The Levelling Up White Paper focused on tackling regional disparities across the UK. The paper notes that “differences are also typically hyper-local and differences within UK regions or cities are often larger than differences between regions on most performance metrics”. The Paper is essentially a manifesto for levelling up everywhere, not just north versus south. However, the three tiers for allocating funding are measured on a UK-wide scale and don’t take fully into account variation across regions or within local authorities.

Overlaying Indices of Multiple Deprivation with the local authority tiers demonstrates the variation within even small areas. 29% of Lower Super Output Areas in the most deprived decile of the index are not in the highest priority levelling up local authorities in the White Paper. This rises to over 50% in the third most deprived decile and underlines the argument that the case for levelling up can be made almost anywhere in the country.

How does planning interact with levelling up?

Levelling up has been defined by twelve missions, covering Productivity, R&D, Transport and Connectivity, Education, Skills, Health and Well-being, Housing, Crime, and Local Communities, and the planning process will have an important influence in many of these areas. Government has prioritised areas for the Levelling Up Fund with metrics relating to Productivity, Connectivity and Regeneration. Disaggregating these factors by local authority can start to show the types of interventions most needed to improve the performance of those areas.

Productivity

In the Levelling Up White Paper, one of the aims of the Productivity mission is to have a “globally competitive city” in each region. Metrics used to measure this include GVA per job, unemployment rate, and share of knowledge-intensive service sectors. Looking at GVA per hour worked shows that many UK cities are not meeting their full productivity potential. London is the only globally competitive city, but Birmingham, Leeds, Glasgow and Manchester are much less productive. They are attracting fewer high-paid, high-productivity jobs; and therefore not maximising the potential of benefits that can only achieve in urban areas, known as the agglomeration effect. As a consequence the prosperity that urban centres can bring to their wider city regions is limited.

To meet the ambition of creating more competitive cities, the levelling up policy is likely to be most effective if it focuses on creating high-performing, high-value clusters of businesses. These clusters will be predominantly urban, benefitting from the agglomeration effect of denser settlements, and the provision of improved employment space to attract occupiers but need to be supported by the right infrastructure across city regions. The areas most in need of improved productivity are in the East Midlands, which contains seven of the 20 least productive areas in the UK, North Wales and Yorkshire and the Humber.

Connectivity

The connectivity metric measures the average journey time to the nearest employment centre of at least 5,000 jobs, by both car and public transport, and identifies areas where the transport network could be holding back the local economy in England.

The maps show that for these areas, particularly in the East of England and the South West, a core component of levelling up will be increasing transport links to employment hubs such as Cambridge, Milton Keynes, Bristol and Exeter from surrounding local authorities. However, this metric masks urban connectivity issues beyond London. For example, within Greater Manchester, Rochdale has an average journey time by public transport of over 40 minutes to the nearest employment cluster. In contrast, no London borough has an average public transport travel time of more than 25 minutes.

Therefore strategic planning across local authority boundaries will be important to align public transport services to deliver levelling up goals, and using the powers devolved to Mayoral Combined Authorities can increase the impact of this, for example through franchising bus services. Future housing development also needs to be located in areas that can easily access public and/or active transport networks to ensure that they don’t fall into a vicious cycle of isolation, a strategy that will also help meet sustainability goals (See: Is development coming forward in the most sustainable locations?)

Another important metric for ensuring the most people are connected to important city regions is the travel-to-work data. This assesses how many people travel in and out of an area each day for work. The greater the amount of movement (flows in and out) the more inefficient the economy in terms of delivering housing and jobs in the same location, which creates an imbalance. More sustainable planning should address these challenges, notably in functional economic areas.

Regeneration

The third component of the Government’s levelling up methodology is the requirement for regeneration. This has been calculated by looking at commercial and residential vacancy rates. The areas with the highest residential vacancy rates tend to have significant overlap with the areas with the lowest productivity, with 52% of local authorities in the bottom third of GVA per hour worked also in the top third of residential vacancies. However, there is less overlap for commercial vacancies. Instead, these vacancies are clustered on the outer edge of major cities, predominantly in the North and Midlands, but also to the west of London.

