Following the Levelling Up White Paper’s publication, which the Government says will set out a plan to transform the UK by spreading opportunity and prosperity to all parts of it, local business leaders have reacted.
East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire) Chief Executive Scott Knowles said: “After lots of rhetoric, it’s an important moment to finally see what levelling up will mean in practice under this Government.
“Any vehicle that results in more powers being given to local areas is, in principle, a positive step as it should equip cities, counties and regions with the tools to shape their places as they see fit and use their local knowledge to target the issues that matter to them.
“It’s promising to see Derbyshire, Leicestershire and Nottinghamshire all named in the first cohort to be invited to agree new county deals. It’s crucial these mechanisms lead to enhanced public investment, given the East Midlands has historically received the least funding per head of any UK region.
“Businesses in our three counties are increasingly beginning to understand they are being left behind by those in other regions that have been given devolved powers. For example, the public investment gap per capita between the East and West Midlands grew by 21% in the period since Andy Street was elected Mayor of the West Midlands.
“Therefore, should our counties take up the devolution offer, we would expect to see this result in more money for our areas in matters that have been neglected for too long, such as our transport infrastructure, skills, education, digital infrastructure, and research and development (R&D).
“Low productivity has long been a sticking point for the UK economy, with poor growth since the 2008/09 financial crisis and lagging behind our peers in countries such as Germany, France, Norway and the US.
“In regions such as the East Midlands, we have argued that one of the reasons for this has been that too much focus has been placed in London and the South East rather than in the North and Midlands, where there are plenty more gains to be made.
“So the Government’s pledge to increase public investment in R&D outside the Greater South East by at least 40% by 2030 is a key aspect of the Levelling Up White Paper that will be music to the ears of our manufacturers.
“This industry, and our region, was the birthplace of the Industrial Revolution and its general decline in recent years – from 30% of the UK’s economic output in the 1970s to 10% today – has coincided with regional disparities in our country.
“Manufacturing – which is spearheaded by household names including Rolls-Royce, Toyota and Boots in our region – therefore has a central part to play in levelling up our country, making huge contributions not only to productivity uplifts but also providing long-term employment for people in our communities.
“We have also been eagerly awaiting further details about the UK Shared Prosperity Fund, which will replace exhausted EU funding from 2023, and it’s reassuring to learn that much of this will be decentralised to local leaders, who will be able to target investments to regenerate their communities, boost people’s skills and support local businesses.
“The Chamber is already delivering an East Midlands Accelerator project to help create jobs, support digital adoption among businesses and accelerate the low-carbon transition across seven local authority areas in Derbyshire, Leicestershire and Nottinghamshire as part of the Community Renewal Fund, which is the forerunner to the Shared Prosperity Fund.
“Our experience in this programme – as well as a pilot scheme for the Local Skills Improvement Plan, which puts employers at the centre of delivering skills training – suggests there are many benefits to be realised by having local organisations at the heart of local decision-making.
“It’s also encouraging to see Government setting itself some real metrics, supported by statutory legislation that will hold its performance in levelling up to account. We have the plan and now we look forward to the partners in our region who will help deliver meaningful changes – and quickly, because we don’t want to still be talking about the same old issues in 10 years’ time.
“Westminster can also be confident that it will get more bang for its buck from backing the East Midlands in the resulting private sector investment it triggers than in just about any other region.
“We already have lots of exciting projects taking place such as the freeport and schemes led by the East Midlands Development Corporation, including at Ratcliffe-on-Soar Power Station, and we know there’s even more to be achieved by having the full backing of our national decision-makers.”
Richard Rose, partner and head of BDO in the Midlands, said: “Following a disruptive end to 2021 – a year that saw medium-sized businesses rethink operations and quickly adapt to stay afloat – it’s clear just how important levelling up policies are to organisations across the Midlands.
“Through our Rethinking the Economy survey of 500 mid-sized companies, business leaders have been very clear about their priorities and what true ‘levelling-up’ means to them. The top three priorities for regional businesses include investment in skills to reduce the so-called ‘skills gap’, with more than a quarter ranking this as the most important area of focus, investment to develop new infrastructure (20%), and streamlining/restructuring local authorities and councils (20%).
“From our research, only a small percentage of businesses (5%) believe they will not benefit from the Government’s pledge to level up the UK but are confident they will be successful regardless of this. In fact, more than a third of businesses in the region feel that levelling up is critical to the success of their business, with a further 36% believing it will help to some extent by improving the region as a place to live and work.”
Rose continued: “Regional investment in R&D is a huge positive and Government funding to leverage at least twice as much public sector investment could be the key to stimulating innovation and productivity growth. The Midlands is well placed to take advantage of this given its entrepreneurial spirit, combined with the sectors and talent in the region.
“Against a backdrop, in which 90% of Midlands companies will be impacted by the Government’s announcement to eliminate reliefs for overseas R&D from April 2023, regional business leaders will need to rethink their tax and innovation strategies and consider how they can bring this into the UK.”
