While tax changes and childcare provision understandably took the headlines from last week’s Budget, there was an interesting indication beneath these headlines about the Government’s focus on growth and levelling up. And there is a subtle difference emerging between them.
The approach to growth is increasingly swinging towards both a prioritisation of a selection of places and a focus on ‘productivity potential’ – how well places should be doing given their size – as a key measure of how this prioritisation should be done. This recognises that different places make (or rather should be making) different contributions to the national economy. And it means dealing with the underperformance of big cities outside of London (noting that London has become a second economic headache in recent years).
“While talk is cheap, action is not.”
This approach was evident in language and narrative. In terms of signposting, the Budget and other supporting documents refer to the importance of improving the performance of large cities, and the benefits that this brings to the towns around them.
While talk is cheap, action is not. Fortunately this language is backed up with policy action in three areas that prioritise big cities and empower the mayoral institutions in them.
The first is the progression of the trailblazer devolution deals for Greater Manchester and the West Midlands. The Budget set out the details of what the proposed deals look like, with the creation of single pots of money to fund devolved policy responsibilities, agreed at spending reviews in the same way departments have their budgets agreed, being the biggest step forward within them.
The second indication is the extension of the City Region Sustainable Transport Fund for a second phase running from 2027-28 to 2031-32. This will give a further £8.8 billion to mayoral combined authorities to develop transport systems in addition to the £5.7 billion between 2022-23 and 2026-27.
And the third is the locations of the investment zones. Not only are the number zones scaled back from at least 40 down to 12, again showing prioritisation in action, but seven of the eight English zones will be in mayoral combined authorities covering large cities (with Tees Valley being the eighth).
“Announced were a plethora of modest pots of money for many different places amounting to just under £2 billion in total.”
In contrast, the language used around most policies explicitly badged as ‘levelling up’ was very different to that used around growth. Instead of prioritisation it spoke more about getting a ‘fair geographic spread across the regions of England’. And these policies are more likely to be focused outside of large metropolitan centres. Announced were a plethora of modest pots of money for many different places amounting to just under £2 billion in total. This included Levelling Up Partnerships, which will spend over £400 million across 20 places including Torbay and Tendring, £211 million for Levelling Up Regeneration Projects across 16 places, £58 million through Levelling Up Capital Projects in Stockport, Bootle and Rossendale and a third Round of the Levelling Up Fund worth £1 billion.
“Levelling up has always struggled with whether it is a policy about growth or a policy about redistribution.”
Levelling up has always struggled with whether it is a policy about growth or a policy about redistribution. Last year’s white paper set out a plan about how it should do both things depending on the role that a place plays in the economy. It seems as if the current chancellor and prime minister are moving towards separating this out so that growth policy focuses on potential and levelling up focuses on redistribution. Politically this will probably make both approaches easier to explain, and so are welcome.
The on-going challenge is how serious the Government is about both policies. While action isn’t cheap, the Government continues to try and do these interventions on the cheap. The amount of money announced is below the estimated £70 billion that Germany spent on average on reunification each year for almost 30 years by some considerable distance. Now that it has seemingly got its thoughts straight, it needs to start allocating some of the considerable increase in spending the current PM set out in 2020 if it is going to have impact.
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