The Government's Levelling up agenda, House of Commons debate, 15 September 2021

The Government announced its intention in the Queen’s Speech to introduce a Levelling Up White Paper later this year. We understand this will supersede the planned Devolution White Paper. 


Key messages

  • Local leaders have shown throughout the pandemic that they are well placed to deliver the best outcomes for local communities. They are also best placed to align the work of government departments and agencies with the assets and opportunities of different places. 

  • Local government has played a vital role in leading the response to COVID-19. Throughout this period, councils have delivered at speed, working in partnership with national government to support communities. 

  • As we turn our attention to tackling the significant economic challenges ahead, it is more important than ever that the Government reconsiders the growth funding and policy landscape to ensure it is fit for purpose and able to drive green and inclusive growth that achieves the Government’s levelling up ambitions and meets local needs.  

  • The Government announced its intention in the Queen’s Speech to introduce a Levelling Up White Paper later this year. The White Paper presents an opportunity to reset the relationship between central and local government and put councils at the heart of delivering the Government’s ambitious programme to improve opportunities in all parts of the country.  

  • The LGA supports the findings of the Devolution APPG inquiry into ‘Levelling Up Devo’, which recommended that the White Paper should rethink the recent top down devolution process to set out a new English devolution baseline for our communities, accompanied by a sustainable funding settlement. 

  • The LGA welcomes the £4.8 billion Levelling Up Fund and the fact that councils have been placed at the heart of the delivery of the Fund. We look forward to working with government on the detail but are concerned by the prospect of competitive bidding processes at a time when councils want to be fully focused on protecting communities and businesses from the impact of the pandemic.  

  • The £220 million UK Community Renewal Fund is also an important means to help councils invest in their communities as we look to recover from the pandemic. However, with just six months to go before the end of the financial year, there is now a real risk to in-year project delivery if funding allocations are not announced urgently. 

  • Good jobs and career opportunities where people live is central to the Government’s levelling up ambitions. The route to achieving this is through greater devolution, which would empower local leaders to create local, integrated skills and employment offers tailored to the needs of local economies and residents. We will be working with government to ensure that the changes put forward in the Skills and Post-16 Education Bill make use of local government’s expertise to deliver better outcomes.  

  • The Skills and Post-16 Education Bill should be used as an opportunity to tackle our fragmented employment and skills system, with a greater role for councils and employers to help create jobs and training opportunities in their local communities 

  • Councils fund and run a wide range of culture and leisure services, including libraries, museums, theatres, parks, sports pitches and leisure centres, which have significant value in preserving people’s mental and physical wellbeing, supporting educational outcomes, connecting communities and creating resilient liveable places. This important area of council work must not be forgotten in the Government’s levelling up ambitions - spending on culture and leisure is not a luxury: it is a commitment to the wellbeing of residents and the economic future of local places.  

  • The effects of the pandemic have mirrored, and in some cases exacerbated, our entrenched health and social inequalities. Health, wellbeing and economic objectives should be explicitly aligned as part of a strategic approach to the local economy.  

Levelling up white-paper

  • The Government announced its intention in the Queen’s Speech to introduce a Levelling Up White Paper later this year. We understand this will supersede the planned Devolution White Paper.  

  • The White Paper will build on actions the Government is already taking to level up across the UK and will set out “bold new policy interventions to improve livelihoods and opportunities in all parts of the UK.” It looks to improve living standards, grow the private sector, improve health, education and policing, strengthen communities and local leadership and restore pride in place.  

  • The Levelling Up White Paper presents an opportunity to reset the relationship between central and local government and put councils at the heart of delivering the Government’s ambitious programme to improve opportunities in all parts of the country.  

  • The LGA supports the findings of the Devolution APPG inquiry into ‘Levelling Up Devo’, Among the APPG’s recommendations are that the Government should work with local government to set out a National Devolution Baseline for England, including a list of new powers available to every council, without the need to negotiate a devolution deal, as well as further powers which are available subject to clear eligibility requirements. Devolution from Whitehall to councils should be by default and at the heart of the national government policy. 

  • An English devolution taskforce should be established to enable discussion between national and local government on progress with devolution to councils. To ensure a co-produced approach to devolution, it should be led by Number 10 and jointly chaired by the responsible Cabinet Minister and a Council Leader. 

  • The Government should build on the approach to future growth funding signalled at the recent Budget and continue to move away from a pattern of piecemeal, fragmented and short-term interventions. We need to move towards a localist settlement that gives councils the powers and resources to drive green and inclusive growth that meets the needs of their communities.  

