Almost three turbulent years after the Prime Minister announced levelling up as a priority in his first speech on the steps of Number 10, the White Paper detailing how this will be implemented has been published.
The Government’s aim for levelling up is clear: addressing the stark geographical imbalances in the UK economy. In different guises it has been a priority for governments of all colours for generations. Indeed as Lichfields reflects on 60 years of consultancy practice, it is notable that policies to re-balance the economy have been an ever-present. From Wilson’s Urban Aid programme in 1969, to Thatcher’s Urban Development Corporations, Blair’s New Deal for Communities, the Coalition’s Northern Powerhouse and the current Government’s Levelling Up Programme. The challenges are clearly long term, ‘
wicked problems’, with most of the areas now identified as in need of ‘levelling up’ being the same areas that were supported by the Special Areas Act passed in 1934.
However, after the challenges of Brexit and Covid-19 and well documented ‘debates’ with HM Treasury: there is no new money announced today. Against this backdrop, what the paper does offer is:
Clarity matters, as funding commitments foster confidence and can assist in making markets and ‘crowding in’ other investment, as do institutions and leadership, which offer more accountable decision making and detailed strategic prioritisation.
Changing where investments are made
The Secretary of State has highlighted the current 80/20% split of housing funding – which is directed to the least affordable areas of the country and favours the Greater South East – as in need of redressing. To do this, there is a commitment that most of the £1.8bn in brownfield land funding will be spent in “the North and Midlands”. In keeping with this, 20 towns and cities will be targeted for regeneration funding (starting with Wolverhampton and Sheffield) to be supported by the new Office for Place.
Discussions with some of our key housebuilder clients operating in Northern markets indicate that committed investments from the
first round of the levelling up fund are already making some large housing sites newly viable to deliver due to the resulting new job opportunities associated with them. These are sites that although allocated in local plans, would not have been viable without the boost to demand from local investments in new employment sites.
However, in other areas there is concern amongst some housebuilders that a move away from supporting housing growth in the Greater South East will only deepen the housing crisis in this area by making it harder to deliver homes. The White Paper also makes clear that Homes England will be re-tasked with concentrating on its regeneration work, in the Midlands and the North.
However, there is consistent feedback from the development industry that levelling up policy should not be viewed as a substitute for the need to increase the supply of land available for new homes where it is needed to address affordability pressures. In these markets, future development pipelines rely upon the requirement, restated in the White Paper, for local authorities to have up to date local plans in place. The current level of need in the Greater South East is such that there will remain an urgent and significant demand for new housing which is independent of future economic growth in other areas. Indeed, the “80/20” balance of funding currently in favour of the Greater South East refers to mostly recoverable Homes England investment rather than grants or gap funding, i.e. this is an investment that enables development and is recovered, rather than funds it directly. In calling for less focus on areas with the most significant need for housing, there is a risk of levelling down the most productive areas of the country, or to use the Prime Minister’s phrase
“decapitating the tallest poppies[1]”.
Empowering local decision making
Building the institutions to deliver change is key to addressing local priorities, and the White Paper’s stated mission in this area is significant: a devolution deal with powers at, or approaching, the highest level of devolution and a simplified, long-term funding settlement for every part of England that wants one by 2030. The White Paper presents a devolution framework designed as a consistent set of pathways for places to gain these powers. This Government has been clear that areas with devolved powers will be best placed to strategically deliver change for their local areas.
The key to the success of this round of devolution will be getting the right geography, type of deal and scope of strategic powers. The framework sets out three levels of devolution with various levels of powers: a) local authorities working together e.g. through a joint committee, b) a single institution or county council without a directly elected mayor, and finally c) a combined authority with a directly-elected mayor.
The White Paper sets out that nine areas which will be invited to agree to become Mayoral Combined Authorities (MCA) and build the institutions to do this – by the end of the year. Those areas are: Cornwall, Derbyshire & Derby, Devon, Plymouth and Torbay, Durham, Hull & East Yorkshire, Leicestershire, Norfolk, Nottinghamshire & Nottingham, and Suffolk. There will also be negotiations for a new MCA deal for York and North Yorkshire and expanded Mayoral Combined Authority deal for the North East. Finally, West Midlands and Greater Manchester Combined Authorities will look to secure further powers with “trailblazer” devolution deals.
Where next?
The Paper ends with a section on the “next steps” and includes future legislation ambitions. These include reforms to the planning system, specifically to enable further development of brownfield land together with enhanced compulsory purchase powers to support town centre regeneration and site assembly generally.
Taken overall, the White Paper highlights the significant geographical disparities that have held back the UK economy for generations. The long-term policy focus, crystallised around the 12 “missions” shows a significant and clear shift towards supporting growth and investment outside of the London and the Greater South East. It is clear, however, that this should not be at the expense of growth in the most productive areas of the country, and arriving at a coherent economic plan that can deliver upon the growth potential and needs in all areas. Devolving powers to local leaders should help avoid levelling down productive areas while maintaining much-needed investment in those areas in need of levelling up.
[1] https://www.cityam.com/boris-johnson-promises-not-to-decapitate-london-as-a-part-of-levelling-up-agenda/
