Levelling-up and Regeneration Bill (Fifth sitting)

Neil O'Brien Excerpts

Committee stage
Tuesday 28th June 2022 Public Bill Committees

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

There is a lot of interest in the idea of levelling up and its lofty and laudable aims, but warm words and good intentions, of themselves, will not reduce inequality across the UK. There is a real flaw in the Bill’s lack of accountability and ownership of each of the 12 levelling-up missions on the part of individual UK Government Departments. Amendments 3, 5, 10 and 12 and new clause 1 seek to address that lack of accountability.

Of course, the Government have given themselves the power to move the goalposts, change their targets, and look as if they are doing what they said they would do even if they are not. Rather than merely marking their own homework, they are also ready to lower the pass mark of the test if they fail it. That tells us how important the Government’s levelling-up plans are. If they really had the confidence in this flagship commitment that they profess to have, why would there be any baulking about objectively measuring their progress on levelling up?

These amendments seek to lock independent scrutiny of the progress of levelling up into this flagship Bill. Here we are, having to debate it, when it should be taken as read. The Institute for Public Policy Research has also called for an independent body, established in law, to oversee and judge the UK’s progress on levelling up. What Government with true confidence in their ability to deliver their goals, as this Government say they have, would resist that kind of scrutiny and accountability? Surely they would exalt in it; it would be the opportunity to demonstrate their success. What have this Government to fear from transparent and objective allocation mechanisms for delivery? The only conclusion that can be drawn is that the Government know that there is more bluster here than actual substance.

True levelling up, of course, requires actual investment, but the necessary financial backing appears to be absent. Any investment must be delivered in a non-partisan and transparent way. Let us not forget that the Institute for Fiscal Studies has pointed out that departmental budgets will actually be lower in 2025 than they were in 2010. How that chimes with and supports the idea of levelling up is something that I am struggling to understand.

Levelling up is an admirable principle, but if the Government are confident that they can deliver, as they say they are, what possible objection can there be to scrutiny? With such attempts to avoid independent scrutiny, it feels as if there is agenda beyond levelling up. If the levelling-up missions do not have the effect of reducing inequality across the UK, then they will have objectively failed in their goal. These amendments seek to measure that progress. Who can object to that?

If the very foundation of the Bill—the ability to deliver greater equality across the UK—is not open to full and transparent, evaluative, published scrutiny, and if that is not written into the Bill, the very principles on which it purports to stand are built on sand, will not inspire confidence and, I fear, will not deliver. I absolutely agree that we do not need the fanfare of a Bill to reduce inequality; it could just be done—a Bill is not needed. A Bill whose stated aims are not open to transparency and independent scrutiny is definitely not a Bill we need, and we are right to be sceptical.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Neil O'Brien)]

It is a pleasure to begin line-by-line scrutiny of this important Bill with you in the Chair, Mr Paisley. We have a very distinguished Committee and I look forward to some thoughtful and enlightening debates.

The Government’s defining mission is to level up our country—to close the gap in productivity, health, incomes and opportunity between different parts of the country. That goal is made all the more urgent in the face of cost of living pressures and the inequalities laid bare and deepened by the pandemic.

The levelling-up White Paper sets out that levelling up is a moral, social and economic programme for the whole of Government, not just one Department, to spread opportunity and prosperity more equally throughout the country. The Bill sets out the framework for delivering on our levelling-up missions and places a statutory duty on the Government for the first time to set missions to reduce geographic disparities and to produce an annual report on our progress.

The Government absolutely recognise that scrutiny and seeking expert advice will be important to ensuring that we deliver on our missions and level up the country. That is why we have established the Levelling Up Advisory Council, chaired by Andy Haldane, former chief economist at the Bank of England, to provide the Government with expert advice to inform the design and delivery of the missions.

The council is made up of an expert and distinguished group of people. It includes Katherine Bennett, chief executive officer of the High Value Manufacturing Catapult and chair of the Western Gateway, which brings together the research and development strengths of the Bristol region with south Wales; Sir Tim Besley and Sir Paul Collier, two of our most distinguished economists from the London School of Economics and Oxford; Cathy Gormley-Hennan from Ulster University; Sally Mapstone, principal of the University of St Andrews; Laxman Narasimhan from Reckitt Benckiser; Sacha Romanovitch from Fair4All Finance; Hayaatun Sillem, chief executive officer of the Royal Academy of Engineering; and Sir Nigel Wilson, chief executive of Legal and General. These are very independent-minded people—serious people with deep expertise. The reason why we have brought them together is that we respect and value independent, thoughtful, expert advice.

