How Rishi Sunak should level up Barnsley and North in Budget 2021 – Sir Stephen Houghton

Despite two years having passed since the last election, we are still no closer to understanding what levelling up means and how we can measure the agenda’s success.

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As the Special Interest Group of Municipal Authorities (SIGOMA) have recently detailed in a comprehensive report, not only are the aims of levelling up unclear, but the Government has adopted several policies that could harm so-called “left behind” areas – such as the failure to continue to £20 universal credit uplift or continued cuts to public services.

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This week’s Budget and spending review is a vital opportunity to end policies that run counter to the levelling up agenda and provide support for three clear priorities that will drive economic growth and opportunities and help to close the disparity between different regions in this country: the UK Shared Prosperity Fund, supporting businesses after Brexit, and sustainable local government finances.

This is a make-or-break spending review for the levelling up agenda – Chancellor Rishi Sunak should listen to our councils and act this week.

The UK Shared Prosperity Fund (UKSPF) is due to kick in from April 2022 and is intended to replace EU funding to the regions. In the spending review last year, the Government said the UKSPF will be worth on average £1.5bn a year, making it the largest of the present batch of levelling up funds.

However, virtually all the details are still to be announced. We need a transparent needs-based allocation formula rather than competitive bidding, which is wasteful of time and resources, open to favouritism and poor at delivering better outcomes.

Like the EU funding it is replacing, the UKSPF should operate on a lengthy multi-annual cycle that facilitates strategic long-term interventions. A seven-year cycle (like EU funding) would point to a total allocation of £3bn or more for the North, for example.

If we had stayed in the EU, both South Yorkshire and Teesside would have benefited greatly – as they have slipped below the 75 per cent GDP average compared to the rest of the EU, they would have qualified for more funding. If the UKSPF is replacing EU money, then the Government should hold to its promise and match what the increase would have been.

Sub-regions are the best basis for allocating and managing the UKSPF, with democratically accountable local authorities sharing the day-to-day lead. The Government should not be overly prescriptive about what can and cannot be financed. Within a broad framework, it should be for local partners to decide on the basis of their own priorities.

Brexit means that, except in Northern Ireland, EU State Aid rules now no longer apply in the UK. The Government has begun the process of introducing its own ‘subsidy control’ rules to govern the financial support that can be given to businesses to encourage investment, training, R&D and environmental improvement. Legislation is working its way through Parliament, but the important detail will be in the guidance that the Government is promising, likely to emerge next year.

We need a new assisted area map, targeting the less prosperous places where more generous financial assistance would be allowed. Without a map, the most disadvantaged parts of the country would be competing for investment with potentially no more to offer than the most prosperous parts of southern England.

The final priority is sustainable quality public services. In the years of austerity after 2010, many of the biggest cuts in local authority funding were in more deprived areas as they relied more heavily on the Government grants that were cut so severely. We need substantial additional funding for local authorities, starting at this spending review.

A rising proportion of local authority funding has had to come from business rates and council tax, but in more deprived areas the tax base is modest. There are many people – retirees, schoolchildren, full-time carers, and others outside the labour market – for whom public services matter greatly – and they underpin the quality of life of the rest of the population too.

The ambition of large infrastructure projects is to be welcomed, but we must not forget that for many the quality of their housing or social care provision is more important than how they can get from A to B a bit quicker.

The Government has made rightly made levelling up a cornerstone policy of this Parliament.

Delivering on these three priorities is essential if the Government wants its agenda to be a success and begin to close the growing gap between regions in this country.

Councillor Sir Stephen Houghton is Chair of the Special Interest Group of Municipal Authorities (SIGOMA) and Labour leader of Barnsley Council.

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