This means that local approaches to tackling inequality – with interventions delivered by people with strong local knowledge and lived experience of the community – are essential to achieving levelling up.
Levelling up should be about giving people capacity, confidence, and courage to drive change. Yet there is a lack of this thinking in current public policy. So, what should come next?
There is a wealth of evidence on levelling up that government can use to design interventions and tackle regional inequality – it’s time to move away from piloting programmes to changing mainstream policy. Our evidence at City-REDI shows that ending the stream of competitive funding programmes we have seen in recent years, and shifting to long-term investments will reduce the amount of public resources that are frequently wasted on unsuccessful bids.
Funding processes could be streamlined for skills, innovation, and infrastructure, and based around need. They can be delivered through local structures, with local accountability, and processes can be put in place to trace the combined impacts of place-based funding across the country, allowing us to understand and measure the success of programmes.
A commitment to long-term investment will not only incentivise markets, businesses, and local people to themselves invest in a local area but will help local communities and local government to develop the confidence, skills and expertise needed to drive change and development.
As we enter the run-up to the next election, there’s a chance that ‘levelling up’ could once again be renamed. A new government may want to distance themselves from their predecessors, or the debate could simply get lost in the midst of the other policies which dominate the election campaign. But the causes of regional inequality remain the same and we know what to do to solve them. We just need to look to the long-term.
By Rebecca Riley, Associate Professor, University of Birmingham.