Levelling Up and Local Government

When Boris Johnson was Prime Minister, he made “Levelling Up” one of his big political priorities. During the 2019 General Election campaign, we heard a lot about Levelling Up, which was essentially Johnson’s pledge to revive the large parts of England that lag behind London and the southeast for economic growth and prosperity. His decisive victory in the 2019 General Election legitimised the notion of Levelling Up, and for the bulk of Johnson’s premiership, we heard a lot about the government’s mission to spread economic growth out across the country. But three years on, there’s are very few obvious benefits from Levelling Up, with analysis by the Centre for Cities showing that towns and cities in the north are being hit harder by the cost-of-living crisis than those in the south.

In 2020, the Government announced the Levelling Up Fund – designed to promote local growth initiatives. This was met with a weary sense of déjà vu by local government – once again being asked to use precious resources and to bid for money with no guaranteed return. In recent years, this has become a more common way of funding local government – instead of funding local government sustainably, budgets have been cut by 60p in every £1 since 2010, and the solution by central government has been to establish piecemeal funding streams which provide no certainty or stability for councils. In the context of 13 years of austerity and record-breaking inflation, this is a poor way to fund councils who provide over 800 services – including fixing potholes, collecting bins, cleaning up flytipping, running leisure centres and looking after residents through social care and other support services.

It isn’t just that budgets have been cut over the last 13 years – though this is a huge part of the predicament that councils are currently facing. Demand for services such as children’s and adult social care has skyrocketed in this time – fuelled by the impact that cuts to public services and economic turmoil has had on people and by the fact that we are living longer with more complex needs. Councils have largely been left to fund these services through Council Tax rises, benefiting wealthier areas over those with the greatest need. Local government isn’t a sexy subject, but if you spend more than five minutes with a council leader, they’ll tell you about the eye-watering pressures that their council finances are under, the difficult decisions that they are going to have to make about finances and services and the negative impact this will have on their communities.

Solace has estimated that each Levelling Up Fund bid costs a council as much as £30,000 per bid and FOI data published earlier this month estimated that councils overall had already spent £26.9 million on bids – with most of this money spent on external consultants. Lisa Nandy has described the entire process as a “hunger games” style competition, with Tory metro Mayor Andy Street blasting the entire process as an example of why “Whitehall’s bidding and begging bowl culture is broken”. He’s right – why should civil servants in Whitehall be deciding how and where money is spent, when they don’t have the local knowledge to make these decisions?

But the entire Levelling Up Fund agenda misses two key points. The first is the powers that councils must do what they want to do to improve their local areas – these are sorely lacking and holding local areas back. Take bus franchising – aside from the handful of councils that have their own bus companies, bus franchising powers can only be awarded as part of Mayoral devolution deals. Giving councils the ability to run bus services where they are most needed would make a massive difference to communities that are underserved by buses, connecting residents to job opportunities, medical appointments, shopping, and their support networks. The second is that councils need to be funded properly to deliver – a couple of million pounds here and there won’t address staffing capacity issues and the difficulties of longer-term strategic planning – this must be done through a sustainable local government finance system.

In January this year, Keir gave a major speech setting out Labour’s approach to devolution and regional economic growth. The Take Back Control Act would be the biggest transfer of power from Westminster to our communities ever seen and would give our communities the tools that they need to develop credible, long-term economic growth plans for their areas.  The Act would set out a framework whereby local leaders can request, negotiate, and request powers over economic development to drive local growth, and the powers would be bespoke by area, encompassing policy areas such as fiscal powers, childcare, transport, energy, and employment support (and much more).

This is welcome and shows that Labour is capable of the bold and radical thinking that is needed to address the challenges that this country faces. Including policy areas such as childcare in economic development shows a real understanding of the barriers stopping many parents working full time – giving local authorities more control over this would allow them to tailor childcare needs according to demographic demands.

But, as ever, the devil will be in the detail. The framework that emerges from the Take Back Control Act must genuinely be an equal and fair process, not one where local leaders must go cap in hand to the government asking for what they want and hoping they get what they want – as this would have disturbing similarities to the Levelling Up Fund process. And whilst new powers will be welcome, they must be accompanied by fair and sustainable funding of local government to enable councils to get on and do what they do best – delivering for our communities.


To learn more about Labour’s plans for devolution and the Take Back Control Act, read “All In”— a signpost, not a roadmap, to a better future.