House of Commons debate, The role of local councils in levelling up, 8 December 2021

The anticipated Levelling-Up White Paper presents an opportunity to reset the relationship between central and local government and put councils at the heart of delivering the Government’s ambitious programme to improve opportunities in all parts of the country. 


Key messages

  • Local leaders have shown throughout the pandemic that they are well placed to deliver the best outcomes for local communities. They are also best placed to align the work of government departments and agencies with the assets and opportunities of different places.
  • Councillors and their councils have the democratic mandate, expertise and local insights to change our communities for the better. The LGA regularly undertakes polling to look at residents’ views on their local council and area. The latest survey published last month (October 2021) shows that trust in local councillors remains high; seventy-three per cent of respondents selected ‘local councillors’ when asked who they most trust to make decisions about local service provision.
  • The anticipated Levelling-Up White Paper presents an opportunity to reset the relationship between central and local government and put councils at the heart of delivering the Government’s ambitious programme to improve opportunities in all parts of the country. 
  • Defragmentation of funding is essential to help maximise the strength of councils’ local leadership which was demonstrated so strongly during the pandemic. We must move away from a pattern of piecemeal and short-term interventions. We need to move towards a localist settlement that gives councils the powers and resources to drive green and inclusive growth that meets the needs of their communities. 
  • The Government should publish a framework for devolution deals setting out those powers and resources that it will devolve to any area that requests them. The current ad hoc process for administering devolution has delivered success, but it is time to move towards a clear and agreed framework.
  • The LGA supports the findings of the Devolution APPG inquiry into ‘Levelling Up Devo’, which recommended that the White Paper should rethink the recent top-down devolution process to set out a new English devolution baseline for our communities, accompanied by a sustainable funding settlement.
  • A shift in culture across Whitehall must take place that considers local government an equal partner. We need to see an end to the national ‘one size fits all’ approach and a move towards local leaders being as agents to engage with rather than to instruct to.

      The LGA’s core asks of the Levelling Up White Paper

      • Funding defragmentation: A priority in the Levelling Up White Paper should be further steps towards defragmenting all local funding arrangements to help maximise the strength of councils’ local leadership which was demonstrated so strongly during the pandemic.
      • Equal relationship: It is important that the White Paper is also utilised as an opportunity to reset the relationship between national and local government and put councils at the heart of delivering the Government’s ambitious programme to improve opportunities in all parts of the country.
      • Taskforce: An English devolution taskforce should be established to enable discussion between national and local government on progress with devolution to councils.
      • Devolution Baseline: The Government should also work with local government to set out a National Devolution Baseline for England, including a list of new powers available to every council.

      Local Government Funding

      • Local government finances have been under sustained pressure, even before the current COVID-19 pandemic. Given the intrinsic role they will play in the levelling up agenda, this needs to be addressed.
      • Reconsideration of funding arrangements is of paramount importance to local government. Our research found that £23 billion of public money was spent on growth, regeneration, and skills, fragmented across 70 different national funding streams and managed by 22 government departments and agencies.
      • We must move away from a pattern of piecemeal, fragmented and short-term interventions. We need to move towards a localist settlement that gives councils the powers and resources to drive green and inclusive growth that meets the needs of their communities. 
      • We also need a better picture of what Departments currently fund in local places to make place-based funding more effective. We would also suggest that to build a fuller picture of the relationship between national bodies and local government, this analysis also takes account of the many accountability and inspecting mechanisms that already exist between individual departments and places. This could be streamlined and made more effective. 
      • The LGA would be happy to work with Government to consider how the current system could be improved, in line with our sector-led approach and informed by feedback from place leaders.

      UK Shared Prosperity Fund (UKSPF)

      • The UKSPF is welcome and local government’s vast knowledge and expertise to co-design the programme will be the key to success. We would however like to see a commitment to funding beyond three years.
      • The release of the first £1.7 billion of the Levelling Up Fund gives those councils who were successful in the bidding process an opportunity to deliver much needed improvements for their communities.
      • However, the competitive bidding process means that council resources have been diverted at a time when local capacity continues to be stretched. We would welcome further steps towards defragmenting all local funding arrangements.

      Health and wellbeing

      • The effects of the pandemic have mirrored, and in some cases exacerbated, our entrenched health and social inequalities. Never has the interdependence between health and the economy been closer, or the need for a fairer and more inclusive economic system been clearer.  
      • As a nation we have enjoyed increasingly longer and healthier lives on average since the 1940s. But behind this statistic lie wide health inequalities. The lower an individual’s socioeconomic position, as defined by where they live, their job, qualifications, income and wealth, the more likely they are to experience poor health. It has been estimated that, between 1 January 2003 and 31 December 2018, over a third of deaths in England were attributable to socioeconomic inequality, making this a major and long-term public health challenge which the Government’s levelling up agenda must address. 
      • Many of the so-called health determinants are in fact economic determinants: the goals of developing the local economy to be more sustainable and productive, and of improving the health of the local population and reducing health inequalities, are interdependent. Health, wellbeing and economic objectives should be explicitly aligned as part of a strategic approach to the local economy.  

