The Centre for Policy Studies think tank today welcomed the publication of the Levelling Up White Paper – and in particular the credit given at the Despatch Box by Michael Gove to the CPS’s work in this area.
But it urged ministers to do more to put business, the private sector and private sector investment at the heart of this agenda, as the only sustainable way to deliver the higher growth and greater productivity upon which levelling up will depend.
Robert Colvile, Director of the Centre for Policy Studies, said:
‘This is clearly a serious document, which grapples both with the extremely powerful forces which have concentrated growth and productivity in London and the South-East and the failure of the many previous attempts to redress the balance.
‘The dozen missions set out by Michael Gove are all valuable and worthwhile, as is the focus on data and transparency. But there is a further mission, which sits above them all, which is to ensure that the private sector can create the high-productivity jobs on which levelling up will depend. The current agenda of temporary investment incentives and permanent tax rises will certainly not help deliver that.’
CPS experts also gave their initial verdict on several key aspects of the report.
THE MISSIONS AND LEVELLING UP
Tom Clougherty, CPS Head of Tax, said:
‘The government’s new “missions” and the metrics that underlie them are largely welcome, and should lead to a new focus on Britain’s neglected cities and towns outside the south-east of England. The only danger is that focusing on relative inequality as well as absolute improvement might lead policymakers to reject policies that would improve Britain’s international competitiveness – because they’re seen as too London-centric. That kind of self-defeating analysis must be carefully avoided.’
Tom Clougherty said:
‘We welcome the government’s focus on business and entrepreneurs as drivers of levelling up. We will only achieve robust and sustainable regional growth if we can get the private sector booming across the country. Nonetheless, our research shows that the government still needs to do more – particularly on tax and regulation – to show business that it is really on its side.
‘The White Paper talks about the importance of using the tax system to incentivise investment. But it’s hard to look past the fact that in a little over a year, the super-deduction will expire, the annual investment allowance will fall by 80%, and the headline rate of corporation tax will rise by six percentage points. There seems to be a gap here between the government’s long-term vision, and their nearer-term decision making.’
Alex Morton, CPS Head of Policy, said:
‘The White Paper inevitably rebalanced housing spend toward parts of the country that have seen less government investment in new homes. But it is ultimately planning reform that will make the biggest difference to housing supply. We need to ensure that we continue to increase housing supply in high-demand, high-growth areas across the whole country.
‘The pledge on home ownership is welcome, as is the goal that there will be more first-time buyers in all areas. But there needs to be more detail on how this could be achieved. The existing funds, re-announced today, have only had limited success in driving up ownership. And while the government helpfully mentions greater access to low-deposit mortgages, one of the CPS’s core priorities, it does not say how this can be delivered.
‘It is also odd that rising home ownership is not one of the metrics for success, on the missions and accompanying ONS dashboard, given how much of a priority it is for so many people in all regions.’
Eamonn Ives, CPS Head of Energy & Environment said:
‘Extending London-style devolution across England – and letting more regions elect powerful mayors – should help to deliver better services, faster economic growth, and a restored sense of pride in the places which need it the most.
‘This is something we called for in our report “A Rising Tide”, so we welcome the White Paper’s commitment to overhauling England’s local government by 2030.
‘However, the government should also look to take the devolution agenda to the next level by explore what meaningful tax responsibilities could be handed back by Whitehall to local communities alongside new spending powers.’
LEVELLING UP, NET ZERO AND R&D
Eamonn Ives said:
‘The White Paper rightly recognises the wide overlap between spreading opportunity and the decarbonisation agenda. Though the shift to a cleaner economy poses certain challenges, the possibilities on offer to revive Britain’s industrial heartlands along Net Zero lines are immense. As we made clear in a recent report, seizing these opportunities successfully will require an innovative private sector to develop the clean technologies of the future, so it is pleasing to see the government reaffirm its commitment to raising R&D across the country.’
Karl Williams, CPS Senior Researcher added:
‘The government’s continued commitment to increasing R&D investment and so boosting productivity growth is welcome, as is its recognition of the imperative of crowding in private sector R&D investment to maximise returns on public investment. However, there is a danger that in broadening the remit of agencies such as UKRI to take into account spatial criteria and ‘economic, social and cultural benefits’ in the award of R&D funding, they risk losing sight of their core mission – funding cutting-edge, world-class research and innovation, wherever it happens to be based in the UK.’
Archie Hill, CPS Researcher said:
‘It is encouraging to see the White Paper recognise the importance of ensuring that individuals can access flexible support to train, retrain and upskill throughout their lives. Addressing the skills gap across the UK is key to tackling regional equality.
‘And while few of the White Paper’s announcements around lifelong training were new, we look forward to seeing proposals such as the Lifelong Loan Entitlement brought forward as a priority, to help make the ambition of a high-wage, high-skill economy a reality.
‘We also welcome the establishment of a “unit for future skills” – it is vital that government efforts to boost skills provision are connected with the emerging needs of business and the wider economy in a meaningful and data-driven way.’
Date Added: Wednesday 2nd February 2022