Anthony Breach is a Senior Analyst at Centre for Cities, where he leads on housing and planning.
Ahead of her election, Liz Truss committed to delivering on levelling up, and we have already seen the first instance in this direction. The promised Investment Zones have the potential to deliver growth if they ensure that the planning process for development is simple, predictable, and rapid.
However, we have not heard much more from the Prime Minister on levelling up, either before or after the election.
The wider levelling up agenda therefore looks uncertain, despite the appointment of Simon Clarke as the new Secretary of State for Levelling Up and the fact that achieving greater prosperity and productivity in places performing below their potential is one of the easier ways that the Government can succeed on the most important part of its agenda: hitting the 2.5 per cent economic growth target.
Now that the new team is governing, for progress to be made on levelling up there are three key commitments that need to be made at party conference.
First, the Government should stick to implementing the existing White Paper, rather than going back to the drawing board.
Second, the new Government should pass the Levelling Up Bill currently going through Parliament, and pay special attention to the most important reforms contained within the Bill.
And third, the Government should commit to devolution on economic geography, and agree bold trailblazer deals with the metro mayors of Greater Manchester and the West Midlands.
Across all of these, regulatory reform is the name of the game. Some of these institutions governing local economic growth have remained essentially untouched since at least the 1970s, and have not changed nearly as much as the rest of the British economy.
Progress can be made on supply-side reform across each of these areas in the short-term without spending much more public money.
The Levelling Up White Paper was by no means perfect. But its diagnosis and prescribed treatment for the British economy are essentially correct. Many of Britain’s most important local economies, primarily the biggest cities outside London, perform so far below their potential that they are a drag on the national economy, when they should be driving it as self-reliant, globally-competitive economies.
As Centre for Cities research has shown, ensuring the eight biggest cities outside the capital perform at their potential would add £47 billion a year to national output.
As the White Paper discusses, advancing levelling up in these areas depends on reforms to institutions to improve accountability and incentives to pursue economic growth, such as addressing the problem of ‘churn’.
The impulse among national politicians to always be tearing up old plans and announcing something new may generate headlines. But it does not generate growth, as it is highly disruptive to officials and to the private sector who both depend on policy stability to make steady progress on delivering tough projects.
For the new Prime Minister to commit to the logic, approach, and targets of the White Paper through the change in Government would be a bold departure from the status quo of relentless, pointless churn, and provide policy stability.
The easiest way for Truss and Clarke to deliver on the Levelling Up White Paper is to pay close attention to the wide-ranging Levelling Up and Regeneration Bill currently making its way through Parliament, despite its extended timetable. The targets that the White Paper sets out for monitoring progress on levelling up should be passed into law to guarantee policy stability and focus through to the end of the decade.
The Levelling Up Bill is not just about the White Paper’s objectives though – it also contains important reforms for planning and devolution.
On planning, the most important are the Clause 83 and 84 supply-side reforms, which will essentially give local authorities a smaller number of planning rules to enforce but greater ability to enforce them. This is an important step to increasing housing supply and improving affordability, while reducing the amount of political conflict generated by planning and improving public support for new homes.
The new Infrastructure Levy, which will fund new public services and transport links from development is also important on similar lines, as it will replace the ‘trench warfare’ of the current Section 106 method.
The Levelling Up Bill also contains important reforms to governance that will make it easier for all parts of England to get mayors and the powers and platform that comes with them, not just the big cities. The Government has already using these forthcoming powers to get a number of devolution deals inked and agreed in anticipation of this new legislation.
But if the Government is to use devolution to advance economic growth, then devolution will need to match economic geography. Truss and Clarke should rethink the recently agreed ‘D2N2’ deal that merges Nottinghamshire and Derbyshire under one mayor, despite them being at least two separate local economies.
The East Midlands deal contradicts principles expressed in previous deals and the Levelling Up White Paper that political geography should click with economic geography. It will make it harder to deliver economic change in the two cities and on other reforms as a result, such as the headache posed by how the mayor will interact with Nottinghamshire and Derbyshire’s two police forces.
The Government should stick to its prior commitments and cleave the East Midlands deal in two to give Nottinghamshire and Derbyshire two separate mayors, just like it has in North, West, and South Yorkshire.
Advancing Levelling Up also depends on reforms to existing devolution deals to increase their level of accountability. The trailblazer deals being negotiated with the metro mayors for Greater Manchester and the West Midlands will be the starting point for this. Government should go bold in these discussions and agree deals that really shift the responsibilities for the combined authorities to pursue local economic growth.
As Manchester and Birmingham go from strength-to-strength, it will be important for government to keep upping the bar. Ensuring the two biggest English cities outside the capital keep making decisions that support the success of their private sectors in turn depends on stronger incentives for the mayors that reward growth, such as through greater tax devolution.
Pursuing these three supply-side reforms would make serious progress on levelling up without committing to spending more money than that already agreed, but they alone will not achieve it.
Alongside these reforms, underperforming places need public investment. Levelling up cannot be done on the cheap, but the gains for national economic growth are so large that fixing this decades-long problem is worth doing.
Nevertheless, in essence the new Prime Minister and the Secretary of State will inherit a good plan, and a strong agenda for delivering on levelling up. If they are serious that levelling up is a priority, there is plenty to be cracking on with that will have begun to deliver long-term benefits by the time the cost-of-living crisis has come to an end. All they need to do now is deliver.