      Skills

      • Since the pandemic hit, councils have led from the front, using their knowledge, links and leadership and have been trusted to bring together partners to support residents and businesses. The Government’s ‘Plan for Jobs’ rightly introduced vital new support to help learners, jobseekers, and businesses, but it added to an already confusing national employment and skills system. 
      • To build an integrated skills and employment system that can deliver on local needs, local and combined authorities must be at the heart of the design, commissioning, delivery and oversight of skills for their local areas.
      • The best route to achieving this is through progressive skills devolution. We have been engaging with the Skills and Post-16 Education Bill, and have been calling for local authorities to be named as a core strategic partner in the development of local skills improvement plans (LSIPs) alongside the proposed Employer Representative Bodies.
      • Unless local authorities have a meaningful role in the development and approval of LSIPs, there is a risk that these reforms could create further fragmentation within the skills system, with Further Education (FE) providers being subject to different skills plans, disruption of progression pathways for learners, and a lack of local democratic accountability for outcomes.
      • We have been engaging with the Skills and Post-16 Education Bill, and have been calling for councils to be written into the Bill so they can work in partnership with businesses and further education providers to develop Local Skills Improvement Plans (LSIPs), which will help plan technical skills within a local area. Without a meaningful role for councils in LSIPs, there is a risk that these reforms could create further fragmentation within the skills system, with Further Education (FE) providers being subject to different skills plans; disruption of progression pathways for learners; and a lack of local democratic accountability for local outcomes.  
      • It’s therefore disappointing that the Government overturned the Lords’ amendment, which wrote councils and Mayoral Combined Authorities into the Bill as a local partner in LSIPs. In its place, the Government has amended the Bill to give Mayoral Combined Authorities a role as a statutory stakeholder, but without a defined role for councils in non-devolved areas on the face of the Bill. We remain committed to working with Government so that councils’ wide-ranging role and expertise in the skills system is recognised and utilised in the reforms.  

      Economic growth and recovery

      • Economic growth relies on a wide range of factors and the country's economic recovery will need joined-up support at all levels of government. Throughout this pandemic, local government has delivered at speed, working in partnership with national government to support communities. If Government is to achieve its levelling up and growth ambitions to tackle not just the national economy, but economic disparity within the UK, it will need to include local government as early as possible.
      • As we turn our attention to the significant economic challenges ahead, it is more important than ever that the Government reconsiders the growth funding and policy landscape to ensure it is fit for purpose and able to drive green and inclusive growth that achieves the Government’s levelling up ambitions. 
      • The scale of the challenge ahead means that a new approach to growth and policy responsibility in England is now required, one that matches the place leadership of councils and their crucial role in convening wider public service delivery and investment with the need for locally tailored reconstruction and renewal. To deliver on this there must be greater devolution to councils. Local leaders need the powers and resources to bring government departments and agencies together to deliver locally determined and democratically accountable outcomes. 
      • The UK’s current regional productivity gap has an impact on the economies of these areas – London and the South East account for over 40 per cent of businesses and 36 per cent of jobs in England, and London’s productivity is significantly higher than the rest of England. Central London is among the most productive areas in Europe, but this is in stark contrast to other areas of England which have productivity levels below Hungary, Slovakia and parts of Poland
      • If levelling up is to reduce the regional productivity gap, it must involve decentralising and devolving powers to local government. As it stands, the UK is one of the most fiscally centralised countries in the developed world, with councils in England only able to levy two taxes: council tax and business rates. Both are subject to significant intervention and control by Whitehall and both stand increasingly exposed in the light of long-term changes in home ownership and business composition, such as the rise of e-commerce and the growth in micro-businesses. In contrast, research commissioned by the LGA shows how local authorities in Germany, Switzerland and the Netherlands can access a diverse range of revenue sources and adjust and introduce local levies in consultation with their residents and businesses. This allows them to respond to new public priorities, such as climate change or new forms of economic activity. 
      • There have been a range of attempts to estimate the growth impacts of decentralisation. One study produced by the OECD in 2018 found that “increasing tax decentralisation by 10 percentage points is associated with around 0.09 percentage points more growth or, in the long run, with around 1.75 per cent higher GDP per capita.” That matches very closely to the increase in UK tax decentralisation that would be required to shift the UK to the OECD average for decentralisation: whereas in the UK 4.9 per cent of taxes are set locally, for the OECD the average is 15.1 per cent. Fiscal decentralisation must form part of Government’s plans for growth. 
      • Devolving economic powers means that local and regional leaders can use their local knowledge and their integration into the local community to utilise resources more efficiently and develop partnerships to grow local economies. Local leaders are better able to innovate to make the places they represent more inclusive through progressive procurement, living wage areas or anchor institutions. 

      Contact

      Jonah Munn, Public Affairs and Campaigns Adviser

      jonah.munn@local.gov.uk