The Government’s levelling-up policy has significant flaws and is unlikely to achieve its objectives for regions like the North East without a significant shift in approach, MPs have said.
A damning report by the cross-party Levelling Up, Housing and Communities Committee found funding for short-term initiatives and a lack of transparency on allocations created barriers to progress in addressing regional economic inequality. Two of the politicians hoping to be North East mayor have criticised the levelling up project, saying the new report shows shortcomings in the Government’s approach to boosting the North East economy.
The committee found that the absence of the “substantive” long-term funding necessary to help councils deliver economic growth threatens to condemn levelling up to “failure”. Highlighting how council budgets have faced a 56% reduction in revenue grant funding between 2010 and 2020, the committee highlighted that the focus of levelling-up funding on short-term capital projects meant councils lacked the capacity to invest in local priorities.
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The objectives of the Government’s levelling-up white paper, published last year, were broadly welcomed across the political spectrum. But the lack of significant funding for its wide-ranging and ambitious targets have been a constant source of criticism.
Clive Betts, the committee’s Labour chair, said: “There is cross-party consensus in tackling the regional and local inequalities that are holding back communities across the country. But the complexity of the levelling-up challenges mean they cannot be remedied by the Government’s current approach of one-off short-term initiatives.
“The levelling-up policy requires a long-term and substantive strategy and funding approach, elements this policy currently lacks. Without this shift, Levelling Up risks joining the short-term Government growth initiatives which came before it.”
Earlier this week, analysis of the Community Renewal Fund - a key levelling up funding package - suggested that the North East had lost out on around £13m of funding it should have had. There has also been repeated criticism that the North East has been overlooked in the Levelling Up Fund, and the committee highlighted the example of a district council in Rishi Sunak’s constituency of Richmond, which received £19m in the second round of levelling-up funding despite having a high level of prosperity.
Northumbria police and crime commissioner Kim McGuinness, who is hoping to be Labour candidate for North East mayor, said: ““Levelling up will only work if it is backed up with the funding to make it work. We need to do away with all the short-term competitive funding pots – they’re clearly counter-productive.
“Instead, we should trust local areas to administer their own funds which allow for more ambition and long-term progress. I’m not interested in temporary quick fixes. I want long-lasting, real regeneration for future generations. Infrastructure investment can’t deliver levelling up alone either. Our police, our schools , our councils and our health service are all up against the system and for the North East to realise its potential, public spending allocations need bold reform, and fast.”
Fellow mayoral candidate and current North of Tyne mayor Jamie Driscoll said: “Devolved funding works. We know the future’s unpredictable – but Whitehall micro-management makes it worse. Long-term planning is the key.”
A spokesperson for the Department of Levelling Up, Housing and Communities said: “Levelling Up is a long-term programme of reform that sits at the heart of our ambition as a Government. It is breathing life into long overlooked communities, whether it is record investment in town centres and high streets or devolving more money and power out of Westminster to the regions.
“Almost £10bn has been allocated from DLUHC since 2019 to support around 1,000 projects, in addition to the £7.5bn commitment to the nine city-based Mayoral Combined Authorities in England. We are continuing to work towards simpler funding processes to support local authorities and are currently reflecting on the lessons learned from the first two rounds of the Levelling Up Fund allocations to inform the design of Round 3.”
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