North East Devolution and Levelling Up

Labour pledges £28bn a year for levelling up

Labour has pledged to spend £28bn a year for the lifetime of the next parliament on levelling up – a huge increase on what is being spent today or has been in the past by either Conservative or Labour governments.

The promise was made by Lisa Nandy, Shadow Levelling Up Secretary, at a conference organised in Newcastle by Northern Agenda, an online newsletter published jointly by northern papers in the Reach plc group, including The Journal and ChronicleLive*.

She said: ‘Far too many places have been losers in our economic settlement – many of them in the industrial and coastal town here in the North East and in every region of the UK where good jobs have gone and not been replaced…

‘We are promising £28bn a year, every year, in the next parliament to re-build our coastal and industrial towns so young people do not have to move hundreds of miles just to find good work or prospects’.

ANALYSIS

These two short and apparently straightforward sentences provide answers, on the face of it, to two important questions about levelling up, but in fact leave them as uncertain as ever: how much will be spent by Labour and where.

The amount Labour would spend is apparently clear, and £28bn a year is certainly a lot of money. But a lot compared with what?  Under the last Labour government England’s nine regional development agencies (RDAs) had budgets totalling £2.26bn in 2009-10, before the financial crash, and this was reduced to £1.17bn the following year.

When the Coalition government, having abolished RDAs, established the Local Growth Fund (LGF) in 2013, it pledged to maintain it at £2bn a year to the end of the following parliament. The White Paper Investing in Britain’s Future in 2013 put ‘resources under the strategic influence of LEPs’ (Local Enterprise Partnerships) at as much as £20bn in the years to 2021, including £5.3bn EU funding.

Given these figures, the next Labour government appears to be promising to spend ten times as much or more than previous governments this century – whether Labour, Coalition or Conservative.

But will it really? Is this credible? Is it a comparison of like with like? The amounts spent on regional development are viewed by scholars globally as notoriously difficult to calculate.

What will Labour’s £28bn a year include? Should it be compared with the current government’s relatively very small Levelling Up Fund (LUF), which amounts to only £4.8bn over three years? Or with the LUF plus a variety of other funds such as the Towns Fund (£3.6bn) and the City Region Sustainable Transport Settlement (£4.2bn), both of which are one-offs?

And is the UK Shared Prosperity Fund (£2.6bn over three years) – the replacement for EU regional funding of about £2bn a year – to be included?

Even counting these and other funds, Labour’s £28bn-a-year pledge is still very much larger.

But then there’s the question of reversing local government austerity. One of the present Conservative government’s levelling-up objectives is to improve public services, and presumably that would be the case for a Labour government too. As many such services are provided by local authorities that would mean reversing the cuts they have suffered over the past decade and more. Would funding for that process count towards the £28bn?

And whether it would or not, how would cash for levelling up be distributed across the country? Places like the North East have traditionally thought of levelling up as a regional issue. It is the region that has been seen as lagging and the region as requiring assistance not available to other more prosperous regions.

This idea of levelling up (under whatever name) as regional policy benefiting a limited number of regions like the North East actually started to be watered down when the Labour government created RDAs for every region of England in 1997. It was carried further by the Coalition government, which created LEPs for every locality. Now the funds referred to above are being distributed to places in all nations and regions of the UK.

Lisa Nandy’s speech, with its reference to losers in every region of the UK where good jobs have gone and not been replaced’ suggests that this will be Labour’s approach as well.

This is not to argue that this approach is wrong. There are deprived areas in all parts of the country, as the English Indices of Deprivation show. But it is to warn that the North East should not necessarily expect ten times or more the levelling up funding from the next Labour government as it is receiving from the current Conservative one.

By the time local authorities everywhere have had their austerity cuts reversed, and deprived and lagging localities everywhere have received their share of levelling-up funding, the North East, even if relatively favourably treated by the next Labour government – as it doubtless will be for political reasons after the party’s ‘red wall’ electoral shock in 2019 – can expect considerably less than the ten-fold increase in government support that Lisa Nandy’s £28bn pledge on the face of it implies.

*A full report of the conference, including links to the keynote speeches, can be accessed at the Northern Agenda site here.