The importance of tackling Britain’s geographical inequalities is now widely recognised – and is a key priority for Government. A new Centre for Policy Studies report, launched tomorrow by the Communities Secretary, the Rt Hon Robert Jenrick MP, sets out the full extent to which wealth, talent, trade and investment are concentrated in London and the South East – and offers a detailed blueprint to spread prosperity more widely, including:
- ‘Devolution Evolution’: a greater devolution of powers, funding and responsibility through:
- A new Devolution Framework offering a base level of devolution around the country, a levelling up of mayoral powers and clarity on the devolution offer for other areas
- Fiscal devolution, including return of decision-making for local authorities on council tax and examination of suitability of local income, corporation or tourist taxes
- Localised transport and trade and investment policy-making
- Moving Government Departments and officials out of London
- A re-examination of the role of LEPs given their mixed record to date
- The establishment of a new National Infrastructure Fund, taking advantage of record low interest rates to invest in transport, digital, energy, space, electric vehicles and beyond
- The creation of Opportunity Zones to give the country’s most deprived areas the opportunity and incentives to succeed (potentially alongside a programme of ‘Opportunity Towns’)
- Flexibility on the Apprenticeship Levy and wider changes to skills and education policy to ensure that the UK has the pipeline of talent available for the industries of the future and has a workforce more widely spread throughout the country
The report’s main author, Nick King, was Chief of Staff and lead policy adviser to the Rt Hon Sajid Javid MP whilst he was Business Secretary and Communities Secretary. In ‘A Rising Tide: Levelling Up Left-Behind Britain’, he shows that the gap between London and the rest of the country has widened to the point where no other region of the country, apart from the South East, is generating as much wealth per capita today as London was 20 years ago.
Furthermore, London now attracts roughly three times more transport investment per head than the rest of the country; boasts the most successful education system and attracts the best talent; exports £100 billion more than any other region bar the South East; and attracts more than three times as much Foreign Direct Investment.
The report also shows that locally determined taxes make up just 1.7 per cent of GDP in the UK, compared to 15.9 per cent in Sweden, 15.3 per cent in Canada and 10.9 per cent in Germany.
To put this right, the report argues that the Government should commit itself to a serious programme of devolution, predicated on the view that local leaders are best placed to know what is needed in their local area and reflecting the fact that healthy competition between areas will lead to better outcomes.
The recommendations are also rooted in the belief that the private sector is the only reliable means of developing sustainable local economies and helping ‘level up’ local areas in the long-term. It is for that reason it proposes a new series of Opportunity Zones, which would build on the idea of Free Ports – a policy that the CPS has championed since 2016, and one which has already been adopted by Boris Johnson since becoming Prime Minister.
These Opportunity Zones would directly target specific parts of the UK where generations have been locked out of work and employment opportunities are scarce. Local areas would be given the ability to test out a series of local measures, such as full expensing or simplified or reduced taxes, which might lead to private sector and investment and significant economic gains to the communities in which they are based. Crucially, these Zones would not be bound to just ports, eliminating any geographical constraints the areas may have had to contend with.
Robert Jenrick, Secretary of State for Housing, Communities and Local Government, said: ‘This Government has been clear that its mission is to level up our regions, boost economic growth and ensure we all benefit from the opportunities Brexit brings. And under this Government, public investment is set to reach levels not sustained for 40 years.
In this new report from the CPS, Nick King makes a valuable contribution to this topic – with ambitious ideas to level up the British economy by devolving powers and empowering local areas to drive economic growth.’
Nick King, Head of Business Policy at the Centre for Policy Studies, said: ‘In terms of economic performance our United Kingdom is not as united as we might like, with significant disparities between London and the South East and the rest of the country. The only way to close the gap and to bring about economic growth around the country is by giving the private sector every reason to invest and operate in those parts of our country that need investment most.
‘Whether through devolution, infrastructure investment, a revamped approach to skills and education or the introduction of new business-friendly ‘Opportunity Zones’, this report sets out a plan for how the Government can level up the economy and boost growth around the country.’
Robert Colvile, Director of the Centre for Policy Studies, said: ‘The best way to level up Britain’s regions is not to punish the south for its prosperity, but to give every part of Britain the freedom, and the tools, to compete for talent, investment and infrastructure. It’s no coincidence that we are simultaneously one of the most centralised countries in Europe and one of the most geographically unequal.’