Inequalities of Region and Place

Lord Bishop of Durham Excerpts

Thursday 14th October 2021 Lords Chamber

[The Lord Bishop of Durham]

My Lords, I thank the noble Lord, Lord Liddle, for securing this debate, and am pleased to follow on from the noble Lord, Lord Young of Cookham. I, too, look forward to the maiden speech of the noble Viscount, Lord Stansgate.

Jubilee is a strong theme of our Judaeo-Christian tradition. Jubilee includes setting people free from the impacts of inequality. If levelling up is going to mean anything significant, it must tackle the inequalities that exist in our nation. It needs to be a kind of jubilee.

This week is Challenge Poverty Week. Child poverty is a very good measure of regional inequalities within England, as it is both an indicator of poverty and a perpetuator of it. Child poverty highlights the complexity of issues that cause it, including education and employment. It has lifelong impacts on children as they grow into adults and shape their communities. The recent report by Donald Hirsch for Loughborough University estimates that the cost of child poverty is £38 billion a year, a significant increase in the past five years.

We see far higher levels of child poverty in some places than others. It is not a simple divide of a wealthy London and an impoverished north. The Institute for Fiscal Studies reported in its Green Budget for 2020 that

“inequalities within regions are larger than the inequalities between regions.”

So, in Bethnal Green and Bow, 60% of children are in poverty. However, child poverty rates in the north-east rose more steeply than in any other region in the lead-up to the pandemic. In Bishop Auckland, where I live, child poverty has increased by 7% since 2015. In nearby Middlesbrough, the increase is 13.6%. Poverty is inextricably linked to the issue of inequalities of place, and it demands a measure of relative poverty if it is to be addressed properly. The Work and Pensions Committee has called for the Government to re-engage with the Social Metrics Commission and to look beyond a solely absolute measure of poverty, and I echo its conclusions. So, in considering levelling up, will Her Majesty’s Government commit to using the Social Metrics Commission assessment for measuring poverty to inform decision-making?

The compound impact of the two-child limit in universal credit, the cuts to the £20 uplift, the impending national insurance levy, and food and fuel inflation create an increasing threat of a growth in child poverty. So, along with groups such as the North East Child Poverty Commission, the Child Poverty Action Group, the Work and Pensions Committee and many more, I urge that a strategy is developed rapidly. I hope that we will hear soon that HMG will publish a proper child poverty reduction strategy.

Then there are health inequalities. Here I note the findings of the recent report from the Northern Health Science Alliance, A Year of Covid in the North. This research found that Covid mortality rates between March 2020 and 2021 were 17% higher in the north than in the rest of the country. The estimate is that this has cost the national economy £7.3 billion in lost productivity. Minor psychiatric disorders were also 10% higher in the north.

In considering levelling up, what are Her Majesty’s Government doing about the disparity in health inequalities across the nation? Throughout the pandemic, the average unemployment rate in the north was almost 20% higher than in the rest of the country. Furlough was good but it worked less well in the manufacturing and service sectors. Inward investment in infrastructure and higher skills work is one key area to help here. I highlight transport. The inequality between our capital city and the rest of the country can clearly be seen in the difference in government spending and the service provided. London has received nearly two and a half times the public spending received by the north, according to the IPPR.

Since the publication of the Northern Powerhouse strategy in 2016, local transport chiefs are still waiting for the integrated rail plan to make this transport investment a reality. Therefore, as part of the future planning, will the integrated rail plan be published and will it favour the most poorly served regions? I look also to foreign direct investment. The International Trade Committee has reported that FDI is unevenly distributed between the regions and, despite its importance as an instrument of levelling up, it is reinforcing the inequalities it is intended to correct. What will the Government do to address the inequalities of investment in the north?

We all recognise that tackling inequalities of place is a highly complex issue. The Government’s welcome and much needed levelling-up agenda will not succeed without a coherent, cost-effective and long-term regional strategy to tackle inequalities of place within England. We could have a jubilee.

