Inequalities of Region and Place

Lord Young of Cookham Excerpts

Thursday 14th October 2021 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I very much welcome this debate, so ably moved by the noble Lord, Lord Liddle. Like him, I look forward to the maiden speech from the noble Viscount, Lord Stansgate. This debate is timely because it comes just before the imminent publication of the White Paper on levelling up. This is in fact the delayed White Paper on devolution, promised for September last year, which has now morphed into a White Paper on levelling up. I very much hope that this rebranding will not diminish the previous commitment to greater local autonomy. Devolution has clear centrifugal overtones: pushing powers out. Levelling up has connotations of a more centralised approach: how else can you make things level?

While we are all pretty clear what devolution means, there is no such clarity about levelling up. Like others in this debate, I have spent many hours on the doorstep listening to voters’ priorities: safer streets, better schools, more houses and shorter waiting lists. Nobody has ever said, “George, please level me up.” This is not to discount it as an objective, but just to say that it means different things to different people.

In the context of this debate, in his levelling-up speech on 15 July, the Prime Minister uttered two sentences which I hope will inspire the levelling-up White Paper. First, he said that

“for many decades, we have relentlessly crushed local leadership”.

The second sentence was:

“Come to us with a plan for strong, accountable leadership and we will give you the tools to change your area for the better”.


This afternoon, we should respond to that challenge and then hold him to those words.

I took further encouragement from the recent appointment of Neil O’Brien to the rebranded Department for Levelling Up. In his speech last Wednesday, which was overshadowed by another speech on the same day, he said:

“Boris Johnson put levelling up at the heart of his conference speech ... But what is it? The objectives of levelling up are clear. To empower local leaders and communities.”


That objective was reinforced by Bridget Rosewell, a member of the National Infrastructure Commission, who commented on a report that it issued last month. She said:

“Levelling up cannot be done from Whitehall. Every English town faces a different set of challenges and opportunities, and local leaders are best placed to develop strategies to address these.”


But we live in a highly centralised country. In a recent report on tax and devolution, the IfG said:

“The UK is an outlier by international standards. In 2014, every other G7 nation collected more taxes at either a local or regional level according to estimates by the Organisation for Economic Co-operation and Development.”


Our figure is about 5%, roughly half that of most other countries.

So, while other countries have national and local government, we have national government and local administration, and it is not working. The helpful Library brief for this debate shows that the UK has the highest regional inequalities of the 27 nations measured. I believe that part of the answer to the question posed by the noble Lord, Lord Liddle, in this debate about regional inequalities is to set regions free from central control and allow them to take greater responsibility for key decisions. Others will talk about devolution of power; I shall talk about devolution of money because, without freedom to raise and spend, and being accountable for those decisions, devolution of power is meaningless.

Let me give two examples of how the system is weighted against raising money locally. The Government have just increased national insurance contributions from 12% to 13.25%—an increase of more than 10%. Local government would not have been able to do that without holding a referendum first. There has been no such inhibition on the Government. Then take national taxation. Government income is buoyant. Without touching tax rates, economic growth and inflation swell the Government’s coffers year by year. Income tax, national insurance, inheritance tax and capital gains tax all rise without the Chancellor lifting a finger or incurring a single hostile headline. The OBR estimates that just freezing personal allowances—so-called “fiscal drag”—will be worth £8 billion a year to the Government by 2025-26.

Local government has no such advantage. The council tax base is fixed at 1990 levels, and if local government wants to raise more money, even to stay still in real terms, it has to raise tax rates, with all the aggravation that that entails. And, unlike income tax, council tax is regressive and the tax base is 30 years out of date. Would the Government raise income tax on the incomes of 1990?

I will irritate my noble friend the Minister once more by suggesting that tax bands should be revalued and that there should be two additional bands. However, my final suggestion is that, when we move from taxing fuel to road pricing, the revenue from road pricing—a buoyant source of revenue—should go to local, not central, government, which would give councils the independence and financial help that they need to deliver the autonomy that we all want to see.