Published:

Jonathan Werran is Chief Executive of Localis.

We have had a month to digest the 332-page Levelling Up White Paper. It isn’t the first attempt to increase growth and rebalance an economy. The document is awash with historical examples and precedents from the humanity’s beginnings with the first cities through to Medici Florence, the Golden Age of the Dutch Republic and the Industrial Revolution. It also provided a cogent trot through post-war economic interventions to the present day. We have to admire its ambition as a sincere and thoughtful attempt to change the United Kingdom’s economic geography.

During a pre-publication briefing, Michael Gove, the Levelling Up Secretary, quoted scripture and Matthew’s parable of the talents: “For to everyone who has will more be given, and he will have abundance” He used this to give Biblical sanction to his mission to reverse the agglomeration effect in the South East and channel money into the North

If the overriding ambition of Levelling Up is to change our economic geography, this means raising standards to the levels of those in the Treasury’s three net contributors  – namely the east of England, London and the South East.

From the Prime Minister down, the Government has emphasised that Levelling Up isn’t an exercise in decapitating the tall poppies. But it must rethink its assumption that merely directing R&D and infrastructure investment away from an ‘overheated’ South East would cool intense living pressures affecting the region and benefit the rest of Britain. In a new Localis report, ‘Resetting the South East: levelling up after Brexit, Covid and climate change’, we make the case that the inherent strengths of the region, which leads the country in export-led growth, demand a greater devolution of economic control, infrastructure investment and transport coordination.

Intra-regional inequality within functional economic areas is something the document acknowledges as being as notable as disparity between our regions. And the South East contains notable pockets of deprivation, especially in coastal areas, which are as left-behind as anywhere else nationally.

The South East is pivotal to our hopes of spearheading export-led growth through ‘Global Britain’. At the same time, the region has the natural capital to deliver on Net Zero, energy, and food security. However, its local authorities are hemmed in by financial restrictions that leaves them unable to respond adequately to demographic demands, growth challenges, and service pressures.

A more nuanced devolution settlement for the South East would empower local councils to alleviate deprivation, improve living standards, and boost the Government’s environmental and trade ambitions. This starts with local government finance. Localis is calling for the establishment of a South East Finance Commission – similar to what Boris Johnson did as London Mayor – to investigate how appropriate fiscal levers could help the region as a net contributor to the Exchequer self-fund investment to boost the economy and local services.

There is ample room for councils in surplus-generating areas to raise funds for capital investment towards Levelling Up. The South East should be able to, with local leadership, raise additional levies to fund investment, using powers like those afforded to the Mayor of London in the Business Rates Supplement Act or the ability to use expansive Tax-Increment Financing for pro-growth schemes. The current devolution framework offers nothing for district councils working in partnership with counties, LEPs, and each other to achieve local goals across a functional economic area.

Ministers have been adamant recently there will be no mezzanine or level 2.5. But in the South East, where there is no popular local demand for governors or combined authority mayors, a devolution framework could extend the powers offered under ‘level 2’ to joint ventures, providing they are incorporated as a single body with a nominated leader for accountability to Whitehall. And in revising the framework, given the vital importance of increasing export intensity to achieving the government’s Global Britain ambitions, government should review local government’s role in exports.

To co-create a devolution framework, Localis is recommending the South East’s local authorities should come together in a major ‘Summit for the South East’. This would not be another permanent bureaucracy. Instead the convention would decide upon the preferred structure of local government in the South East, set broad regional priorities for Levelling Up, and define key regional assets. This could be done alongside the forthcoming Levelling Up Director.

This has to connect the South East, which faces numerous unique transport challenges relating to decarbonisation and pandemic recovery. Transport for the South East should be made a statutory body, focusing on reforming the rail franchise system.

Finally, we have to ask, is the South East more than a mere geographic expression? This was something Count Metternich, when Europe’s leading statesman, was able to label pre-Italy as in 1814. During the high renaissance, the Medicis of Florence and the Sforzas of Milan were happily engaged in humane urban innovation and economic expansion amid ruthless civic competition that ultimately left Italy vulnerable through disunity to the Valois kings of France and the Holy Roman Empire.

The South East has a productive role to play in sparking, if not a renaissance, then a UK wide risorgimento movement of modern national solidarity. We must take on board what the South East can achieve in serving as the growth flywheel, unlocking for the nation the mutual dynamic and useful interdependencies between and within our regions for the greater good.