Levelling up fund

  • The Government launched the prospectus for the £4.8 billion Levelling Up Fund alongside the Budget 2021. The Levelling Up Fund will invest in infrastructure that improves everyday life across the UK, including town centre and high street regeneration, local transport projects, and cultural and heritage assets. The Government has identified priority places based on an index of local need to receive capacity funding to help them co-ordinate their applications.  

  • The leading role for councils identified in the Levelling Up Fund Prospectus is evidence that the Government has listened to our calls for a greater focus on the challenges and opportunities of place. It is good that councils have been placed at the heart of the delivery. We look forward to working with government on the detail but are very concerned by the prospect of competitive bidding processes at a time when councils want to be fully focused on protecting communities and businesses from the impact of the pandemic.  

  • COVID-19 has highlighted some of the entrenched inequalities that exist across the country. We note that this prospectus only sets out the approach to the first round of bids. In order to tackle the scale of the challenge ahead Government will need to build on this commitment in future years.  

  • The Government has committed to providing capacity funding to help those councils most in need of levelling up to develop high quality bids for the Fund. This is an important step in helping mitigate the risks of local capacity issues as the result of COVID-19 restricting local areas from pulling together bids for the benefit of their communities.  

  • We recognise the importance of collaborating with businesses, civic institutions, communities, and MPs across place to bring together high quality and impactful bids. However, it is vital that the criteria setting out how many bids areas can submit to Government is simple and promotes collaboration, rather than competition between neighbouring councils. It is welcome that the prospectus recognises the primary role of local government and confirms that all bids should have the approval of the relevant authority responsible for delivering them. 

  • The £220 million UK Community Renewal Fund is also an important means to help councils invest in their communities as we look to recover from the pandemic. This will support communities across the UK in 2021-22 to pilot programmes and new approaches as the government moves away from the EU Structural Funds model and towards the UK Shared Prosperity Fund. The LGA is looking forward to working with government to help design the UKSPF in advance of its introduction in 2022/23 through a Task Force. We await further details of the UKSPF when it is announced later this year, including the total quantum of the fund.  

Economic growth and recovery

  • Economic growth relies on a wide range of factors and the country's economic recovery will need joined-up support at all levels of government. Throughout this pandemic, local government has delivered at speed, working in partnership with national government to support communities. If Government is to achieve its levelling up and growth ambitions to tackle not just the national economy, but economic disparity within the UK, it will need to include local government as early as possible. This includes in the development of the Levelling Up White Paper. 

  • As we turn our attention to the significant economic challenges ahead, it is more important than ever that the Government reconsiders the growth funding and policy landscape to ensure it is fit for purpose and able to drive green and inclusive growth that achieves the Government’s levelling up ambitions. 

  • For too long national government has lacked a strategic and joined-up plan to drive local economies and empower local leaders to take effective action. Instead, national support for local growth has been characterised by a lack of coordination between departments and a complex framework of national funding and support. Previous LGA research found that £23 billion of public money was spent on growth, regeneration and skills, fragmented across 70 different national funding streams and managed by 22 government departments and agencies. More recently, Government’s new Plan for Growth has yet to demonstrate how it will connect an ambitious national plan with delivery on the ground. 

  • The scale of the challenge ahead means that a new approach to growth and policy responsibility in England is now required, one that matches the place leadership of councils and their crucial role in convening wider public service delivery and investment with the need for locally tailored reconstruction and renewal. To deliver on this there must be greater devolution to councils. Local leaders need the powers and resources to bring government departments and agencies together to deliver locally determined and democratically accountable outcomes. 

  • If levelling up is to reduce the regional productivity gap, it must involve decentralising and devolving powers to local government. As it stands, the UK is one of the most fiscally centralised countries in the developed world, with councils in England only able to levy two taxes: council tax and business rates. Both are subject to significant intervention and control by Whitehall and both stand increasingly exposed in the light of long-term changes in home ownership and business composition, such as the rise of e-commerce and the growth in micro-businesses. In contrast, research commissioned by the LGA shows how local authorities in Germany, Switzerland and the Netherlands can access a diverse range of revenue sources and adjust and introduce local levies in consultation with their residents and businesses. This allows them to respond to new public priorities, such as climate change or new forms of economic activity. 

  • There have been a range of attempts to estimate the growth impacts of decentralisation. One study produced by the OECD in 2018 found that “increasing tax decentralisation by 10 percentage points is associated with around 0.09 percentage points more growth or, in the long run, with around 1.75 per cent higher GDP per capita.” That matches very closely to the increase in UK tax decentralisation that would be required to shift the UK to the OECD average for decentralisation: whereas in the UK 4.9 per cent of taxes are set locally, for the OECD the average is 15.1 per cent. Fiscal decentralisation must form part of Government’s plans for growth. 

