Levelling Up the North East

What is levelling up and how can we measure it?

Updated on April 14, 2022

After more than two years waiting since the 2019 general election for answers to those two questions we at last, on February 2, 2022, received the government’s answers when it published its Levelling Up White Paper. The White Paper is 332 pages long, and there is a 54-page technical annex explaining how success will be measured. For easier reading, there is an executive summary of the White Paper here, and you can read the government press release here

Encapsulating the White Paper’s central message is far from easy, but is perhaps best summarised in the Foreword by Prime Minister Boris Johnson when he writes: ‘Politicians have been aware of…regional inequality for as long as it has existed yet have been content to focus instead on the big picture of national growth – a waste of talent and a waste of this country’s economic potential.

‘The answer to it lies not in cutting down the tall poppies or attempting to hobble the areas that are doing well. Instead, I am determined to break that link between geography and destiny, so that it makes good business sense for the private sector to invest in areas that have for too long felt left behind.

‘If places that are currently underperforming start firing on all cylinders, national GDP will rise by tens of billions each year. That means more growth, more jobs, and higher wages right across the UK. And if we can level up this country – and close our productivity gap – we will have the most prosperous economy in Europe. That is the theory; this White Paper describes the practice’.

A more succinct definition comes in a second Foreword in  the joint names of Michael Gove, Secretary of State for Levelling Up, and Andy Haldane*, part author of the White Paper during his now-completed secondment as Permanent Secretary in the Cabinet Office: ‘Levelling up is a mission – part economic, part social, part moral – to change that [geographical inequality] for good’.

As a concrete example of what they mean, Gove and Haldane open their Foreword with a glowing reference to Tees Valley Mayor Ben Houchen and a Teesside slogan:  ‘Stay Local, Go Far’.

‘Teesside is making good on that ambition’, they write, ‘with the recent rebirth of its high tech, high skill, high wage economy under mayor Ben Houchen’s inspirational leadership. We see similar success stories throughout the country’.

Andy Haldane has written an essay on the White Paper which is available on the Royal Society of Arts website here.

OBJECTIVES 

Aside from a history and theory of economic geography, the White Paper sets out four objectives for levelling up and 12 missions, all to be achieved by 2030. The four objectives are:

  • Boosting productivity, pay, jobs and living standards by growing the private sector;
  • Spreading opportunities and improving public services;
  • Restoring a sense of community, local pride and belonging; and
  • Empowering local leaders and communities.

The success of the first of these will depend on growth in the economy. Government support for the Britishvolt factory being built near Blyth, for other ‘green industrial revolution’ projects on the Tyne, Wear and Tees, and for other sectors where the North East is strong, such as life sciences, advanced manufacturing and the digital sector are examples of what is needed. This offers a reasonable prospect of success in the medium term; the White Paper’s 2030 target date is sensible.

The success of the second objective will depend on the reversal of the austerity of the past decade and more, particularly as it has affected local councils which provide many of the public services involved. The prospects of this are not good, firstly because the Treasury will be keen to start paying down the national debt accumulated during the Covid-19 pandemic and secondly because the demands for funding levelling up from the economically lagging areas in the north and Midlands will face competing pressure from the Tories’ traditional heartlands in the leafy suburbs and shire counties of the south, where the priority is lower taxes rather than higher public spending.

It is noticeable too from the distribution of the grants that have already been paid that levelling up is not a regional project but one that is applicable wherever economic problems and their social consequences are to be found all over the country – for example, in deprived coastal towns in otherwise generally prosperous regions in the East and South East. This is significant for regions like the North East, where it has been assumed for decades that it and other parts of the north were to be the main beneficiaries of regional economic development because they had the worst regional metrics. The Coalition Government effectively put paid to that idea when it abolished the apparatus of regionalism – regional development agencies and government offices for the regions – in 2010 and substituted localism instead with 38 local enterprise partnerships (LEPs). That shift from regionalism to localism has reached its apotheosis in the White Paper. Now the North East has to share levelling up funds with rival claimants all over the UK. We don’t always realise the shift has occurred because the Office for National Statistics (ONS) still announces many of its figures, including the all-important unemployment totals, most frequently though not exclusively on a regional basis.  

The restoration of local pride is where much of  the limited funding that is available is being directed. The £4.8bn Levelling Up Fund is being doled out in relatively small grants of around £20m for civic improvements that can show visible results by the time of the next general election in 2024. The £3.6bn Towns Fund is already paying out similar sums to 100 selected towns, including seven in the North East, to drive their sustainable economic regeneration. Other announcements of modest sums designed to enhance local pride have been reported on this website since the White Paper was published, such as two tranches of cash for culture of £75m nationally on February 23 and £48m on March 14. Allocations from the £2.6bn UK Shared Prosperity Fund, including £170m for the North East have the  strengthening of social fabric and the fostering of a sense of local pride among their objectives alongside more conventional economic development targets like business support and skills. The government will be hoping all these initiatives will boost pride in place quite quickly, and they may well be right. But they are no substitute for improved living standards and public services.