The Government are committed to enabling Parliament, the public and other experts outside the advisory panel to fully scrutinise progress against our missions. The proposed initial set of metrics have already been published in the levelling-up White Paper, in the technical annex—40 pages, which give all the different ways we will measure all the different missions in incredible, unprecedented detail. I do not remember such detail under any previous Government. The metrics were published in the White Paper and will be refined over time. The analysis included in the annual report to Parliament will be based on the metrics that are here and included in the statement of levelling-up missions that will be laid before the House.

Given the level of transparency and reporting, and the level of input from deep experts, it is unclear what value an independent body would add. The Government will be required to report on set missions within set metrics and methodologies. Instead of creating a new independent body, the Government believe that levelling-up missions can be better supported by focusing on delivering those missions themselves—by getting on with it, as the hon. Member for Westmorland and Lonsdale said. It is also wrong to argue that without an independent body, the Government’s progress towards delivering missions will not be subject to independent external scrutiny. Parliament, the public, think-tanks and civil society will all have an opportunity to comment and report on how well the Government deliver missions, in response to our annual reports.

[Patricia Gibson]

This has just occurred to me as the Minister has been speaking. I am curious: if child poverty does not reduce, will the levelling-up programme and mission be considered a success or a failure?

[Neil O'Brien]

The hon. Lady raises a really important point. The last Labour Government had a statutory child poverty target; that target was literally locked into legislation. Was it hit? It was not hit, no. That is why we have adopted the approach that we have; just writing something into law does not mean that it happens, unfortunately. That is why we have created the independent architecture around levelling-up missions: to provide both really serious external expertise in the work that we are doing—I do not think anybody disputes the fact that these are really independent, serious people; and an unprecedented level of detail, to give everybody who wants to criticise the programme all the resources and exact detail they need to do just that. I do not remember any of those things happening under previous Governments.

Missions are intended to anchor Government policy and decision making to level up the UK. However they should not be set in stone. As the economy adapts, so too might the missions, to reflect the changing environment and lessons learned. Of course, some of these things can be tightened over time; we have made remarkable progress on our missions to roll out Project Gigabit and the Shared Rural Network, which are a £5 billion intervention and £1 billion intervention respectively. Over the course of just the last two years, they have transformed the availability of gigabit internet and rural 4G.

Opposition Front-Benchers said, “Why do you have to change some of the missions? That seems very dodgy to us.” Some of the missions will literally have to change. For example, one of the missions that I am very proud of is the one to increase domestic public R&D spending outside the greater south-east of England by a third over the period covered by the spending review. Of course, that prompts the question, “What will happen after the spending review?” We will have to change that mission, otherwise it will just become meaningless. Things have to adapt over time, of course, and I think that everyone recognises that levelling up is a long-term mission; nobody thinks that any of these things, some of which are century-long problems, can be solved in the course of one or two years.

However, the Opposition Front-Benchers made a very important point: the Bill sets out that any changes to missions should be—indeed, have to be—fully and transparently explained and justified through a statement to Parliament where they occur. Nothing will happen without Parliament knowing about it.

Hon. Members on the Opposition front page—Freudian slip; Front Bench—would recognise that some of the missions will just have to change over time; there is no point locking in a three-year mission for the next 30 years. This layer of transparency enables the public and civil society at large to comment on the Government’s decisions. It is unclear what additional benefit an independent body would bring. The Bill sets out that any changes to missions should be fully and transparently explained and justified where they occur. The missions will be rolling endeavours.

[Rachael Maskell]

The big challenges facing our society, such as climate and the economy, have independent bodies, but inequality and the injustices that come from it will not. What do the Government see as the value of independence when it comes to the Office for Budget Responsibility and the Climate Change Committee that they do not see with this particular agenda?

[Neil O'Brien]

That is an extremely good and useful question. Everyone remembers the backstory about why we created the OBR. As Chancellor, Gordon Brown changed the assumption about how fast the UK economy would grow, to prop up and justify to the public extraordinarily high levels of public spending. When the financial crisis happened, his decision to change the assumption about how fast the UK economy would grow proved catastrophic, and we ended up with the largest structural deficit of any major developed economy in the world going into the financial crisis, with catastrophic effects on public spending and public services that lasted for a generation.

We changed that because it is very difficult for anyone outside the Treasury to challenge or see some of the forecasting assumptions being made; the macroeconomic and technical work that was happening only within the Treasury prior to the OBR was difficult for anybody to scrutinise externally. Anybody, even Opposition Front-Benchers, could tomorrow update every single bit of data in this document. All these things are public sources; it is straightforward for anybody to hold us to account for them.

However, when it comes to the OBR, it is not quite so straightforward to say, “No, I think the output gap should be different. I think that your assumptions about the fiscal impact of excise duty changes interacting with changes in consumer behaviour are wrong.” That is a fundamentally more difficult thing to do. Ultimately, the OBR was created to protect the Treasury from the kind of behaviours that, I am afraid, we saw under the last Labour Government.

