‘Levelling up’ to be levelled down, with half a billion lost to inflation

The leading think tank for the north of England, IPPR North, has today calculated that £1 in every £13 allocated through key ‘levelling up’ pots of money – the Levelling Up and Shared Prosperity Funds – will be lost to inflation.  

The chancellor’s move today not to ”inflation-proof” levelling up funding, means that £560 million will be lost from these two key levelling up pots: 

• £223 million will be lost from the Shared Prosperity Fund, the government’s replacement for EU structural funds over the next three years. 
• £340 million will be lost from the Levelling Up Fund, named after the government’s flagship agenda, over the same period. 

Researchers have also warned that delays in delivering funding are, and will, further add to the levelling up money lost to inflation. But the director of the think tank, Zoë Billingham explains that levelling down is not inevitable. 

Zoë Billingham, director of IPPR North commented: 

“This autumn statement leans on local government to raise council tax, just as people are suffering from the soaring cost of living, double digit inflation and stagnant economic growth. This is the wrong call. 

“Progress on agreeing devolution deals around the country is welcome, as is the decision to effectively scrap investment zones, as IPPR North has called for, and replace them with university led clusters. 

“Overall, the government is showing an ever-weakening grip on levelling up the country. Investing in and growing our regions is how we grow the UK economy. Northern Powerhouse Rail in skeleton form and levelling up funding eroded by high inflation won’t cut it.” 

Marcus Johns, a research fellow at IPPR North who carried out today’s analysis added: 

“Resilience has been sucked out of local authorities, disproportionately in the North, over the last twelve years and the impacts of this continue to mount. Local authorities and public services face surging costs and are being pushed to the brink, at a critical time when the economic outlook suggests a deep drop in people’s disposable income and increasing hardship.  

“People across the country will pay more for less, and inequalities will widen between places as councils with pricier properties will be able to raise more than other areas – like many in the North – because of the chancellor’s decision not to support councils with surging inflation, but instead to raise council tax limits. Of course, improving local authorities’ flexibility to fund services and investment would generally be positive, but specifically raising council tax limits without any other support means less well-off places will be more exposed to inflation than the wealthiest places”. 

Jack Shaw, who also carried out today’s analysis and is based in IPPR, said: 

“The autumn statement was an opportunity for the chancellor to put tackling inequality at the centre of the government’s agenda, but the rhetoric hasn’t matched the reality. 

“The government’s failure to inflation-proof levelling up funding will have a direct impact on local communities as infrastructure projects will have to be scrapped, delayed or scaled back. That means fewer jobs and less growth as a recession looms”.