Remedying Spatial Inequality: Key Lessons for Regional and Local Policymakers
Henriette Ruhrmann
Spatial inequality in the UK stands out as a significant concern. The top half of its regions are on par with prosperous Finland in terms of GDP per capita, and the bottom half ranks below the Czech Republic (LGA 2023, McCann 2020). Policymakers are faced with the ongoing dilemma of whether Whitehall or local leaders are better equipped to address inequality between and within regions.
IPPO Cities’ policy roundtable on “Place and Spatial Inequality” convened national and local policymakers and experts to discuss the road ahead for remedying spatial inequality. The panellists tackled two fundamental questions: how much authority should the government devolve to local leaders, and what does the government’s Levelling Up Agenda entail at the local level?
Long-term budgeting through devolution deals empowers local leaders
The North’s productivity gap is often attributed to “over-centralization” and excessive “micro-management” by Whitehall (Flanagan 2021). When compared to other developed European countries, the UK is highly centralized, with the government claiming 96 pence out of every £1, whereas Germany’s federal government only receives around 65 pence (LGA 2023). This centralized approach forces local leaders to compete for government funding, leading to significant inefficiencies. Competitive bidding costs local authorities approximately £2.25 million annually (LGA 2023).
Devolution deals offer a much-needed solution by providing reliable long-term budgets for local leaders. They enable functional economic and political areas to engage in strategic planning and make investments with confidence. For instance, the North East Devolution Deal allocates a substantial £1.4 billion investment, the highest per capita investment among all devolution deals, to the seven participating local authorities. In negotiating this unprecedented investment, local leaders insisted on a “no detriment policy,” ensuring that per capita funding for the localities covered by the North of Tyne devolution deal would not be reduced. In addition to the core investment, the deal also includes targeted investments in areas such as adult education, housing, and borrowing powers.
Beyond budgeting, devolution deals help functional economic areas to act as one
Alexandra Jarvis, Head of North East Area Team, Cities and Local Growth Unit, UK Government, emphasised that regional devolution deals offer more than just funding stability. Mayoral Combined Authorities (MCAs) enable functional economic areas, like the North East, to act as a unified entity. Transport is a policy area in which such coordinated action can deliver “more for less” to residents who work and socialise across the region, for example, by integrating bus and rail. Moreover, MCAs enhance partnership opportunities when negotiating collaborations with the government, private sector, and universities. By consolidating responsibilities, MCAs promote greater accountability to their partners and citizens.
The achievements of the North of Tyne MCA provide tangible evidence of the less quantifiable benefits of devolution and coordinated action at the regional level during negotiations for the North East devolution deal. For instance, the North of Tyne MCA successfully established an Inclusive Economy Board and a Citizens’ Assembly on Climate Change. Mark Stamper, the Principal Innovation and Economy Manager of the current North of Tyne Combined Authority, acknowledged that MCAs are still in their early stages, and studying the long-term multiplier effects of devolution will yield further evidence to inform future negotiations.
Devolved Mayoral Combined Authorities are well-equipped to manage regional diversity
The soon-to-be North East MCA will see itself confronted with the challenge to create policies for a highly diverse region. According to Mark Stamper, the area governed by the new MCA, one of the largest devolved areas, exhibits extremes—comprising a significant share of rural areas with distinct urban pockets and higher levels of deprivation than the national average. The region’s challenge is to achieve an economic transition from industries like coal mining and shipbuilding to more future-proof sectors. However, ensuring adequate connectivity and digital inclusion remains a persistent challenge. Stamper believes that MCAs are uniquely positioned to understand and navigate the complexities of such diversity and create a cohesive policy environment.
Councillor Jason Brock, the leader of Reading Borough Council, emphasized that the concept of Levelling Up varies across different localities. For instance, Reading struggles with achieving an equitable distribution of economic success, while other areas like Oldham need to generate more overall economic growth. In Brock’s view, local leaders must be the driving force behind the levelling up agenda. Devolution can be a helpful tool in empowering them, although he highlights the need for meaningful devolution that goes beyond delegating decisions based on rigid criteria. He envisions a more European-style model that provides local leaders with greater autonomy.
Levelling up at the local level needs to find solutions for five common challenges
Examining the most deprived areas reveals the challenges faced by local leaders and residents in their levelling-up efforts. Adam Hawksbee, Deputy Director of the think tank Onward, conducted in-depth conversations with local leaders and held focus groups across the country to gain a bottom-up understanding of the practical levers available for levelling up. In all the localities visited, below-average productivity scores, household income, a relatively low sense of belonging, and low rankings on Onward’s social fabric index were common.
Hawksbee’s team found five common challenges across the localities they studied: (1) antisocial behaviour and crime make residents feel unsafe in public spaces, (2) town centres struggle with high vacancy rates, (3) neglect of local sports, culture, heritage, and green space for residents to identify with, (4) a weak private, tradeable sector, and (5) a lack of support for the most disadvantaged. Based on their Levelling Up Locally programme, Onward developed a playbook of interventions for local leaders confronted with these issues.