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02 Feb 2022

Levelling up plan must lead to further investment in East Midlands, says Chamber

Commenting on the Levelling Up White Paper’s publication today (2 February 2022), East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire) chief executive Scott Knowles said: “After lots of rhetoric, it’s an important moment to finally see what levelling up will mean in practice under this Government.

“Any vehicle that results in more powers being given to local areas is, in principle, a positive step as it should equip cities, counties and regions with the tools to shape their places as they see fit and use their local knowledge to target the issues that matter to them.

“It’s promising to see Derbyshire, Leicestershire and Nottinghamshire all named in the first cohort to be invited to agree new county deals. It’s crucial these mechanisms lead to enhanced public investment, given the East Midlands has historically received the least funding per head of any UK region*.

“Businesses in our three counties are increasingly beginning to understand they are being left behind by those in other regions that have been given devolved powers. For example, the public investment gap per capita between the East and West Midlands grew by 21% in the period since Andy Street was elected Mayor of the West Midlands.**

“Therefore, should our counties take up the devolution offer, we would expect to see this result in more money for our areas in matters that have been neglected for too long, such as our transport infrastructure, skills, education, digital infrastructure, and research and development (R&D).

Investing in R&D should improve productivity

“Low productivity has long been a sticking point for the UK economy, with poor growth since the 2008/09 financial crisis and lagging behind our peers in countries such as Germany, France, Norway and the US.

“In regions such as the East Midlands, we have argued that one of the reasons for this has been that too much focus has been placed in London and the South East rather than in the North and Midlands, where there are plenty more gains to be made.

“So the Government’s pledge to increase public investment in R&D outside the Greater South East by at least 40% by 2030 is a key aspect of the Levelling Up White Paper that will be music to the ears of our manufacturers.

“This industry, and our region, was the birthplace of the Industrial Revolution and its general decline in recent years – from 30% of the UK’s economic output in the 1970s to 10% today – has coincided with regional disparities in our country.

“Manufacturing – which is spearheaded by household names including Rolls-Royce, Toyota and Boots in our region – therefore has a central part to play in levelling up our country, making huge contributions not only to productivity uplifts but also providing long-term employment for people in our communities.

Devolving skills and UK Shared Prosperity Fund an important plank of levelling up

“We have also been eagerly awaiting further details about the UK Shared Prosperity Fund, which will replace exhausted EU funding from 2023, and it’s reassuring to learn that much of this will be decentralised to local leaders, who will be able to target investments to regenerate their communities, boost people’s skills and support local businesses.

“The Chamber is already delivering an East Midlands Accelerator project to help create jobs, support digital adoption among businesses and accelerate the low-carbon transition across seven local authority areas in Derbyshire, Leicestershire and Nottinghamshire as part of the Community Renewal Fund, which is the forerunner to the Shared Prosperity Fund.

“Our experience in this programme – as well as a pilot scheme for the Local Skills Improvement Plan, which puts employers at the centre of delivering skills training – suggests there are many benefits to be realised by having local organisations at the heart of local decision-making.

“It’s also encouraging to see Government setting itself some real metrics, supported by statutory legislation that will hold its performance in levelling up to account. We have the plan and now we look forward to the partners in our region who will help deliver meaningful changes – and quickly, because we don’t want to still be talking about the same old issues in 10 years’ time.

“Westminster can also be confident that it will get more bang for its buck from backing the East Midlands in the resulting private sector investment it triggers than in just about any other region.

“We already have lots of exciting projects taking place such as the freeport and schemes led by the East Midlands Development Corporation, including at Ratcliffe-on-Soar Power Station, and we know there’s even more to be achieved by having the full backing of our national decision-makers.”

*The latest Treasury figure for 2019/20 show that Government spend per head was £8,879 in the East Midlands, lower than any other region and compared to a UK average of £9,895. The full figures can be found at 1.3 on this page.

**The West Midlands received £8,852 expenditure on services per capita in 2016/17, compared to £8,280 in the East Midlands, representing a difference of £572. By 2019/20, the difference was £691 (£9,570 per capita in the West Midlands versus £8,879 in the East Midlands), representing a 21% increase in the investment gap.