[Rachael Maskell]

Will the Minister give way?

[Alex Norris]

Will the Minister give way one more time?

[Neil O'Brien]

We are going to have to make progress this morning, I am afraid, because we have a lot of clauses to get through. The Opposition amendments are well intentioned—given who the shadow Ministers are, it could not be otherwise—but they are unnecessary and that is why we must resist them.

[The Chair]

Rachael Maskell, you can make another speech, as this is line-by-line scrutiny.

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[The Chair]

Does any other Member wish to catch my eye? Does the Minister wish to respond?

[Neil O'Brien]

indicated dissent.

[Alex Norris]

I start by saying—given that one of my Whips is in the room, I should not say this—that, for the reasons mentioned, I enjoy these Bill Committees. I am not sure whether I will enjoy them in a few weeks’ time, because we will have been at it for a long time.

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[Patricia Gibson]

Amendment 13 would place

“a responsibility on the Government to publish the resources made available to communities in order to level-up”.

Who could argue with that? In not arguing with it, I cannot help reminding the Minister that Scotland was promised a £1.5-billion-a-year bonanza as part of the Brexit windfall. Of course, the reality is that Scotland has received 40% less funding than it did under the EU funding agenda, and it has suffered a 5.2% cut in its resource budget and a 9.7% cut in its capital budget. Perhaps the Minister can tell us how that supports the levelling-up agenda, because I certainly cannot understand. It is quite galling that as this Government show disrespect to devolved Parliaments—democratically elected Parliaments—by impinging on devolved powers and bypassing the democratic will of the Scottish people in devolved areas, they simultaneously cut their budget in the context of levelling up.

Despite the stated goals of the legislation, the Minister has been unable to say—perhaps he will do so when he gets to his feet—whether the levelling-up missions would result in a reduction in inequality to the point where we would see a reduction in child poverty. What kind of levelling-up commitment would not address the basic social scourge of child poverty? I cannot think what the point of any of this is if we are not committed to tackling that most basic and serious ill.

Of course, as we have heard, we do not need a fanfare to tackle inequality; we just need to get on and do it. We can exalt in our success if indeed we have it, but we do not need a Bill that runs to hundreds of pages but cannot even commit to transparency or to publishing details of the resources that it is willing to use.

In Scotland, the Scottish Government have tried, with their limited powers, to instigate levelling up—for example, with the Scottish child payment of £20 per child per week. That is real levelling up, and these are the kinds of measures that the Bill really ought to tackle to build a more inclusive society. As food bank use rises, we have a real opportunity if we are serious about levelling up, but it takes targeted political will and a determination to tackle the causes of inequality. That is not an easy thing to do—we have to put in a real shift—but a Bill that runs to a few hundred pages with vague missions that objectively cannot be held to account will not convince anybody.

It is clear to see that the resources for true levelling up will not be made available, certainly from the Scottish perspective with the figures I have cited. For all the warm words, and there have been many, it is difficult to have confidence that our communities will see any tangible difference as a result of this fanfare—sorry, this Bill. The Government should have no problem with amendment 13, because they know that no levelling up can happen without resources. Presumably, if they are serious about levelling up, those resources will be committed, so why not publish them? Why do the Government not exalt in their success and the resources they are willing to expend? If this levelling-up Bill and agenda do not reduce inequality or tackle poverty, child poverty or child hunger, I honestly cannot see the point of them.

[Neil O'Brien]

I agree completely with the spirit behind the amendment, and we are actively working to bring about what Opposition Members want. However, we do not think the amendment works, and I will explain why. Official statistics about public spending in different places are widely available already. Her Majesty’s Treasury already publishes a regional breakdown for total current and capital identifiable expenditure per head through PESA—Public Expenditure Statistical Analyses—which is my favourite regional statistical document.

We are also taking steps to improve the quality of spatial data. The Department for Levelling Up, Housing and Communities has established a new spatial data unit to drive forward the data transformation required in central Government. It is frustrating to us that many of the types of data that should have existed for years still do not. The spatial data unit supports the delivery of levelling up by transforming the way the UK Government gather, store and use sub-national data, so that it can underpin transparent and open policy making and delivery decisions. It is completely in that spirit that we are acting to improve data on all levels.

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[Rachael Maskell]

I am listening carefully to the Minister, who has talked about input as opposed to outcomes. In the light of our seeing gross inequalities and life expectancy for some people in our poorest communities decreasing, there is clearly something that is not working in the Minister’s methodology to deliver the outcomes we want to see to close the inequality gap. Will he expand on how he sees the shifting of the dial, as opposed to what we on the Opposition Benches perceive as more of a scattergun approach in terms of where the money still seems to be going through the methodologies he has described?

