As the furore regarding the distribution of the latest round of the governments levelling up fund rumbles on it is becoming increasingly clear that changes in how such funds are allocated is essential. Our analysis at the Centre for Levelling Up and Inequality showed that 23 the of 100 poorest areas in the country have yet to receive any of the £3.2 bn of Levelling Up funding distributed so far. The amount of money distributed to the top 20 such poorest areas has also declined by over £100m from round 1 to round 2.
The glaring gaps in how funds are distributed has led to calls, especially from regional metro mayors for funds devoted to addressing inequality to be combined with other monies and given to them to meet local needs. This has been led by Andy Burnham who has called for a single grant for Greater Manchester - similar to the way Whitehall funds Scotland and Wales.
There are some, undoubted, potential advantages to a greater devolution of funds related to addressing regional inequality. Breaking free from the mechanistic Treasury led approach, which by its nature struggles to understand local need would be one. However, devolving funds in and of itself does not necessarily avoid making tough decisions about who receives funding and what for. Nor does it ensure that the poorest areas receive the support they need.
One would hope in a world where funding allocations were made locally that competitions between areas to prove their need would be avoided but this would not necessarily be the case. These forms of ‘poverty parade’ are very unpopular with those who have to participate in them but devolution alone would not guarantee their abolition. They could in principle be used to decide on who receives funds at the regional level, this time just pitting Rochdale against Salford for instance rather than against Salford and Thanet. There is also the danger that if this approach is used at smaller geographies than the national level the kind of scrutiny which the recent levelling up allocations received may be more difficult to do.
A better approach may be to allocate funds and give greater latitude to mayors or other regional bodies the ability to use them flexibly but seek consensus across mayoral authorities regarding the poorest places and guarantee them some funding. It would also be preferable to get agreement on transparency regarding allocation methods and preferably a collective rejection of the kind of competitive bidding we have seen so far in the levelling up fund.
Without the safeguards above in place the risk is that devolution will see national problems repeated in microcosm as regional bodies struggle to meet the competing needs of different localities with the added problem of having to make decisions face to face rather than the safety of Whitehall desk.
Professor Graeme Atherton
Head, Centre for Inequality and Levelling Up, University of West London
