Regional inequality is getting worse, despite ‘levelling up’ agenda, think tank warns

A failure to reduce regional inequality has seen in-work poverty rates increase in the North

The government’s Levelling Up fund provides around 10x less per person spending in the North than has been cut from local authority budgets since 2009/2010, according to a new report.

The State of the North report, by the IPPR North think tank, also shows that centralisation has increased despite devolution of power and spending being a key aspect of the ‘levelling up’ agenda.

At a glance: the key points

  • Regional inequality and the north-south divide in particular is getting worse, despite the supposed aims of the government’s ‘levelling up’ agenda, according to IPPR North 
  • An analysis of central government and local authority spending found that while the Levelling Up Fund provides an investment of £32 per person in the North, this does not nearly make up for the £413 per person drop in council service spending since 2009/2010
  • The North outperforms the south on a number of metrics, including on the production of renewable energy, 51% of which is generated in the North
  • Despite devolution of spending being a central plank of the ‘levelling up’ agenda, the think tank found that the amount of tax-revenue taken by central government has actually increased slightly in the last four years, from 95p in the £1 to 96p
  • The impact of the regional inequality is significant, according to the think tank, leading to an increase in in-work poverty in the North from 3.4m people in 2009/2010 to 3.5m people in 2019/2020
  • The government has described the analysis as ‘misleading’ and said the levelling up white paper, which is significantly overdue, will “drive forward” the issue in due course

What’s been said?

Interim Director of IPPR North, Arianna Giovannini said: “Two years on from the promise to level up the country, government’s rhetoric has reached fever pitch, but in reality they have once again over-promised and under delivered on rebalancing our economy.

“To succeed in levelling up, enabling people everywhere to live a good life it will be necessary to build an economy hardwired for widespread prosperity, that powers the net zero transition, and provides everyone with access to high quality lifelong education.

“Broadening and deepening devolution, and building collaborative relationships between and across all levels of government are essential components of the levelling up jigsaw. But reorganising local government by the back door, false dawns, and further centralising power and funding would be a huge mistake and level down the country”.

A DLUHC spokesperson said: “This analysis is misleading as it focuses on just one part of our investment to level up the North of England.

“In addition to the £4.8 billion Levelling Up Fund, we’re providing record investment in infrastructure worth over £96 billion, £12 billion in affordable housing and a £2.6 billion Shared Prosperity Fund to help rebalance opportunity across the UK.

“The government will publish a White Paper that will drive forward this central mission in due course.”