Despite favourable newspaper headlines, Rishi Sunak’s spending commitments are still overwhelmed by the legacy of austerity reports Sam Bright

English local authorities that have benefited from the first round of the Government’s ‘Levelling Up Fund’ lost £25.5 billion in spending power after 2010, a Byline Times analysis reveals.

On Wednesday, the Government announced the first recipients of the fund – devoted to infrastructure projects in relatively deprived areas of the UK. The Department for Levelling Up, Housing and Communities allocated an initial £1.7 billion in funding for the first round, ultimately intending to invest £4.8 billion.

As the name of the fund suggests, this investment forms part of the Prime Minister’s much-heralded ‘levelling up’ agenda, ostensibly designed to heal the profound, long-standing inequalities between different areas of the country.

However, while the money invested by the Government sounds significant, it does not come close to matching the money withdrawn from these same areas under the austerity years.

Byline Times used data from the Place-based Longitudinal Data Resource – a project by data experts at the University of Liverpool – to calculate the decline in spending power among the English local authorities that have received levelling up funds. The data set runs from 2010 to 2018 and applies to 59 of the 64 English local authorities that have received funding.

If these local authorities would have retained their 2010 spending power, they would have been able to spend £25.5 billion more by 2018, the data shows. The £1.25 billion now awarded to these areas represents just 5% of the money that was lost during the austerity years. The data also does not take into account inflation.

Calderdale in Yorkshire, for example, lost £259 million in spending power between 2010 and 2018 – only to receive £12.2 million for a swimming pool in Halifax through the Levelling Up Fund.

Sunderland, meanwhile, has been awarded £20 million for a new housing eco-system, having lost £562 million in spending power from 2010 to 2018.

“The Government will continue to support local partners to improve public services and regenerate our communities and we have allocated over £1.3 billion to places in every corner of England in the first round of the Levelling Up Fund,” a Department for Levelling Up, Housing and Communities spokesperson told Byline Times.

“We have also provided more than £12 billion directly to councils since the start of the pandemic and are building on this through a further £1.6 billion in grant funding in each of the next three years – the largest annual increase in core funding for councils in over a decade.”

Overall, the north-east has seen relatively few local projects funded in the first spending round. London, the south-east and the south-west all boasted more recipients than the north-east – despite the levelling up agenda previously concentrating on former industrial areas of the country that have suffered from decades of neglect, in part prompting their support for Brexit.

The pattern of levelling-up spending also reveals something fundamental about the Government’s approach to regional redistribution. The Chancellor announced a new fiscal rule in Wednesday’s Budget, to be voted on by MPs: the Government will only borrow to invest in capital projects (i.e. infrastructure), while day-to-day spending should be met exclusively through tax revenues.

Boris Johnson’s administration can therefore invest liberally in headline-grabbing infrastructure schemes, while restricting the amount of support provided to local authorities for basic services. This may be designed to give the appearance of ‘levelling up’ even as the Government upholds its general antipathy to state spending.

As Marcus Johns, of the IPPR North think tank, said: “[It] looks like this Budget is going to be capital intense and revenue light, and the Chancellor’s new fiscal rules could lock in austerity in public services and local government while Government points to new infrastructure projects as levelling up.”

The Conservative Party’s victory at the 2010 General Election ushered in an era of public sector austerity, during which the then Prime Minister David Cameron and his Chancellor George Osborne curtailed Government spending. From 2010-11 to 2017-18, Government funding for local authorities fell by an estimated 49.1% in real terms. In 2019, Professor Tony Travers, of the London School of Economics, told MPs that while local government had experienced funding cuts before, “the reduction since 2010-11 is without parallel in modern times”.

As a result, the circumstances of former industrial ‘Red Wall’ seats have deteriorated since 2010. As Byline Times has reported, child poverty increased by 16% in the Red Wall from 2014/15 to 2019/20 – double the England-wide average. Staggeringly, 39% of secondary school children in Blackpool are now eligible for free school meals, compared with 25.6% in 2011/12. NHS waiting times in Red Wall areas have also jumped markedly, from 8.5 weeks in 2012 to 11.6 weeks in 2020 (pre-pandemic) – an increase of 36.5%.

The gap between the Government’s rhetoric and reality appears to have again been laid bare.


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