The eagerly anticipated White Paper setting out the UK Government’s plans to address regional inequalities and to ‘level up opportunity’ is now due later this month. In advance of its publication, we are sharing our perspective that to be effective, levelling up must be driven at a local level. However, local and city authorities need sufficient capacity to deliver the complex, transformational change required to tackle this issue in a meaningful and sustainable way. Building local capacity is a prerequisite for achieving the more equitable and prosperous society we all want to see.
The UK has among the most extreme disparities in wealth and economic performance between regions of any developed country.1 These inequalities may have been exacerbated by the pandemic. Left behind by social, economic and technological change, people and places are disillusioned and the UK’s economic potential is being held back.
Local issues, local answers
Arup has been working on these issues for many decades – in the UK and across the world. Our experience suggests that ‘levelling up’ needs to be locally led, designed and driven. Our towns and cities need to be able to plan more strategically, developing a coherent and evidence-based vision and strategy for a place over longer time horizons. To do so, they need greater certainty around their long-term funding and decision-making powers – but they also need capacity: the skills and resources that will drive and deliver levelling up initiatives.
Constrained capacity: the causes
Our discussions with clients reveal that the causes of resource shortages in local authorities are multi-faceted and complex. In essence, though, they boil down to three core issues that, if not addressed, will hinder our ability to deliver meaningful change.
1. Staffing pressures: Local authorities have an average 30% less staff than in 2012.2 This depleted pool of talent required to deliver change – programme managers, regeneration officers, finance specialists, procurement teams – is occupied with immediate issues, from the ‘day job’ of delivering public services to responding to the pandemic.
2. Complex funding: The funding landscape for local authorities is complicated. Multiple sources are available, but they often have conflicting objectives, misaligned timescales and bespoke delivery requirements. Bidding for these funds is complex, involving numerous submissions pre- and post-award, all draining resource. The competitive nature of many funds acts as a block to knowledge and resource-sharing across authorities.
3. Restrictive spending requirements: Many funding sources are highly restrictive on how money is spent. Programmes are often focused exclusively on capital projects with short delivery timescales, leaving authorities without sufficient funding to cover the sizable management and delivery costs of these complex schemes, or to cover ongoing operational costs.
Charting a way forward
There are, however, practical and deliverable actions for addressing this challenge. We believe that local authorities, central government and businesses like ours all have a role to play.
New approaches to implementation: Councils everywhere should consider creating dedicated, strategically focused teams to lead on levelling up initiatives. In some places, it might make sense to make these ‘arms-length’, for example as development trusts or regeneration companies, so long as this works for the council. Doing this can facilitate access to secondees from businesses and to funding from third parties. In addition, they can provide more agile procurement routes and greater flexibility around sharing commercial risk to help speed up local delivery.
Leveraged spending power: Local authorities know can have a positive impact disproportionate to their powers and resources by working with and through others. They should build broad-based coalitions for change across business, community organisations, and other public sector bodies, seeking to align their spending plans to support local delivery. They can use their procurement power to secure supplier commitments on investment in skills and apprenticeships, secondments and inclusion of local enterprises in supply chains.
Pooled knowledge and resources: Collaboration with neighbouring authorities is an effective and efficient way to augment resources and knowledge – as recommended by the National Infrastructure Commission. On the Towns Fund, for example, officers from towns across the country have a network to share advice on handling the conditions of the fund, saving duplicated effort and freeing up resources. A clear and widely understood case for change across different projects in a place, along with a common framework for evaluation, will create efficiencies in developing business cases and monitoring the impact of investment.
A new integrated funding approach: Simplifying the number of funding pots, streamlining the application and award process and allowing funding to be spent on delivery and operations costs – as well as capital – will significantly reduce resource burdens for accessing and wisely spending cash on levelling up initiatives.
Better data, better decisions: Rapid, evidence-based reviews of barriers to private sector investment, education, skills, and transport will help make new local policy and interventions more targeted and effective. Government can refine its approach to data collection and analysis across all of these areas – measuring the right things at the right scales – and use new data analytics to evaluate the impact of initiatives. This will help towns and cities better understand their needs and opportunities and prioritise efforts.
Supporting the development of local leaders: A ‘Local Leaders Academy’ programme – like a large-scale version of the Homes England capacity centre – would supercharge excellence and knowledge sharing across local authorities and institutions. Our experience designing and running the Place Leadership Programme for the Towns Fund highlights the value of this exchange between independent experts and the participants themselves.
Leadership: Businesses have a major role to play in relation to their commitment to maximising social value, deploying their time and skills to public sector causes can help address the challenges faced by local authorities – as clients and partners. It can also allow for knowledge transfer and skills sharing, as well as delivering meaningful change for communities.
Local presence and skills: Businesses involved with levelling up related initiatives should lead from the front and think about where their people and offices are located – and the role they themselves might play in the process of promoting local opportunity and prosperity. Having a physical presence in the communities with which we work enables a much greater degree of local understanding, civic engagement and skills development. We have an office in Whitehaven with 75 high skilled jobs, where we are helping to link national industrial decarbonisation ambitions with local social value strategies to ensure the community is more prosperous and resilient in the future.
Delivery partnerships: Traditional consultancy engagements rarely have sustained impact on local capacity once projects are completed and the consultants move on. Firms (and procuring authorities) should place greater focus on the legacy they leave behind in terms of skills and resources so that local authorities can build their own in-house capacity over time.
Whatever the details contained in the White Paper, delivering the political, economic and social imperatives that inspired it will take imagination and commitment. Above all, local authorities must be in the driving seat so they can get on with delivering for their people and communities – and the change we all want to see.
 Institute for Fiscal Studies, ‘Levelling Up: Where and How?'
 UK Office for National Statistics