What is the UK government’s Levelling Up Fund?

Bid to invest in local communities branded ‘pork barrel politics’ as award of taxpayer money appears to disproportionately lean towards towns in Conservative constituencies

Joe Sommerlad
Tuesday 24 August 2021 14:22
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Can Boris Johnson weather the storm of sleaze allegations?

What was its original purpose?

The Conservative Party’s manifesto ahead of the December 2019 general election declared that a new Boris Johnson administration would set about “levelling up every part of the UK” in order to address regional wealth disparities as identified by the Institute for Fiscal Studies, which found widespread inequality between different parts of Britain when measuring a number of key living standards metrics.

In an appeal to those who felt their communities were being left behind, the Tories pledged to invest more in towns, cities and rural and coastal areas, grant greater spending autonomy to local authorities, encourage apprenticeships and grants to make up the skills gap, boost the farming and fishing sectors and create up to 10 freeports to help deprived areas.

But just three months after Mr Johnson’s landslide win over Jeremy Corbyn’s Labour Party, the coronavirus pandemic brought the world to a standstill, which in turn hauled the British economy - still finding its feet in the world after an acrimonious divorce from the European Union - to a juddering halt and saw chancellor Rishi Sunak lay out millions in funding to enable employers to retain their staff in lockdown via the furlough scheme.

The Covid-19 outbreak also served to highlight the existing inequalities across the country in stark terms and to make a strong case for greater local autonomy, which the Conservatives had argued for in their manifesto by saying: “We need to get away from the idea that ‘Whitehall knows best’.”

With the success of the government’s vaccine rollout this spring, the prime minister has been able to return to his “levelling up” agenda, inviting a group of Conservative MPs to form a taskforce investigating how tax and spending changes might impact different areas and appointing Harborough MP Neil O’Brien as his dedicated adviser on the question.

In his March 2021 Budget speech, Mr Sunak duly unveiled his £4.8bn Levelling Up Fund, intended to invest in regional infrastructure like local transport and town centres, which could also benefit from the £1bn available through the Towns Fund, intended to be divided between 45 English towns.

It appeared to convince the voters of Hartlepool, who duly elected Conservative Jill Mortimer as their new MP over Labour’s Paul Williams on 6 May, making her the first Tory to take the “red wall” seat since the constituency’s creation in 1974.

Why has it become so controversial?

While the ambitions of the “levelling up” initiative towards achieving a more even distribution of resources across the UK might appear laudable, the phrase itself was immediately attacked as empty sloganeering by the government’s many enemies, already riled by Mr Johnson’s bungled handling of the pandemic in 2020 and doubtful of his “chumocracy” cabinet’s sincerity at the best of times.

More sympathetic critics of the agenda included Lord O’Neill, once vice-chairman of George Osborne’s Northern Powerhouse partnership, who expressed his disappointment that a white paper on devolution and local recovery from the impact of the pandemic had been promised but not materialised on time.

Another, Lord Sainsbury, said that efforts like Mr Sunak’s Budget announcement that 750 civil servants would be relocated to Darlington from London had “symbolic importance” but would not amount to real change.

Any new post-Brexit support for the fishing industry did not arrive in time to stop a fresh feud breaking out between British and French trawlermen in Jersey in May while the promise of freeports was rubbished in a report by UK in a Changing Europe.

“The thought they’re going to transform the wealth and prosperity of this country is simply untrue,” argued Professor Catherine Barnard, one of its authors. “It will help the regions that get a freeport - but possibly to the detriment of those that don’t.”

As for the fund itself, it was labelled “pork barrel politics” by Labour Treasury spokeswoman Bridget Phillipson when Mr Sunak first trailed it in November 2020, the party arguing the money would be handed out “on grounds of politics not need”.

Then-shadow chancellor Anneliese Dodds said the Levelling Up Fund would see MPs forced to “beg for support for their areas, rather than that change being driven from local communities”.

She told MPs: “So much for taking back control. This is about the centre handing over support in a very top-down manner.”

Parliament’s own cross-party Public Accounts Committee said that same month that it was “not convinced” by the way towns were selected under the scheme, which had “fuelled accusations of political bias” and “risked the civil service’s reputation for integrity and impartiality”.

Why are we asking this now?

The prime minister finds himself embroiled in a legal battle after the Good Law Project accused the Conservatives of using the Levelling Up Fund to funnel taxpayer’s cash into Tory areas to further boost their re-election prospects.

The High Court will now decide whether the PM’s £4.8bn fund unlawfully and systematically sent cash to areas considered to be “of political benefit to the Conservative Party”.

Judges agreed to hear the legal challenge, declaring: “The grounds are arguable.”

The lawsuit, formally filed against Rishi Sunak, Robert Jenrick and Grant Shapps in their ministerial roles, could reach the humiliating conclusion that the centrepiece of the government’s central agenda is unlawful.

Campaigners cited an investigation by the National Audit Office, which found that the government’s list of targets for the cash had been published without supporting information to explain why they had been chosen.

Forty out of the first 45 schemes to be approved under the fund in March had at least one Conservative MP, an analysis by The Financial Times in March found.

Labour protested after the Budget that poorer places like Barnsley, Flintshire, Coventry, Plymouth, Salford and the Wirral had all been relegated to the second tier priority status in favour of Tory-held locations.

The government was “diverting the money to serve their own party’s needs,” alleged shadow local government secretary Steve Reed.

“Just months after the government was criticised for diverting funding away from towns that desperately needed it, we discover that cabinet ministers’ own constituencies now stand to benefit ahead of more deprived areas,” he said.

Jolyon Maugham, the barrister who founded the campaign group now bringing the suit, said: “If you think that it’s coincidence that Tory marginals are huge beneficiaries I have a fine bridge to sell you. To ensure the Tories don’t use public money for party purposes, the Good Law Project is suing.”

A spokesperson for the Ministry of Housing, Communities and Local Government said in response to the suit: “The £4.8bn Levelling Up Fund is open to all places in Great Britain and will play a vital role in helping to support and regenerate communities.

“The published methodology makes clear the metrics used to identify places judged to be most in need. It would not be appropriate to comment on potential legal action.”

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