The empowerment of local leaders and communities is intended to be achieved by offering a devolution deal to every place in England that wants one by 2030. An expanded North East deal taking in all six councils in Northumberland and Tyne & Wear (the LA6), and a separate county deal for Durham, are among those specifically mentioned in the White Paper. After seeing how Tees Valley, with a deal, has benefited from preferential government funding in recent years compared with the rest of the region, it seems almost unthinkable that the councils to its north should not correct the error they made in 2016 and sign a deal at the second attempt. Almost unthinkable, but not quite. It is still impossible to tell what the leaders of Gateshead, South Tyneside, Sunderland and County Durham will do.

MISSIONS

In addition to the four objectives listed above, the White Paper sets out 12 national missions to be achieved by 2030. They deal with the following topics: the economy, R&D, local public transport, digital connectivity, education, skills, health, wellbeing, pride in place, crime, housing and local leadership. It is worth recording them in full:

1. By 2030, pay, employment and productivity will have risen in every area of the UK, with each containing a globally competitive city, with the gap between the top performing and other areas closing.

2. By 2030, domestic public investment in Research & Development outside the Greater South East will increase by at least 40% and at least one third over the [three-year] Spending Review period, with that additional government funding seeking to leverage at least twice as much private sector investment over the long term to stimulate innovation and productivity growth.

3. By 2030, local public transport connectivity across the country will be significantly closer to the standards of London, with improved services, simpler fares and integrated ticketing.

4. By 2030, the UK will have nationwide gigabit-capable broadband and 4G coverage, with 5G coverage for the majority of the population.

5. By 2030, the number of primary school children achieving the expected standard in reading, writing and maths will have significantly increased. In England, this will mean 90% of children will achieve the expected standard, and the percentage of children meeting the expected standard in the worst performing areas will have increased by over a third.

6. By 2030, the number of people successfully completing high-quality skills training will have significantly increased in every area of the UK. In England, this will lead to 200,000 more people successfully completing high-quality skills training annually, driven by 80,000 more people completing courses in the lowest skilled areas.

7. By 2030, the gap in Healthy Life Expectancy (HLE) between local areas where it is highest and lowest will have narrowed, and by 2035 HLE will rise by 5 years.

8. By 2030, well-being will have improved in every area of the UK, with the gap between top performing and other areas closing.

9. By 2030, pride in place, such as people’s satisfaction with their town centre and engagement in local culture and community, will have risen in every area of the UK, with the gap between the top performing and other areas closing.

10. By 2030, renters will have a secure path to ownership with the number of first-time buyers increasing in all areas; and the government’s ambition is for the number of non-decent rented homes to have fallen by 50%, with the biggest improvements in the lowest performing areas.

11. By 2030, homicide, serious violence, and neighbourhood crime will have fallen, focused on the worst-affected areas.

12. By 2030, every part of England that wants one will have a devolution deal with powers at or approaching the highest level of devolution and a simplified, long-term funding settlement.

Few commentators have criticised the White Paper’s aims and ambitions but many have questioned whether it is achievable in the time allowed – by 2030 – or with the resources committed. One critic is the respected Institute for Government, which has said that only four of the 12 missions are clear, ambitious and have appropriate metrics. The other eight, it says, all need to be recalibrated if they are to deliver on the government’s promises to level up the UK. 

Those who believe that levelling up should mean a direct assault on poverty and deprivation, as exemplified by food banks and rough sleepers, will be disappointed. Ministers would doubtless argue that they are tackling these problems by other means and that the White Paper is a longer-term answer to the underlying issues causing these problems. Nevertheless, levelling up does not involve, for example, increasing Universal Credit. It is not itself a welfare policy.   

 COMMENT

The White Paper puts in place two of the three building blocks required for levelling up. One is the policies and the other is the funding. The policies are comprehensive in scope, reasonable in ambition and sensible in time scale.

The funding is disappointing, but little more is to be expected until economic growth permits mainstream departmental expenditure limits to be increased. The only real hope is that the Fair Funding Review will lead to a larger slice of the existing pie going to economically lagging areas.

It is an unfortunate feature of the British system that the sensible time scale for the levelling-up policies referred to above is not matched by a budget commitment of an equivalent period. No one knows how much will be available for levelling up after the current three-year Spending Review period ends in 2024, a full six years before the levelling-up missions are targeted for achievement. No one even knows if the levelling up policy will survive he general election due in 2024.

These two building blocks of levelling up which are now in place, the policies and the funding, whether adequate or not, are the responsibilities of ministers. The third block, devolution, rests largely in the hands of local councillors. The challenge in the North East now is one for local politicians: to walk through the door to devolution that was held open for them in 2016 but which they did not have the unity, ambition, sense or courage to walk through then. They should not stall again.

MEASURING PROGRESS

The government will, the Levelling Up White Paper (p. 247) promises, legislate to introduce an obligation on itself to publish an annual report on delivery against the levelling up missions. It is also possible for readers to check progress on some economic targets in the North East Local Enterprise Partnership (NELEP) area on NELEP’s website here. A wide range of economic data at national, regional, LEP, combined authority, local authority, constituency and ward level is available on the website of Nomis, the official labour market statistics, here. In addition, the Office for National Statistics publishes local statistics on a range of other topics including wellbeing and life expectancy here. See also this website’s Levelling Up Checklist here

*For transparency: Andy Haldane is Chief Executive of the Royal Society of Arts, of which this author is a Fellow.

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