He concluded: “Medium-sized businesses are the engine of the economy, accounting for more than £1tn or revenues and their future growth will be crucial to the overall economic recovery of the UK.
“We know there isn’t a one size fits all solution, but the Government’s ambitious levelling up whitepaper should be received positively by business. As companies across the region plan for a brighter year ahead, all eyes will be on the UK Government to listen to what they truly need and deliver against these priorities. The proof will come from whether the necessary funding, focus and implementation follows and brings this whitepaper to life.”
FSB development manager Natalie Gasson-McKinley, said: “The new Levelling Up agenda gives an opportunity to rebalance the system, making sure opportunities and funding are more equitably spread across the nations and regions. The East Midlands continues to lose out in terms of public investment, and local businesses have long raised concerns about the comparably low levels of infrastructure and economic development funding – which impacts on rates of local and regional economic growth. It’s important that this white paper has real substance and nails down policies that are adequately funded to ensure that it makes a difference, so we look forward to going through all the details when it is published in full.
“To ensure Levelling Up is a success, small businesses must be front and centre, with improvements made to connectivity, business support and skills development across the UK. The focus that the Government has put on locality, rejuvenating town centres and high streets, where the majority of businesses are small, is pleasing to see. It is positive that Derbyshire and Derby, along with Nottinghamshire and Nottingham, have been invited to begin negotiations to agree new County Devolution Deals. The Federation of Small Businesses (FSB) will work with local policy makers to ensure that the voice of small businesses is not lost or excluded from discussions. Elected representatives must now be engaged closely to make meaningful change in all our communities.
“Housing is key to levelling up and while it’s the right move to provide loans to small housing firms as part of the Home Building Fund, a small house builders strategy is needed to make certain smaller businesses are at the forefront of policy thinking.
“In the wake of the Government’s Integrated Rail Plan announcement, there’s already concern over plans for connectivity in some parts of the country. Local public transport is important to small businesses and their employees, and improvements in its frequency and quality are much needed, as well as a focus on improving deteriorating local roads.
“In the towns and areas of the country where it is most key to level up, small businesses are not short of ambition and want to flourish and grow. Our research shows half of small business owners in these ‘less favoured areas’ striving to become a business leader in their community. But significant support is needed, addressing regional inequalities and moving beyond just job creation.
“This paper certainly isn’t short of ambition, but we need to make sure it is delivered well. The acid test will be whether small firms, which are integral to our economic recovery, feel better supported, are better connected, can find the right staff and feel more pride in their area. With potentially debilitating tax rises on the horizon, Levelling Up must now deliver lasting change; it cannot just be a worthy intention or partisan slogan.”
Matthew Fell, CBI chief policy director, said: “The Levelling Up White Paper is a serious assessment of the regional inequalities which have hamstrung the UK’s economic potential for generations. It offers a blueprint for how government can be rewired and an encouraging basis for how the private sector can bring the investment and innovation to start overcoming those deep-rooted challenges, and power long term prosperity for every community, wherever they live.
“The picture it paints of a reinvigorated 2030 UK can inspire public and private sector partners to unite on shared missions for improving health, wealth, growth and opportunity across the country.
“Crucially, it accepts the CBI view that business-driven economic clusters – enabling every region and nation to build its own unique competitiveness proposition – can be a catalyst which brings levelling up ambitions to life.”
Phil Woolley, head of public sector consulting, Grant Thornton UK LLP, commented: “The publication of yesterday’s White Paper plans is a welcome first step and it is reassuring to see government recognise the need for systemic changes in order to deliver its central aim of Levelling Up.
“The ‘12 missions’ can be seen as an attempt to consolidate existing elements of government activity behind a singular banner and now provides a clearer picture of the levelling up opportunity.
“Following a decade of successful regional devolution and mayors, the White Paper marks the next stage of the country’s devolution journey. With government now offering a clear framework of devolved powers and accountability, local leaders will need to embrace the opportunity and collaborate across the public and private sector to ensure they negotiate and then deliver the best deal for their communities. The East Midlands could be at the forefront of the ‘devolution revolution’, with Derbyshire, Leicestershire and Nottinghamshire all earmarked as some of the first counties to be invited to begin negotiations on new deals.
“Grant Thornton’s Levelling Up Index shows that the economies of the 10 worst performing local authorities in England are on average over five times smaller than their best performing counterparts – highlighting the scale of the challenge ahead.
“To level up, these areas would need to grow their economies by £12billion, increase employment rates by 6 percentage points, create 1,700 new businesses a year and increase average weekly pay by £200.
“It is too early to determine whether the measures announced today will be sufficient, but it is a start. Success will ultimately depend on the ability and willingness of local and national government to translate these new frameworks into meaningful change in people’s lives.
“The Spending Review offers the next opportunity for government to show its commitment by realigning departmental objectives behind these new goals.”
