Fairer funding formula urgently needed if the Government is serious about levelling up in Yorkshire - Ryan Swift

Yesterday was Yorkshire Day, rightly a day of festivity – a moment to celebrate the culture, identity and strengths of this wonderful place that five million of us call home. While the government sought to join in our celebrations with warm words for Yorkshire, they can and should offer more than platitudes.

Here in Yorkshire, people are experiencing the second lowest rates of disposable household income in all of England. In Yorkshire, disposable household incomes are on average £17,592 per person. This compares with £29,890 per person in London and £24,551 per person in the South East. The England average is £21,962.

In reality, this means that many Yorkshire folk have less money in their pockets to spend than those in the majority of other regions in England. This is particularly hard felt during a cost-of-living crisis, when too many people are trapped in a cycle of impossible decisions – like between heating and eating.

Hide Ad
Hide Ad

Despite our need for the levelling up agenda to deliver, we continue to be underinvested in by central government. In the second round of allocations made by the flagship Levelling Up Fund which were announced earlier this year, Yorkshire received the second lowest amount of funding out of all English regions – a measly £21.90 per person. That's right – just £21.90 per person to level up our region.

A young boy from Leeds pictured amongst the White Roses, in the Rose Garden at Temple Newsam, Leeds, for Yorkshire Day. PIC: Simon HulmeA young boy from Leeds pictured amongst the White Roses, in the Rose Garden at Temple Newsam, Leeds, for Yorkshire Day. PIC: Simon Hulme
A young boy from Leeds pictured amongst the White Roses, in the Rose Garden at Temple Newsam, Leeds, for Yorkshire Day. PIC: Simon Hulme

Yorkshire did receive a slightly higher share of funding in the round one allocations of the Levelling Up Fund back in 2021, but taking both rounds together, and accounting for inflation between the two rounds which has chipped away £1 in every £13 from the fund, Yorkshire was in the bottom half of England’s nine regions in terms of funding. This is despite being second to last for disposable household income regionally. Need and investment appear to be divorced in the government’s funding of levelling up.

Levelling up is an agenda that still needs to shift from rhetoric to reality in Yorkshire. It was launched with the promise of improving the regional inequalities that so negatively impact many communities here, but the funding to match the ambition has yet to materialise for the region. It’s time that the government put its money where its mouth is, stepped up and delivered the investment that the region both needs and deserves, enabling Yorkshire to unlock and reach its vast potential. For example, IPPR North has previously highlighted how investment in green steel could protect one of our region’s historic industries, create thousands of new jobs and put Yorkshire at the forefront of the action when it comes to achieving net zero. Investing in Yorkshire would not only benefit us here – fixing the UK’s regionally unbalanced economy is essential for boosting national prosperity and improving living standards across every part of the country.

To that end, we’re calling on the government to look to adopt a fairer funding formula for regions across England, where funds are devolved and calculated by a fair, needs-based formula. Internationally, such approaches are common. As well as enabling more funding to go to regions with the greatest need, a fair funding formula can provide enhanced certainty over future revenue, enabling local decision-makers to develop long-term plans that will benefit their areas.

Hide Ad
Hide Ad

New IPPR North analysis published in yesterday’s edition of The Yorkshire Post has found that if such a system were in place, Yorkshire would have received £1.1bn, or 11.24 per cent of all of the various different competitive funding pots associated with the levelling up agenda over recent years. While we estimate German-style levelling up would see an annual £854m pot for Yorkshire's leaders to invest in our priorities.

By contrast, the way in which the government currently funds levelling up has been widely criticised, described as being competitive and opaque by the influential Public Accounts Committee. Adopting a sensible and fair approach to providing funding for regions and devolving power to allow local leaders to spend these funds in ways that will truly benefit their areas is key to successful levelling up. Our over-centralised, low investment approach to levelling up is wrong. Previous IPPR North research has shown that there are credible international examples from Sweden to Spain, and from Germany to Japan and the Netherlands, where positive approaches to investment in areas such as net zero, culture, transport and skills have transformed regional economies.

A fairer funding formula for regions is something the government should be exploring urgently if it’s serious about levelling up for the people of Yorkshire. No longer should our region be held back by underinvestment. Imagine a future in which local leaders in Yorkshire have the power and financial firepower to properly invest in the region’s priorities, delivering well paid, high-skilled jobs, great culture and leisure opportunities, brilliant public transport connections and enhancing the towns, cities, villages and green spaces that make our region so special.

Ryan Swift is a research fellow at IPPR North. He is based in Halifax and tweets @RyanSwift93.