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Business, Energy and Industrial Strategy Committee

Volume 699: debated on Thursday 22 July 2021

Select Committee Statement

I am grateful for the opportunity to make a statement on the third report of the Business, Energy and Industrial Strategy Committee’s inquiry into post-pandemic economic growth. The report focuses on levelling up.

In the 2019 Conservative party manifesto, the Prime Minister said:

“We have mapped out a fantastic programme for the years ahead: to unite and level up, spreading opportunity across the whole United Kingdom.”

Since the election, however, the Government have failed miserably at translating the political slogan “levelling up” into a real programme for government. Although the Prime Minister said that he had a map for levelling up, it seems that either he has lost it or he is not willing to share it with us. That is important, because the promise of levelling up was a major part of the Conservative party’s success at the last general election, yet so far we do not have any clear answers on what the Government think levelling up is, how it will be paid for, who is responsible for delivering it or what a successful delivery of the levelling-up agenda will mean for people in their day-to-day lives.

Crucially, the Government have failed to set out how the special focus on levelling up will differ from the normal day-to-day functions of government and whether funding for the levelling-up agenda will equal or exceed the funding to local communities that has been cut following Brexit and the previous period of austerity. In the Committee’s year-long inquiry, we took evidence from many stakeholders, including the Government and a number of their Ministers, to ask many of those simple questions. Unfortunately, answers were not forthcoming.

We therefore concluded that levelling up, in our view, is about a more equal distribution of economic and social opportunities across the United Kingdom. We agreed that that is a laudable aim, and one that has been pursued by many Governments of different colours over many years. We took evidence from local authorities, local enterprise partnerships, city and regional mayors, powerhouses and Ministers, as well as businesses, local chambers of commerce and academics. In considering their evidence, we have made several recommendations to the Government.

First, the Government should urgently publish the promised levelling-up White Paper, which we understand will incorporate the devolution White Paper, so that we can be clear on how they define levelling up, what the priorities are and which tiers of local and regional government will be responsible for delivering it. Secondly, they should work with the Office for National Statistics, the cities and local growth unit in the Department for Business, Energy and Industrial Strategy and the National Audit Office to agree a set of metrics for the routine reporting of progress in delivering levelling-up priorities. Thirdly, they should establish the functioning of a Cabinet Committee on levelling-up that collaborates with devolved regional and local leaders. Fourthly—this is important—the Government should recognise that inequality exists across the whole of the United Kingdom, including within cities, so levelling-up priorities should not be focused only on some regions or sub-regions of the country. Lastly, they should ensure that each region in England has the capacity to bid competitively for Government funding, given that some areas in England—for example, those with metro mayors—have a greater capacity to engage with Whitehall than others.

Devolution in England is inconsistent, and some areas perform better than others irrespective of whether they have multiple tiers of local or regional government. If, therefore, the Government are committed to levelling up insofar as it relates to empowering local communities, I encourage Ministers to be bold and progressive in the devolution sections of the levelling-up White Paper expected later this year. Ultimately, the Committee concluded that the lack of clarity in what levelling up means and how it translates into specific policy initiatives and strategies risks its becoming an “everything and nothing” policy, not owned by any particular Minister or Department and without any means of evaluating or assessing its impact or efficacy in improving people’s lives. It seems as if Ministers are trying to hide the fact that they do not have a real levelling-up policy by saying that every other policy from Government, be it about bus stops or football pitches or the obesity strategy, is in fact levelling up. The Prime Minister’s spokesperson in response to my Committee’s report said that more detail would be forthcoming in the levelling-up White Paper later this year. The imperative is therefore on the Government to hear our request, as well as those from others, and step up with the level of detail expected of any competent Government in delivering on their manifesto commitments.

Everyone on the Committee agreed that sharing economic and social opportunities more fairly across the country is a good thing, and we want the Government to succeed in delivering on their promises and improving people’s lives. In the meantime, we will continue to scrutinise the Government and hold Ministers to account, but ultimately, if they do not step up, it will be for the British people to decide whether their promises have been delivered. I thank all the witnesses who gave oral and written evidence to our inquiry, my parliamentary colleagues on the Committee and, as ever, our excellent Clerks. I commend the report to the House.

