For the government’s levelling up agenda to meet its objectives, processes must be made inclusive at every stage and address fundamental problems of inequality. Hartwig Pautz and Arno van der Zwet draw on the experience of the City Region Deals to discuss how levelling up instruments can and should put inclusion and equality at the heart of their design and implementation.  

The recent announcement of £2.1 billion of “levelling up” funding to be used to “breathe new life into more than 100 communities” caused the usual brief media furore with regards to where the money was to be channelled and for which types of projects. Some accused the British government of investing too little into the areas and communities which really need it, others have detected bias in where the money is to go as they highlighted that more money was allocated to projects in Conservative constituencies than to those in opposition constituencies, leading to accusation of pork-barrel politics.

The “levelling up” agenda itself is laudable with regards to its objectives of improving economic opportunities and reducing the significant regional disparities across the UK. At first glance, the agenda appears to address structural inequalities. To quote Prime Minister Rishi Sunak: “Through greater investment in local areas, we can grow the economy, create good jobs and spread opportunity everywhere”.

However, aside from the criticisms immediately following the announcements, there are deep-seated problems with such economic development initiatives. One key problem is around the integration of equalities and inclusion objectives into growth-targeted policy instruments such as the government’s Levelling Up Fund. Getting this integration right is a serious challenge, as a recent report by the UWS-Oxfam Partnership about another levelling up instrument, the City Region Deal in Scotland, shows.

The case of the City Region Deals

In 2011, as part of then-Chancellor George Osborne’s city-centric levelling up agenda – his 2014 “Northern Powerhouse” initiative was one aspect of this agenda – the UK Government introduced the “City Deal” instrument to stimulate growth. The government committed about £2.3 billion to 32 such deals across the UK. These deals are, in essence, vehicles to promote economic development and growth which seek to pool resources and expertise in bespoke “packages” tailored towards defined geographical areas and designed to provide funding for specific projects.

When rolled out in Scotland, the Scottish government became a co-funder of the deals so that in Scotland, the deals are arrangements between the UK government, the Scottish government, local governments and further local private, public or third sector stakeholders. In Scotland, the deals were meant to be less city-centric – this was reflected in their re-labelling as “City Region Deals” (CRDs).

Significantly, the Scottish deals pivoted towards the Scottish government’s “Inclusive Growth strategy” that chimes with the government’s ambition to make Scotland into a “wellbeing economy” where societal progress is measured in ways that go beyond GDP. In other words, the CRDs diverged from the pre-existing deals in England with regards to the strength of the focus on “growing GDP”. Because of this pivot, the Scottish CRDs could be expected to more explicitly focus on inequalities and exclusions than their English counterparts. By 2020, a total of £5.2 billion had been committed for Scotland by all partners involved, and by late 2022, 11 deals had been agreed. Most of Scotland is, today, “covered” by deals with durations between 10 and 20 years.

Design flaws

The UWS-Oxfam Partnership report focuses on whether the CRDs were designed with inclusion and equality considerations in mind, whether those not usually represented in economic development decision-making were involved in initial deal development and later project design, and whether equality impacts are actively monitored during the delivery of the deals. The answers to these questions provide crucial lessons not only for current deals across the UK, but also for other and future instruments of the levelling up agenda.

Overall, the research demonstrated that the deals were not always conceived with exclusions and inequalities in mind, at least not in the initial, and crucial, design phase of the deal-making process. Among the key research findings was that the deal design process – from first draft to the official bid document submitted to government – was, in many ways, “top-down” with little steer given to local stakeholders outside local government. To bring in local stakeholders, local government usually used existing public consultation mechanisms, which were not always suitable for the novel instrument of the CRD and were not inclusive and open enough.

A key research finding was that the deal design process was, in many ways, “top-down” with little steer given to local stakeholders outside local government.

The “secretive” nature of the early deal design stage hampered the inclusion of third sector stakeholders frequently most concerned with equality, poverty and inclusion issues. The private sector was often better represented in the design process, and there was a close working partnership between local enterprises and government stakeholders. Private sector involvement in the deals was seen as an asset in terms of securing a robust economic framework for investments enabled by the deals, but also as supporting social inclusion by improving employment prospects in relatively disadvantaged places. Indeed, such employability measures were understood, by many, to be at the core of “inclusive growth”.

Signs of progress

There is some indication that those in charge of deal-making and implementation did not include third sector organisations, including social enterprises, as contributors to (inclusive) growth because they saw them as undertakings that “cost (public) money” rather than generate it. However, there were some cases where local authorities actively looked to engage third sector stakeholders, but limited capacity on both sides may have hampered full engagement.

Nevertheless, the research also showed that local stakeholders are interested in “building in” equality concerns within the wider economic growth agenda and that they are very aware of existing inequalities in Scotland, with poverty and social exclusion being the most readily understood dimensions of this.

The value of including diverse voices early in the deal-making process seems to have been recognised in the more recent deals, compared to the early ones. However, the extent to which this has led to a meaningful shift in terms of the type of projects and activities that are supported remains to be scrutinised.

Beyond rhetoric

A further finding is that there is no uniform monitoring system for the deals, and their bespoke nature would make it difficult to establish one. This means that the overall impact of the deals on equality and inclusion is difficult to determine. Moreover, deals are not obliged to use specific indicators, meaning that there is the potential for equality issues not to be actively monitored or reported.

What are the implications of this research for the current phase of the levelling up agenda? We believe that if “levelling up” through economic growth is to succeed, equality and inclusion concerns need to be explicitly addressed in any investment decision flowing from the agenda. In practice, this means:

• The making and delivery of levelling up measures, be they through capital projects or otherwise, should be fully transparent to allow early scrutiny and provide opportunities for a wider set of stakeholders to engage in their development and subsequent delivery;
• Third sector actors should be considered as key to both the design and delivery of levelling up instruments;
• Individuals directly affected by inequality and exclusion should be involved in project design and delivery, also through participatory frameworks;
• A robust monitoring and evaluation framework is required to capture the impact of levelling up projects on equality and social inclusion within and across the territories they cover.

There is no doubt that the levelling up narrative carries political weight, and by making it a central policy of the Johnson, Truss and Rishi premierships, there are high expectations for the UK government to deliver on its promises. So far, levelling up policy has been dismissed by some as being an empty vessel. The lessons from the CRDs are particularly valuable when it comes to taking the policy from political rhetoric to programmatic credibility.

This article draws on the findings of the January 2023 report “City Region and Growth Deals: Growing Equality for Scotland?” published by UWS-Oxfam Partnership:

For more analysis of levelling up policy, browse all related blog posts here.

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.

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