[Neil O’Brien]

We are the Government who are creating—literally, through the Bill and the clauses we are debating this very morning—a mission to close the gap in healthy life expectancy between local areas, and between the highest and lowest areas, and to raise it by five years by 2035. These are the missions that the Bill will be getting us to report on every year to Parliament, so we are addressing the hon. Lady’s point. Through the health disparities White Paper and the other things the Government are doing, we are addressing as one of our central priorities the underlying causes of lower life expectancy and the inequalities she mentioned.

To summarise, while we are completely with the spirit of the Opposition’s amendments—we are trying to get better data and have processes in place that are generating better data, because we recognise its importance to the levelling-up agenda—there is, in truth, no hard and fast difference between levelling-up resources and the rest of Government resources. Indeed, philosophically, it is important to recognise that one should not think just about levelling-up funds. Much as one can rattle off an impressive list, one should think about how we reform the totality of Government spending.

That is one of the novel aspects of the White Paper’s approach. For a long time, people thought of science funding in a science policy silo, and thought that it should be allocated to science excellence, with no spatial dimension. We are the first Government to set regional targets for science spending, recognising its importance to potentially addressing some of the inequalities that the Opposition have mentioned this morning. We have changed the Treasury Green Book. We have started to allocate housing and regeneration spending differently so that we can get out of the cycles that Tom Forth and other regional economic policy experts have talked about: some bits of the country are overloaded and people cannot get on a train or buy a house, while other parts are crying out for investment and have lots of scope to take on growth.

I hope that I have given the Opposition at least an honest account of why we are resisting the amendment, even though we absolutely agree with its spirit.

[Alex Norris]

I am really grateful for the contributions to what has been a good debate. I will cover some of the points made by my Opposition colleagues and then move on to what the Minister said. Turning to my hon. Friend the Member for York Central, Great British Railways is a brilliant example of what we are talking about. We remember the press release on, I think, 5 February, which came shortly after the White Paper and was seen very much as an element of the levelling-up agenda—indeed, it says that on the Government’s website. The location of Great British Railways will be determined through an online public vote. It is like “Love Island”, Mr Paisley. Anyone watching this series knows that we badly need a vote to try to shake things up, but I do not think it is how we should determine the location of—

[Alex Norris]

I apologise, Mr Paisley. I will get straight back to Great British Railways and levelling up. My hon. Friend the Member for York Central made a strong case for York and, if the hon. Member for Broxtowe promises not to tell my constituents, I might make a strong case for Derby. We are generally not allowed to do such things, but that is my one for the year—[Laughter.]

[Neil O’Brien]

There is some confusion on the Opposition Benches.

[Alex Norris]

Happily, it does not look like the hon. Member for Broxtowe is going to grass me up.

The whole process—we can already see this because people are being encouraged to use a hashtag—will involve TikTok videos and be nauseatingly modern. I know that the Minister does not like things as nauseatingly modern as that, so I cannot believe it for a second—he is sitting sphinx-like, which is of course fine. The constant beauty parade and artificial competition just take energy out of things. Of course, someone will win, and that will be wonderful news, and I will be very pleased for them, but multiple places will lose as a result. That cannot be the best way to level up. I know the Minister talked about a balanced diet, but I will cover that shortly.

My hon. Friend the Member for York Central spoke about where she sees the future for her community and her region, with an emphasis on biotech, rail and the creative sector, and that will be different in Nottingham, Leicestershire or West Yorkshire. That is a good thing. Part of levelling up will be about, as we understand it, sub-regions taking control of where they think their local economies are going to go and the skills they will need to ensure they get that. Getting the resources to make sure they can do that, which is what this amendment is about, is fundamental. This is about resource going to those communities so that they can make those decisions for themselves. I think that the people of York and the sub-region in which my hon. Friend works will have a better say about that than Ministers themselves.

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Let me finish on the Minister’s point about the inconsistencies that he perceives in our positions. Our positions are not inconsistent; they are entirely clear. We want to move away from the beauty parades and to proper funding, based on need, for communities to shape their own direction. That is our position. The Minister said that contrasts with the points that I made about value for money and the spending so far that pushes us instantly to half a dozen analyses, but that is not the point I was making. I was making the point that the Government spend so far has barely passed even the most basic financial tests.

[Neil O’Brien]

The PAC reported on the levelling-up fund. Are there any particular levelling-up fund bids that we are funding that the hon. Gentleman would like to say represent bad value for money and should be withdrawn?

[Alex Norris]

The Minister knows that is unkind. I am not going to stand here and pick at one. We could go down the entire list of 157 local authorities, virtually all of which are significantly worse off, by tens of millions of pounds; I am not going to turn around and say that one of their projects should not happen. Please—of course I am not going to say that. The Minister says that the Public Accounts Committee picked up on the levelling-up fund, but that is not true: it has reported on the towns fund, too. This is a long-running issue and there are more than three years-worth of reports.