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[The Minister of State, Home Office and Department for Levelling Up, Housing & Communities (Lord Greenhalgh) (Con)]

My Lords, I congratulate the noble Lord, Lord Liddle, on securing this debate. I am grateful to all noble Lords who contributed this afternoon. The debate has been passionate and well-informed, and I am glad that noble Lords share my commitment to reducing regional inequalities and levelling up the country.

I am grateful to my noble friend Lord Horam for mentioning my northern roots. I am of course delighted to come to a debate and receive a gift—I think that is a first for me, and probably the last time it will happen—to help me to learn about the glories of Yorkshire. However, my family comes from Lancashire. Interestingly enough, one of my childhood recollections is being taken by Uncle Harry to Blackpool to see the fairground attractions and then have fish and chips with him at the Lobster Pot, which I gather no longer exists. Blackpool is a great town; despite the points made about the deprivation there, we have to build on the positives and have the local leadership in Blackpool build on the many strengths of the place.

The UK is one of the best places in the world to live, study and work. We have thriving cities and towns, culture and sport, industry, research and community spirit. However, we know that too many parts of the United Kingdom are performing poorly and that gaps in economic performance have been widening over recent decades. The United Kingdom is now one of the most geographically unequal countries in the developed world.

At present, London and the south-east drive the UK’s economic performance. London alone is 32% more productive than the UK as a whole, while cities in the north and Midlands are below the UK average. These regional disparities in economic performance are linked with a whole host of other disadvantages which have a real impact on people’s day-to-day lives. They can lead to fewer opportunities, weakened civil society and poor social and health outcomes. These issues can be self-reinforcing and have led to the narrative that some places are left behind. That is why, despite the challenges of Covid-19, ensuring that the whole of the UK benefits from the same opportunities remains central to the Government’s agenda.

There is no single driver for the geographical disparities across the United Kingdom and no single methodology to measure the needs of local areas and communities. Of course, I take on board the need to look at how a policy is measured. I am sure that will feature in the policy analysis, so I thank the right reverend Prelate for raising the social commission’s work on poverty. Accordingly, levelling up is a multifaceted policy mission: a combination of improving health, education and skills, increasing jobs and growth, building stronger and safer communities, and improving infrastructure and connectivity. Levelling up will therefore require cross-government interventions, delivered over the long term, empowering local leaders and communities to seize their own destiny, boosting living standards, particularly where they are lower, spreading opportunity and improving public services, particularly where they are weak, and restoring local pride across the UK.

Therefore, as the Prime Minister set out in his speech on levelling up on 15 July, the Government will publish a levelling-up White Paper this year. That is where we will set out the plan that the noble Lord, Lord Liddle, has called for, detailing how we plan to level up the country through bold new policy interventions to improve livelihoods and opportunity in all parts of the UK. At the upcoming spending review, the Government will set out how we will build back better, delivering the priorities of the British people, unleashing the potential of places by improving outcomes across the UK where they lag, working closely with local leaders and strengthening the private sector where it is weak.

While the White Paper will outline our plan to drive forward this agenda, the Government have already rolled out major policy interventions to begin levelling up the UK, investing billions to support innovation, high-street improvement, public transport and digital connectivity. As set out at the spending review in 2020, the Government’s capital spending plans this year will total £100 billion—a £30 billion cash increase compared to 2019-20. This is part of the Government’s plan to deliver over £600 billion in gross public sector investment over the next five years, the highest sustained levels of public sector net investment as a proportion of GDP since the late 1970s.

While levelling up is a broad agenda that encompasses cross-government policy levers to address regional inequalities across a range of outcomes, my department has recently launched a range of policy programmes to support our local economies to level up. We have already made huge strides towards rebalancing the economy and empowering local government. This has been supported by the Government’s programme of devolution, one of the largest in recent decades, including nine mayoral devolution deals and one non-mayoral devolution deal in Cornwall, meaning that 41% of residents in England are now served by directly elected city region mayors, including 63% in the north.