I will now call Members to put questions on the subject of the statement and will then call Darren Jones to respond to them in turn.

Does the hon. Member agree that, as the Government better define levelling-up, they should not lose sight of the leading role and ideas of the private sector, including those announced yesterday in the Richard Koch breakthrough prize, which can supercharge growth in left-behind Britain, such as “zoom towns”, distributed policy making, reinvigorated provincial stock exchanges and—the overall winning idea—a people’s rebate?

Thank you, Madam Deputy Speaker; it is great to see you, as a fellow member of the Committee, in the Chair. Congratulations on your appointment.

I am always grateful for the counsel of my Committee colleague, the hon. Member for North East Bedfordshire (Richard Fuller). We agree that delivering meaningful economic growth for people across the country requires a growing economy that is free to innovate and to make profits. I support many of his points about ensuring that we have a successful, inspirational, innovative economy that delivers for people and businesses across the country.

I thank the hon. Gentleman for his statement. Clearly, the main focus of this report was on aspects of levelling up as it applies to England, but the agenda is being applied across the whole United Kingdom. Can the Chair of the Select Committee tell us what he thinks of a situation where substantial amounts of public money are being spent within the devolved nations on areas of service that quite clearly fall 100% within the competence of the devolved national Parliaments and Assemblies, but where decisions are being taken with no consultation whatsoever with those devolved Administrations? Is that something that he would find acceptable?

I thank the hon. Gentleman for his question. We looked briefly at the role of the devolved Administrations and concluded that pretty much everybody agrees that a more equal distribution of economic and social opportunities for people across the country is something that everybody supports, irrespective of place in the country or political party membership. We did also point to a recommendation where devolved Administration leaders, alongside local and regional leaders, are engaged in a Cabinet-level discussion on the levelling-up agenda in Whitehall, because, together, all of us would wish to achieve these outcomes and we should therefore all be working together to do so.

I commend the hon. Gentleman for his statement and his Committee on its report. I note that, in paragraph 66, the Committee recommends that

“the Government establish a Cabinet Committee to oversee the co-ordination and delivery of the levelling up agenda across Whitehall”.

Why did his Committee recommend a Cabinet Committee and not a specific Cabinet Minister responsible for levelling up, as suggested by some of the Committee’s witnesses?

It is a discussion that we had in some detail on the Committee. The hon. Gentleman will know that the distinction between a Cabinet Committee led by the Prime Minister and a Cabinet member delivering on behalf of the Prime Minister is perhaps important, but we concluded that, given the Prime Minister’s personal commitment to this issue and his personal desire to want to lead it, he therefore ought to chair the Cabinet Committee that he has suggested should be put in place. Importantly, given that levelling up relates to lots of Departments, there needs to be a cross-departmental function, which, ultimately, is why we landed on a Cabinet Committee as opposed to a specific member of the Cabinet leading on levelling up.

Time and again, I have urged Government to fairly fund areas most in need, not create competitions that are often won by Cabinet members representing wealthy areas. We must have a fair levelling-up fund based on need, with power going down to local communities that know best. Does my hon. Friend, the Chair of the Select Committee, agree that this damning report shows that the Government should be focused on genuine efforts to tackle deep-rooted inequality rather than continuing with these failed competitions and wheeling out hollow soundbites?

I thank my hon. Friend for his question. This issue of competition versus collaboration in bidding for funding was a really important part of our inquiry. I referenced in my remarks today how some areas of the country are better equipped and resourced at engaging with Whitehall to receive funding. There is a root problem here in that we do not understand what the Government’s levelling-up priorities are, what funding is then being allocated to solve them, and what data are being used to ensure that funding is distributed in a fair and equitable way—where it is needed, not necessarily, perhaps, where the loudest voices or the political priorities are placed. That is the bedrock of our report, which, I think, would go some way to solving the problems that my hon. Friend has raised.

Has the Committee looked at how, quite often, a range of interlocking opportunities for levelling up require joint working between agencies and businesses, and at how having one single voice, as we are now in the process of establishing in Somerset, can unite all the work that has gone on—whether through the local enterprise partnership, the county plan, the priorities, the local industrial strategy and now the skills agenda that the Government are championing, which I welcome. How much does the hon. Gentleman think that these things need to be integrated when the Government are thinking about how to champion them?

