Resetting the South East

Levelling up after Brexit, Climate Change and COVID

Author: Callin McLinden & Joe Fyans   |  

Resetting the South East

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As one of only three regions of the country to be net contributors to the Exchequer, the role of the South East region in advancing the levelling up agenda for national renewal remains pivotal. Resetting the South East investigates the role of the South East region in Levelling Up, and what is necessary for its constituent local authorities to deliver – individually and collectively – on this multi-layered and ambitious set of environmental, economic, and social transformations.

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Key Points

What should Levelling Up look like in the South East?

The perception of the South East is one of greener pastures. This is, however, an unhelpful oversimplification that risks undermining the potential of the levelling up agenda as a means of bettering both people and place. Even within the South East’s most successful areas there are still major education, health, and quality of life gaps, due in large part to the very high cost of living. There are places in the South East equally deserving of small-scale, community-focused funding – as well as a general uplift in capital and revenue.

When levelling up is viewed as increasing productivity and driving economic growth, rather than the more typical lens of outright capital spend, there are gains to be made in the South East that can help not just the region, but the country writ large.

What can the South East do for Global Britain?

Beyond its national impact, the South East is a truly international region – it is widely considered a global gateway for the UK. The region leads the UK in trade, is a net exporter of services, and is home to several ports and major warehouses. The region also has strong research and innovation assets – with the presence of some of the country’s top universities and research institutes.

As a gateway to global markets, the South East will be instrumental in driving up the UK’s export ability post-Brexit and the country’s attractiveness to foreign trade and investment. For the South East, there are several sectors that are either already notably strong or have great export potential. Yet the export potential of the sector is far from being met. Whilst there is plenty to be done by local governance and stakeholders to this end, levelling up must be pursued with international success criteria in mind.

What can the South East do for Net Zero?

The South East is well-equipped to not lose sight of net zero ambitions and has made admirable progress to this end. Even in the current context, many local authorities have made provisions in moving towards a ‘green’ recovery. In terms of decarbonising energy and industry, the South East is in a promising position. There is exciting potential and progress being made in the proliferation of renewable energy sources, green industries, decarbonising the maritime sector, and strategising for more sustainable food production and land use.

A fundamental reset of how transport is managed and funded across the South East is required to bring various initiatives and agendas into alignment and ensure as smooth a transition to net zero as possible. There is a distinct possibility that the sheer number of different institutional actors with overlapping remits could reduce the efficacy and speed of the transition to net zero, with a need for overarching strategic responsibilities to be clearer delineated emerging. A clearer framework of responsibility, with statutory footing given where required, might reduce the risk of inefficiency and provide clarity for local businesses and residents.

What should the role of the local state in Levelling Up be?

The South East could benefit from a clearer regional structure with a more coherent cascade of responsibilities, but such a framework need not deliberately sideline certain actors and push local government towards a single preferred form. The administrative and political quagmire which unitarisation debates routinely lead local authorities into could be avoided, to the benefit of the region and the country at large, by a more flexible devolution framework. Regarding funding and finance, there are existing options and opportunities for fundraising in the South East irrespective of proper devolution of powers – given the scale of capital and wealth of assets in the region.


General recommendations

  • The pre-publication discourse around ‘levelling up’ alienated communities and local leaders in the South East. While the Levelling Up White Paper made some progress in this regard, a less regionally-fixated and zero-sum focus is required for the agenda to succeed.
  • In advancing the Levelling Up White Paper, government must re-think the assumption that directing investment away from an ‘overheated’ South East will ‘cool’ the region and ‘heat’ the rest of the country.

Local Recommendations

  • A unified approach within the region is crucial to advancing the devolution debate. To create a unified and bottom-up framework for devolution, local authorities should come together in a major ‘Summit for the South East’. This is due to a pressing need for local leadership:
    • to decide upon the preferred structure of local government in the South East;
    • to set broad regional priorities for levelling and define key regional assets.
    • This could be done in concert with, or as a report submitted to, the forthcoming regional Levelling Up Director for the South East.

Structural/governance recommendations

  • The devolution framework currently offers nothing for district councils working in partnership with counties, LEPs and each other to achieve local goals across a functional economic area. The devolution framework should extend the powers offered under ‘level 2’ to joint ventures, providing they are incorporated as a single body with a nominated leader to be the point of contact for and accountability to Whitehall.
    • In revising the framework, given the vital importance of increasing export intensity to achieving the government’s Global Britain ambitions, government should review the role of local government in exports.
  • The South East, as a whole region, faces numerous unique transport challenges relating to decarbonisation and pandemic recovery. As the regional body for transport, Transport for the South East should be made a statutory body with strategic responsibilities. The existence of such a body should be a pivotal part of the plans for reforming the rail franchise system.
    • This should involve an expansion of TfSE’s ability to raise finances to invest in the network.
    • As part of its formalisation, the transport body should also be given a statutory role in reducing emissions.
  • Current rules on council borrowing are driving councils closer towards a core service offer and further away from driving national priorities at the local level. In line with the positive changes to the local government pension scheme (LGPS) rules, government must work to improve the conditions for municipal investment in clean growth and levelling up.

Financial recommendations

  • There is ample room for councils in surplus-generating areas of the country
    to raise funds for capital investment towards levelling up goals. Councils which are in areas of net contribution to the Treasury should be able to raise additional levies to fund investment.

    • This could include powers like those afforded to the Mayor of London in the Business Rates Supplement Act or the ability to use expansive Tax- Increment Financing for pro-growth schemes.
  • More broadly, a serious investigation into appropriate fiscal levers for the region, in the style of the London Finance Commission, should be held on South East council finances.
  • There is also room for councils to help drive levelling up through their spend, as identified in the procurement green paper. To this end, procurement reforms to allow local discretion should be urgently brought forward in the South East.
  • Towns relying on the aviation sector have been among the hardest hit by the pandemic. In the South East and across the country, the government must put forward a plan for revenue and capital aid of airport towns to support public services and at-risk workers through a very difficult transition.

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