Mayoral devolution has strengthened local leadership and institutions, devolving key powers over transport, planning, skills and funding away from Whitehall, so that they are exercised at the right level to make a difference for local communities. Mayors are already playing an incredibly powerful role in driving economic growth, improving public services and giving local areas a real voice in local government. This Government are committed to going further, by offering to negotiate devolution deals with county areas to give more parts of England the benefits of strong local leadership and the powers which have been given to mayoral combined authorities over recent years. We are also committed to deepening existing devolution settlements where appropriate, to further empower local leaders to level up their areas.

Meanwhile, our local growth funds enable places to fund their economic priorities and level up. The £4.8 billion levelling-up fund will invest in infrastructure that improves everyday life across the United Kingdom, including regenerating town centres and high streets, upgrading local transport and investing in cultural and heritage assets. The fund will operate UK-wide, extending the benefits of funding for priority local infrastructure across all regions and nations.

The Towns Fund contributes to the levelling-up agenda by driving the economic regeneration of towns to deliver long-term economic and productivity growth through land use, economic assets including cultural assets, skills and enterprise infrastructure, and connectivity. The UK community ownership fund will also empower communities to protect vital community assets in their area by providing funding to take ownership over them in support of the social well-being of local communities.

Meanwhile, the welcome back fund and reopening high streets safely fund support the levelling-up agenda by helping the businesses and communities that make our high streets and town centres successful. The UK community renewal fund is providing £220 million in additional funding to help places across the United Kingdom prepare for the introduction of the UK shared prosperity fund in 2022. That fund will contribute to the levelling-up agenda by creating opportunity across the UK in places most in need, such as ex-industrial areas, deprived towns, and rural and coastal communities, and for people who face labour market barriers.

Up to 10 new innovative freeports will be opened across the UK. Freeports contribute to realising the levelling-up agenda, bringing jobs, investment and prosperity to some of our most deprived communities across the four nations of the UK with targeted and effective support. Meanwhile devolution, city and growth deals totalling £320 million per annum accelerate economic growth in places across the UK.

It was a fair criticism from the noble Lord, Lord Liddle, and the noble Baroness, Lady Blake of Leeds, that we should not place small pots of money that people have to competitively bid for. It is quite an exercise to bid for funds, which is why we are seeking to consolidate funding into two large funds—the levelling-up fund for capital projects and the UK shared prosperity fund, which will grow to £1.5 billion for more revenue-based projects. It is important to consolidate funding and that is the move the Government are taking in that direction.

The noble Lord, Lord Liddle, and others, including the noble Lord, Lord Davies of Brixton, painted levelling up as simply a slogan without a plan or a long-term strategy. That was a little unfair. As I said, the White Paper is coming but my honourable friend Neil O’Brien and my right honourable friend the Secretary of State have been clear about defining the outcomes for levelling up: empowering local leaders and communities, growing the private sector, boosting living standards, spreading opportunity, improving public services and restoring local pride of place. Despite the challenges of Covid, we have moved ahead with multi-billion pound investments to transform the country’s prosperity and spread opportunity with better infrastructure, public services and access to skills to support good jobs in all parts of the UK.

The noble Baroness, Lady Valentine, gave an excellent speech on the importance of getting Whitehall to join up. That is a reasonable challenge. To be absolutely clear, at the spending review in 2020, we agreed provisional priority outcomes across all UK government departments, along with metrics for measuring progress against the outcomes I outlined for levelling up. Those provisional priority outcomes include the outcomes the Government seek to achieve as part of the levelling-up agenda. The Treasury and my new department, the Department for Levelling Up, Housing and Communities have outcomes related to levelling up. One of DLUHC’s priority outcomes is to:

“Raise productivity and empower places so that everyone across the country can benefit from levelling up.”


That has been agreed on a cross-cutting basis, with BEIS, DCMS, Defra, DfE, DfT, DIT, and DWP as non-leading contributing departments. The levelling-up White Paper will set out further detail on the outcomes and metrics for levelling up.