  • Devolving economic powers means that local and regional leaders can use their local knowledge and their integration into the local community to utilise resources more efficiently and develop partnerships to grow local economies. Local leaders are better able to innovate to make the places they represent more inclusive through progressive procurement, living wage areas or anchor institutions. 

Skills and employment 

  • Economic growth relies on a wide range of factors and the country's economic recovery will need joined-up support at all levels of government. Throughout this pandemic, local government has delivered at speed, working in partnership with national government to support communities. If Government is to achieve its levelling up and growth ambitions to tackle not just the national economy, but economic disparity within the UK, it will need to include local government as early as possible. This includes in the development of the Levelling Up White Paper. 

  • As we turn our attention to the significant economic challenges ahead, it is more important than ever that the Government reconsiders the growth funding and policy landscape to ensure it is fit for purpose and able to drive green and inclusive growth that achieves the Government’s levelling up ambitions. 

  • For too long national government has lacked a strategic and joined-up plan to drive local economies and empower local leaders to take effective action. Instead, national support for local growth has been characterised by a lack of coordination between departments and a complex framework of national funding and support. Previous LGA research found that £23 billion of public money was spent on growth, regeneration and skills, fragmented across 70 different national funding streams and managed by 22 government departments and agencies. More recently, Government’s new Plan for Growth has yet to demonstrate how it will connect an ambitious national plan with delivery on the ground. 

  • The scale of the challenge ahead means that a new approach to growth and policy responsibility in England is now required, one that matches the place leadership of councils and their crucial role in convening wider public service delivery and investment with the need for locally tailored reconstruction and renewal. To deliver on this there must be greater devolution to councils. Local leaders need the powers and resources to bring government departments and agencies together to deliver locally determined and democratically accountable outcomes. 

  • The UK’s current regional productivity gap has an impact on the economies of these areas – London and the South East account for over 40 per cent of businesses and 36 per cent of jobs in England, and London’s productivity is significantly higher than the rest of England. Central London is among the most productive areas in Europe, but this is in stark contrast to other areas of England which have productivity levels below Hungary, Slovakia and parts of Poland. 

  • If levelling up is to reduce the regional productivity gap, it must involve decentralising and devolving powers to local government. As it stands, the UK is one of the most fiscally centralised countries in the developed world, with councils in England only able to levy two taxes: council tax and business rates. Both are subject to significant intervention and control by Whitehall and both stand increasingly exposed in the light of long-term changes in home ownership and business composition, such as the rise of e-commerce and the growth in micro-businesses. In contrast, research commissioned by the LGA shows how local authorities in Germany, Switzerland and the Netherlands can access a diverse range of revenue sources and adjust and introduce local levies in consultation with their residents and businesses. This allows them to respond to new public priorities, such as climate change or new forms of economic activity. 

  • There have been a range of attempts to estimate the growth impacts of decentralisation. One study produced by the OECD in 2018 found that “increasing tax decentralisation by 10 percentage points is associated with around 0.09 percentage points more growth or, in the long run, with around 1.75 per cent higher GDP per capita.” That matches very closely to the increase in UK tax decentralisation that would be required to shift the UK to the OECD average for decentralisation: whereas in the UK 4.9 per cent of taxes are set locally, for the OECD the average is 15.1 per cent. Fiscal decentralisation must form part of Government’s plans for growth. 

  • Devolving economic powers means that local and regional leaders can use their local knowledge and their integration into the local community to utilise resources more efficiently and develop partnerships to grow local economies. Local leaders are better able to innovate to make the places they represent more inclusive through progressive procurement, living wage areas or anchor institutions. 

Health and wellbeing

  • The effects of the pandemic have mirrored, and in some cases exacerbated, our entrenched health and social inequalities. Never has the interdependence between health and the economy been closer, or the need for a fairer and more inclusive economic system been clearer.  

  • As a nation we have enjoyed increasingly longer and healthier lives on average since the 1940s. But behind this statistic lie wide health inequalities. The lower an individual’s socioeconomic position, as defined by where they live, their job, qualifications, income and wealth, the more likely they are to experience poor health. It has been estimated that, between 1 January 2003 and 31 December 2018, over a third of deaths in England were attributable to socioeconomic inequality, making this a major and long-term public health challenge which the Government’s levelling up agenda must address. 

  • Many of the so-called health determinants are in fact economic determinants: the goals of developing the local economy to be more sustainable and productive, and of improving the health of the local population and reducing health inequalities, are interdependent. Health, wellbeing and economic objectives should be explicitly aligned as part of a strategic approach to the local economy.