I thank the hon. Member for his question. I would make two observations. First, we recognised an inconsistency in the tiers of local and regional government across England. I have mentioned that we spoke to powerhouses, metro Mayors, city mayors, local authorities, local enterprise partnerships, chambers of commerce and others, and evidently that means there is an inconsistency across England.

The other thing we found was that in areas where there is a sense of co-ordination between those different tiers, with a single voice focusing on priorities that matter most to those local communities, they tended to be more successful in being able to bid for funding and to deliver on levelling-up agendas. That is why I say that, in the levelling-up White Paper later this year, the devolution aspects are really important to ensure that there is a consistency and an equality of opportunity for regions across England in order to bid for funding and support as part of the levelling-up agenda.

Congratulations on being in your place, Madam Deputy Speaker.

It is quite clear to the Committee that levelling up is really just a political slogan. There are no clear ways of measuring outcomes, and there is no clear avenue or looking ahead on funding streams. Of real concern to me is this phrase, “levelling up across the UK”. The Chair will understand that the Scottish Parliament is there for a reason, which is that Westminster was not delivering for Scotland or the other devolved nations.

At the moment, the way the levelling-up funds are going to be distributed is by the UK Government’s withholding the equivalent in Barnett consequentials to allocate that amount directly to Scottish local authorities, pitting them against each other. Convention shows that it should be the Scottish Government, in conjunction with local authorities, who decide their priorities. Does the Chair agree that, as a Committee recommendation, the UK Government should be working with the Scottish Government transparently on the allocation of funds, and should let the Scottish Government distribute these funds by the conventional method?

The hon. Member is a hard-working member of the Select Committee, and he will know that we are only able to delve so far into the functioning of devolved Administrations. However, we did conclude in our inquiry that leaders in the devolved Administrations should be around the table with local and regional leaders in discussions with Ministers in Whitehall, so that we do have a joined-up and collaborative approach to delivering on a shared objective to level up the whole of the United Kingdom.

I congratulate my hon. Friend and his Committee on this very serious report, which shows undeniably that the Government lack any clarity as to what they mean by levelling up. In fact, the hon. Member for Newbury (Laura Farris) said this week:

“One of the things about ‘levelling up’ is…it’s quite a sort of ambiguous phrase—it means whatever anyone wants it to mean”,

but clearly that should not be the case.

It is at least welcome that there is now political consensus that for too long the UK has been scarred by deep regional inequalities. The single biggest challenge for levelling up is that people have to leave their regions and head south to get good work. This has to change, and it can only happen by making the quantity and quality of jobs in regions our priority. Levelling up must be about investment to combat those inequalities, including between regions, within regions and between socioeconomic groups across the whole of the UK.

Can I ask the Chair, first, what his Committee’s conclusions were in relation to fair funding for levelling up, particularly in the light of how the levelling-up fund’s piecemeal funding does not make up for the failure of austerity over the last decade, with services decimated as £15 billion of cuts have been made to local government? Secondly, on extending democratic power, what is his Committee’s view on how we should reach consensus on which tiers of devolved and local government should have responsibility for achieving those important shared levelling-up outcomes, because quite clearly this can no longer be done from the centre?

I thank the shadow spokesperson for those points, and for her kind remarks about the work of my Committee. On the funding allocation, of course the issue here is that if there is not a clear strategy about what levelling up is and therefore clear funding allocated to it, it is unclear what funding is being made available above and beyond the day-to-day functioning of government, and indeed in comparison with historical funding cuts through periods of austerity and following our withdrawal from the European Union. Because of that lack of clarity, we have no answer as to how local communities can fairly bid for funding for the levelling-up agenda, above and beyond what already exists through the day-to-day work of government.

On democratic engagement in defining local economic areas, that of course is a very difficult issue. It is one we did not delve into in any great detail in our own inquiry, not least because it goes a little beyond the remit of our Select Committee powers. However, we do recognise that there needs to be more consistency across England in democratic structures so that there is an equality of capacity to bid to Whitehall for funding in advance of—this is my personal view—a more devolved level of decision making and funding across England in the years ahead.