Four local authorities in England and Wales have commercial vacancy rates of over 20%, compared with the median vacancy rate of 7.5%. In contrast, the median vacancy rate for residential is just 1.1%, and only 42 local authorities have a vacancy rate of more than 2%. This indicator shows that regeneration will be an important part of Levelling Up in these areas, with a focus on redevelopment of brownfield sites, delivering high-quality commercial stock that is appropriate for the fastest growing economic uses, including logistics, research and development, life sciences and construction. Better regard needs to be had of market forces and occupier requirements - there is little point in allocating significant amounts of land for R&D if the prevailing demand is for industrial and logistics and vice versa. The current employment demand estimation methods outlined in the NPPG are not responsive to market needs as outlined in Levelling up – the logic of logistics.

Housing and employment are inextricably linked, and given the low residential vacancy rates, even in economically underperforming areas, increasing net delivery of housing, as well as improving the quality of existing stock, will be key to supporting growth ambitions. Investment in high-value industries to boost productivity and employment risks being wasted if it isn’t accompanied by sufficient new housing. Commercial occupiers will be less inclined to base themselves in areas where the availability and quality of residential property is a barrier to recruiting and retaining the best employees. This is perhaps the greatest role for planning in delivering Levelling Up missions: there needs to be clear understanding of the capacity of an area to deliver the real estate needed to support economic growth. And in tightly constrained urban areas, joint planning mechanisms need to be in place to ensure unmet need and supporting infrastructure can be delivered in the urban hinterland.

Tees Valley Case study

The Tees Valley was highlighted in Michael Gove’s foreword to the Levelling Up White paper as an area seeing the “rebirth of a high-tech, high-growth, high-wage” economy. Under the UK Shared Prosperity Fund, £42m will be given to the area to help regenerate communities and tackle economic decline, while funding for the region’s transport will total over £300m over the next five years. Around 18,000 skilled jobs are expected to be delivered by 2026. Clearly, these investments are aiming to deliver on the Productivity, R&D, Transport and Connectivity, Education and Skills missions. But unlike some other devolution deals, the Tees Valley does not have devolved power for housing. Current adopted annual housing target across the Tees Valley is 2,125 homes. Although this figure is slightly higher than the standard method for calculating housing need, it does not take into account economic growth from increased investment. Neither do any of the local plans in the area address the type of housing that is needed to attract highly skilled workers to the area.

Savills has been advising TVCA on the scale of the economic growth opportunity in the region and the housing need to support such growth. The analysis has shown that there is a gap in the Tees Valley housing market that may limit its economic growth ambitions. Tees Valley has a good supply of family housing development in suburban areas; however, it lacks the mixed-use, high-quality town centre and rental housing market that is required to retain young and skilled workers and provide flexible rental accommodation for incoming skilled workers. Town centre regeneration is expensive and complex and requires public sector support if it is to deliver the wider benefits of transformational economic growth. It is important that planning for housing and economic growth are coordinated at a strategic level, and that long-term funding is directed to left-behind towns that can support economic growth. There is also a need for greater power to local and regional decision-makers to enact change in their places that will deliver the required productivity growth.

Without devolved housing powers and a joined-up approach to planning across the five local authorities, there is a risk that levelling up investment won’t be able to deliver the transformative change that is needed.

Core Implications for Planning

• Ensure coordinated and strategic plan-making across functional economic areas, not just traditional local authority boundaries.

• Ensure jobs generation is aligned with housing delivery priorities. Workable incentives to produce up-to-date local plans with a focus on productivity growth.

• Link investment priorities to defined clusters of growth, likely based on established city regions. Ensuring for example rapid growth in investment and public transport improvements.

• Ensure effective implementation of LU Bill planning measures to ease barriers for regeneration, for example, notably CPO, costs and planning delays.

• Ensure a clear priority for long-term sustainable development, allied to appropriate environmental priorities, which will sometimes require strategic Green Belt reviews, in addition to effective implementation of LU Bill proposals for environmental outcomes (rather than simply an assessment of impacts).

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