The importance of levelling up is now understood across the political spectrum, and its inclusion in the responsibilities of Angela Rayner (despite it reportedly being dropped from the department name), the new deputy prime minister, ensures that the government will be judged on its delivery. Rachel Reeves, the new chancellor, is right about the lack of money. But there are easy wins for the Labour government if it is serious about its commitment to urban renewal.
I have spent much of my life involved in various versions of levelling up. In 1969 the then Labour government published the Redcliffe-Maud report on the structure of local government in England, which proposed to sweep away 1,300 councils and replace them with 61 unitary authorities. Over the next 15 years I was involved in reforms that reduced the number of councils to 300, based on a two-tier model including conurbation-wide councils in the big cities. Quite wrongly I bowed to popular pressure and abolished these conurbation-wide councils in the early Thatcher years.
The riots in Liverpool in the early 1980s and my subsequent involvement in that great city exposed the reality that local government was local in name only. Spending departments in London controlled the purse strings and imposed policy through what were in effect branch offices of the Home Office, the Ministry of Education, Transport and so on. National policies were imposed with scant regard to the characteristics of the very different local areas. Even worse was the lack of any attempt to coordinate the impact of these policies at a local level.
The Blair government created a mayoral authority in London in 2000 and I was involved in persuading the Cameron government to create similar bodies where there was local agreement. Today we have directly elected mayors in most of England’s conurbations, covering around half of the population and providing a framework for a growth partnership with government.
The first and easiest task for Rayner is to extend the powers of these authorities to ensure that they have effective control of the economic policies that influence growth, including skills and employment. But some of the most dynamic parts of England are in areas where the exercise of leadership is divided between some 200 authorities, with thousands of councillors elected at different times. The present position is incompatible with a coherent, properly led, local partnership with government.
If it is serious about its intention to grow the whole economy, Labour should legislate in its first term to create directly elected mayoral authorities across the rest of England and ensure the involvement of quangos in local growth planning. There will be opposition from local councillors and some MPs, but ministers will be surprised by the degree of support for such a change, once it is obvious that it is coming. The economies to be derived from the abolition of more than 200 councils will make a contribution to the promised improvements in frontline services.
There are more changes that Rayner should make. They have all been done before, are proved to work and the money is available.
Let me start with the money. There are large amounts of it pencilled in for local authority capital expenditure. Over the next year or two those budgets will be committed to specific contracts, but after that they will be no more than proposals, plans, hopes and aspirations. George Osborne top-sliced these budgets to create a single pot and invited local authorities to submit proposals for a part of it. Crucially they had to show what additional funds would flow if their bid was successful. Osborne’s departure from the Treasury enabled governmental departments to get their money back but not before £2bn a year had been made available to councils. The current lengthy planning and consultation process means that there is little demand for immediate cash from the government, but the initiatives themselves send a clear signal and unlock further investment.
Such an approach works. I set up development corporations in London and Liverpool. The private sector added Canary Wharf, ExCel, the O2 and City airport in London. A billion-pound investment by Grosvenor Estates gave Liverpool a new heart.
The use of the derelict land grant – providing funding to local authorities to reclaim derelict land for environmental improvement – depended on input from the private sector. The use of funds from Abbey National and Barclays Bank to transform the Cantril Farm slum in Knowsley in the 1980s led directly to the City Challenge slum-clearance programme of the 1990s. And the Millennium Commission, which used national lottery money to fund projects, informed the setting up of the regional growth fund to help the areas hardest hit by the expenditure cuts of 2010. Both awarded grants on condition of this additional money.
A government has a limited timescale in which to demonstrate results. At the height of the Covid crisis, when the government was anxious to support the private sector by creating or protecting jobs, local enterprise partnerships offered detailed plans that proved invaluable. Many of their updated proposals are still available.
My advice to Rayner is based on a lifetime engaged in urban renewal. Her appointment meets the first priority in that there is now a senior member of government responsible for driving the devolution agenda. She will presumably chair an appropriate committee of the ministers involved. She should also recreate the regional offices of government under a senior civil servant, to ensure that Whitehall sees the full picture and gives the issue high priority.
In terms of levelling up, there is one key question she and the new government must answer, and quickly. Were their words mere electoral slogans or will they herald determined policy?
Michael Heseltine is a former Conservative deputy prime minister
