Analysis

Will the Budget make progress on levelling up the UK? It's a step when we needed a leap

People in regions like the North will be frustrated too by the pace of change (Image: Mark Hall / NationalWorld)People in regions like the North will be frustrated too by the pace of change (Image: Mark Hall / NationalWorld)
People in regions like the North will be frustrated too by the pace of change (Image: Mark Hall / NationalWorld) | Mark Hall / NationalWorld
There were some signs of a commitment to levelling up in Jeremy Hunt's Spring statement, but people in the North will be left frustrated by the pace of change, writes Marcus Johns

Today’s budget happened while the UK barrels towards the next general election amid a succession of crises including people suffering the cost-of-living emergency.

Successive chancellors have not built the necessary foundations for a high-wage, fair, and resilient economy. This exposes us to crises and our economy needs urgent renewal. One shaky foundation is the UK’s low investment. In fact, we languish at the bottom of international league tables for public and private investment.

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To start fixing this, we needed a giant leap forward – rooted in the understanding that regional growth delivers national growth. What we saw today was a shuffle forward on devolution and investment, not a leap.

Upgraded devolution deals for Greater Manchester and the West Midlands, called trailblazers, represent the biggest evolution of English devolution since the expansion of Mayoral Combined Authorities in the previous decade. Today’s deals mean mayors will have new powers and resources in areas like skills, transport, housing, and regeneration. The biggest prize is single departmental-style financial settlements, giving mayors flexible and longer-term funding to deliver local priorities without Whitehall’s micromanagement.

Through these deals and his stated intention to extend them to other areas, the chancellor went big on letting go of power and resource – which is long overdue. Empowering local leaders like this could help them do devolution differently, unleashing local economic potential. Today may mark a shift in the relationship between central and local government towards trust, flexibility, and real empowerment.

There are caveats of course. More power and resources mean more scrutiny. But proposals for panels of MPs to scrutinise mayors looks problematic: will they be effective or become political arenas for headline grabbing, masquerading as scrutiny? Accountability and scrutiny matter. They should be designed to serve the best interests of local people, not central government.

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Another shuffle forward came with new Investment Zones. Compared to the previous Trussite model, these zones have been scaled back, reformed in scope, and clustered around universities. They are set to be tailored to what local areas want, using levers like business support, infrastructure investment, and skills. While tax incentives are included, the departure in emphasis away from tax cuts and deregulation is an improvement.

At initial inspection, they do appear to be an improvement on the past – focused on innovation with the potential to engender cooperation, drive investment, and leverage local assets. However, £16 million a year for five years is small fry in the context of regional economies. Right now, it’s unclear whether these new investment zones are long term enough to appeal to businesses, which risks repeating past mistakes.

A raft of related funding announcements came too, including £1 billion for the levelling up fund round 3; £100 million for innovation projects in Glasgow, Greater Manchester, and West Midlands; and £400 million for levelling up partnerships. While it is positive that investment is flowing to places that need it, joining these funds up with existing schemes and devolving them would have been a more sensible, strategic move.

The chancellor also announced 20 Levelling Up Partnerships – aiming to bring together local councils, civic leaders, and others within places. International evidence such as the experience of Lulea in Sweden, outlined by IPPR North, suggests partnerships can work well in levelling up.

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In the case of Lulea, partnerships kickstarted a prominent and successful transition to net zero transition for the town. The outcomes of trials in Grimsby and Blackpool show positive parallels, and financial backing will help. A watching brief is needed to examine how they are developed and integrated with funding to drive real impact.

One glaring omission today was regional transport investment, the backbone of levelling up. Eligible places will rightly cheer the £8.8 billion second round of the city regional sustainable transport settlements set to be invested in their local public transport. But after decades of underinvestment in the North’s transport, nearly a decade since the Northern Powerhouse agenda began, and four years of levelling up, this government disappoints the North once again.

Investment in our regional transport infrastructure mirrors our ailing trains - cut back and delayed. From a HS2 that works for the North to an integrated Northern Powerhouse Rail, we needed more today to safeguard the prosperity of tomorrow.

At the end of this Budget day, there is welcome relief in the signs of a shuffle towards an investment-led, asset-based approach to levelling up, underpinned by empowered local leaders who can drive regional growth. But people in regions like the North will be frustrated too by the pace of change, and the missing pieces.

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The chancellor was simply not as ambitious as he should have been. Perhaps if he had drawn more on inspiration from global evidence that truly ambitious devolution and supported regional growth drive stronger economies, then we may have seen more.

Marcus Johns is a research fellow at IPPR North. He tweets @MarcusIPPR.

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