My noble friend Lord Young is very good at setting challenging questions. The Government are rightly committed to the devolution of power to people and places; I have talked about mayoral devolution. There was a fair challenge from my noble friend, the noble Lord, Lord Shipley—an experienced local government leader—and the noble Lord, Lord Wallace of Saltaire, about the need for reducing financial dependency on the centre. I am sure they would agree that it is important that we look at business rates, one of the core funding mechanisms for local government. There is a fundamental review of business rates because that clearly needs to change, given the shifts we have seen in the importance of offices as part of the local economy and the moves away from bricks and mortar as a determinant of the strength of a particular business. That is being carried out by the Treasury.

I am sure that local government reform of some description around council tax will happen, although it is not currently part of the Queen’s Speech. I am sure my noble friend will never cease to push for new bands of council tax and ways of looking at this, because it is some time since there was any reform of council tax.

I thank the right reverend Prelate the Bishop of Durham and the noble Lord, Lord Wallace of Saltaire, for testing the Government’s commitment to the north. We will continue supporting the north to level up and build back better from Covid. We are doing this with £319.7 million from the Getting Building Fund for a wide-ranging package of projects that will deliver growth for the local economy and support green recovery. As noble Lords know, there is the new UK Infrastructure Bank headquartered in Leeds, which I am sure the noble Lord and the noble Baroness, Lady Blake, will be delighted about. The freeports are very often located in our northern cities.

The noble Viscount, Lord Stansgate, gave an outstanding maiden speech—that is absolutely the right word for it. I really enjoyed it. As a son of an academic surgeon who spent all his life thinking about research to improve outcomes for patients, I know how important science and research are to the future of this country. All those points are well made and have to form part of the fabric of any ambition to level up the country. I point out that there was an unprecedented commitment at Budget to increase public investment in R&D to £22 billion by 2024-25. I am sure there are other measures in the area of science and technology that will drive forward further progress.

The noble Lord, Lord Adonis, is absolutely right: I have been a passionate proponent of HS2, because I could see the regenerative benefits of transportation. As he pointed out to me, where trains stop is often more important than the actual lines. The ability to regenerate very deprived areas is so important. In the borough I led for six years—I spent 16 years as a Hammersmith and Fulham councillor—there are areas of extreme deprivation. Old Oak and Park Royal is one of the most deprived communities in London, and the prospect of regeneration was great if you combined the benefits of Crossrail and HS2. I am delighted that we know that project is going ahead as quickly as practicable.

However, I am disappointed that we are seeing the escalating cost; the noble Lord can point out why. When we had those conversations back in 2008-09, when as a council leader I corralled him at Clapham Junction for the first time—he was very welcoming when in his pomp as a new Secretary of State—it was a £30 billion project. It is now more than £100 billion. In this country we need to learn how we can deliver big infrastructure at reasonable cost, because it is not sustainable to see these ballooning numbers around that sort of project.

I do not know the situation on the eastern leg. My understanding is that the integrated rail plan, for which I do not have a publication date—I apologise to the right reverend Prelate the Bishop of Durham—will soon outline exactly how major rail projects, including HS2 phase 2b and other transformational projects, will work to deliver the transport we need in the future. That date has not been set, so I cannot provide any more information on that.

I have been given a real-time update, and I can say that there are no plans at the moment to reform the council tax system, which, we know, is politically difficult. My noble friend was, of course, a Cabinet Minister in the Major Government. It is not easy to reform the council tax system, but I am sure that we will continue to look at this. It is important that we consider the fundamental review of business rates, at least as one way of thinking about how we can devolve money, and not just power, to make areas more financially independent.

I conclude by re-emphasising the importance that this Government place on reducing the regional inequalities in economic, social and environmental outcomes present across the United Kingdom. Both within my department and across government, we are already delivering a range of initiatives to level up the country. The upcoming levelling-up White Paper will set out further detail on our plan to reduce regional inequalities across the UK and level up the country.

[The Lord Bishop of Durham]

May I inquire about the child poverty reduction strategy, which I asked about?