The direction of travel for the regions

Levelling up was a defining theme of the incoming government of 2019. Angela Rayner, the new deputy prime minister, made it clear that the terminology was redundant – deleting it from the title of her renamed department, the Ministry of Housing, Communities and Local Government. A clear emphasis on governance and devolution, but what of the details of the policy? 

Increasing public capital investment to £100 billion over five years could provide a major boost to the nations and regions whilst increases in the National Living and National Minimum Wage will have a positive impact particularly for those regions with lower wage economies. However, the increase in employers’ National Insurance contributions has already led to speculation that this will dampen growth and job creation.

The Autumn Budget gave a flavour of the government’s emerging regional vision – an incremental approach which seeks to increase devolution to the regions whilst retaining many key tools of the previous government’s regional policy, specifically:

• Funding for the Investment Zones and Freeports programmes was confirmed
• £253 million for the continuation of all planned City and Growth Deals in Scotland, Wales and Northern Ireland
• The Long-Term Plan for Towns will continue but with some changes
• The Shared Prosperity Fund will be reduced but continues at least in the short term
• The £80 million Port Talbot Transition Funding has been reconfirmed

But the details of “a new localism” and the delivery of local growth plans will not be defined until Phase 2 of the spending review. 

Whilst we don’t know the detail of the spending review, the direction of travel would suggest:

• Combined authorities will have more responsibility for economic development under this emerging settlement with central government
• There could be more freedom in terms of tools and capital funding for local growth plans, defined settlements with UK government, an end to the “pot chasing” that defined the Levelling Up fund, and a longer-term integrated approach to Shared Prosperity Funding with a more place-based approach and a longer-term programme period
• There will be greater responsibility for local leaders in picking and prioritising capital and revenue projects 
• With more responsibility comes the need to demonstrate value for money and effectiveness in improving the economic and social conditions for places that remain or end up left behind 

Regional disparities and central government responses were affecting the UK economy well before the 1947 budget of Hugh Dalton. In Rachel Reeves’ budget there was an acknowledgment that the UK would be about £77 billion richer if we could close the gap between the city regions. A key message here is that empowered regional authorities will be expected to deliver, and that effective governance requires both challenge and support. This will include robust, evidence-based business cases and prioritised pipelines of projects that deliver real regional growth.

Further information

Contact Nick Bennett