Levelling up agenda still prioritising London

The Centre for Progressive Policy’s latest levelling up outlook reveals that the government’s key policies for economic recovery will benefit London over the rest of the UK.

The think tank has analysed the impact of the new super deduction scheme, which was proposed to deliver levelling up through construction and manufacturing. The analysis suggests the scheme offers little in the way of levelling up; based on pre-crisis rates of business investment in machinery and equipment by sector, London is likely to receive the biggest tax break per head.

The analysis also examined the Levelling up Fund, Towns Fund and Community Renewal Fund. This analysis revealed that 6.5 million people living in deprived local authorities will be excluded from these policies. These poorly targeted recovery policies come after big spending to avoid London’s levelling down during the pandemic.

CPP analysis of spending per head on key emergency economic measures suggests spending has been much higher in the capital than in other regions. For example, the furlough scheme has seen £1,300 per resident spent in London by comparison to £620 per resident in the North East. Meanwhile, in Self-Employment Support, the CPP says that £440 has been spent per resident in London by comparison to £190 per resident in the North East.

To get levelling up back on track, the Centre for Progressive Policy calls on central government to: ensure local government is properly funded, making deprivation and need the default criteria for the distribution of any further funds; reboot locally led industrial policies which target investment at high value-add growth sectors in left behind places; invest heavily in social infrastructure including public health, adult education, childcare and youth services; and measure what it cares about – if the government is serious about levelling up it should construct a baseline from which to measure progress and evaluate policy decisions.

Ben Franklin, head of Research, Centre for Progressive Policy, said: “The scale of inequalities between and within places requires a generational effort to level up with greater investment in public health, adult skills, childcare and youth services directed at the poorest parts of our society.

“Instead, our analysis reveals the bulk of recovery efforts will be on a tax break for London driven by financial services and business services. The government then reverts to spending cuts and tax rises by 2023. Given this outlook, we can only assume that the government has either failed to grasp the nature, scale and urgency of inclusive recovery or has given up on its own levelling up agenda.

“The government must urgently change tack to ensure that local communities with the greatest need are sufficiently funded to deliver vital services. Focusing on rebooting locally led industrial policies which can create good, well paid jobs in traditionally left behind places would deliver the government’s levelling up agenda more effectively than these ill thought through tax break schemes.”