15 Nov 2021
On Monday 8th November, Michael Gove MP, Secretary of State for Levelling Up, Housing and Communities (DLUHC) was questioned by the Housing, Communities and Local Government Select Committee, chaired by Clive Betts MP. You can watch the session online.
This is the Select Committee that IPM regularly gives evidence to as it is concerned with the policy, administration and spending of the new DLUHC (previously Ministry of Housing, Communities and Local Government), much of which impact UK towns, cities and high streets. It appeared that all of the committee members were in attendance at this session - not surprising as first there are 7 live inquiries concerning the activities of the Ministry, either ongoing or awaiting a response from Government. And second, with a new name and a new Secretary of State there is the usual curiosity about the portfolio and mission of the Ministry.
It was a long session for just one witness – nearly 2 hours – and covered wide ranging, complex topics including levelling up, housing, planning reform, building safety, local government funding and adult social care.
Much of the substance of the session will be of interest to place managers and leaders across the UK and I have done my best to condense them here in a long read.
First of all, the Secretary of State (SoS) was questioned about levelling up and was asked to provide a definition of the phrase and policy agenda. The Chair referenced evidence from the BEIS Select Committee that had been critical about the lack of clarity and measurement for the concept.
The SoS quoted the Prime Minister, saying that “whilst talent is spread equally opportunities are not”. He went on to specify four aspects to levelling up:
The Chair was keen to learn more about how these aspects would be measured and the SoS said that the metrics would be available in the Levelling Up White Paper which he hoped to publish before Christmas.
This conceptualisation of levelling up is certainly more concrete and is welcomed by IPM. It’s important that place leadership is recognised as central to levelling up. Poor leadership fails places and communities – we know that – and that is why a professional body was formed to raise standards.
Improving living standards and the quality of public services recognises the challenges facing places and communities. We use the Indices of Multiple Deprivation (IMD) in England to understand challenges around the environment, income, education, housing, crime, health, and employment – not at the level of the local authority but at a place level (e.g. town or district). Very local data shows inequalities both between places and within them, and we will continue to do everything we can to ensure the levelling up agenda is really place-based.
Finally, It’s positive to recognise that how people feel about where they live is important. Metrics such as the IMD need to be augmented with data about perceptions of place. Building place attachment, pride and engagement are key aspects of a place leader’s and a place manager’s role. We have a lot to contribute to the levelling up agenda and I have written again today to the Ministry to request a meeting to discuss the role IPM and its members can play.
Following this opening section, the Chair introduced the criticism that the Ministry did not punch its weight in Whitehall. That it was a department “of passed on money from other departments that really controlled the policy”. It is a criticism that we would agree with – we have felt, over the past decade anyway, a lack of clarity of purpose and policy. There have certainly been (and continue to be) some very good civil servants we have worked with – but a lack of Ministerial continuity and leadership.
The SoS was keen to explain that the Ministry was important because it was particularly focussed upon place and is the only department that “thinks in terms of geography”. It should, therefore, lead on levelling up and will need to coordinate the agenda across Whitehall (in the same way BEIS leads the Net Zero agenda). He went on to recognise the intellectual and political expertise that had been in previous incumbents such as Eric Pickles, John Prescott, and Michael Heseltine and how significant the Department had been. He also mentioned some more recent incumbents – and whilst he was equally positive about their strengths, I disagree. I don’t think the Ministry has had the calibre of leadership it needs to deliver for places and to be taken more seriously across Whitehall. No doubt that is why Michael Gove has been appointed. Whatever your views on his track record, style, or politics, he is a heavy-weight in Westminster.
It seems that the levelling up agenda will be coordinated across Government through a cabinet committee (or committees). The SoS justified the effectiveness of this mechanism by referring to a similar committee structure that he chaired to ensure Britain was adequately prepared for Brexit – an answer that won’t engender confidence for many in towns and cities hit by recent risings costs and labour shortages.
The scope of the Ministry was also questioned. It has a very significant portfolio - levelling up, communities, local government, UK, devolution, and housing – so the questions was asked what is the priority? The SoS replied that these are
The Chair asked about the key role of place and local government in levelling up. He specifically asked if the SoS had been talking to local government. The SoS confirmed that he had been talking to the LGA as well as councillors and Mayors.
This exchange highlights the continued misunderstanding of what local leadership is. It is not just the leaders of local government and public bodies. If the SoS wants local government to visibly transform lives and places then this will only happen if local government works in partnership with other place leaders – and there is an urgent need to address the calibre and culture of those in place leadership roles in local government.
The BID Foundation has already written to the SoS to represent place leaders from Business Improvement Districts – and there are others from other place partnerships, landlords and civic society. Getting this important message across as to what place (local) leadership is will be IPM’s priority over the coming months.
The session moved on to housing policy. The Chair was critical of existing policy that encourages investment and more housing in areas that are already ‘overheated’. The SoS was in complete agreement and we got some indication that the Green Book rules will be revised so that housing and public investment can anchor ‘proper urban regeneration outside London and the South East’. This will be very welcome news to many of our members who want to see more housing anchoring regeneration (especially brownfield – more of that later) and those concerned that the quality of their places will be undermined through additional housing on greenfield sites, for example. The SoS also said housing policy and targets would be reviewed – citing, again, the importance of local leadership and making specific reference to Manchester who have developed a spatial framework and housing policy on a regional basis (well…nearly…Stockport Councill withdrew from the plans).
A request for reformed policy on social housing was given – the SoS is bringing forward legislation for both the social housing sector and the private rented sector. The Committee was keen that landlords can be held to account and tenants views were included. Again, the SoS was in full agreement. There was a lot of detail on cladding as you would expect and a commitment from the SoS that ‘guilty’ firms that were still trading should pay compensation.
There was a lot of discussion about funding, starting with the Shared Prosperity Fund. The Chair wanted to know if the commitment remained to allocate the same level of resources to deprived areas that would have been provided by the EU? He pointed out the levels were not forecasted to match EU project funding until the third year of the fund. The SoS explained that this was because for the next 3 years there was residual funding coming from the EU, for projects that had already been started. Therefore, if you add the tail of the EU funding with the new Shared Prosperity Fund, the level of investment stays the same.
Four geographical areas have their capital and infrastructure (e.g. Objective 1) funding guaranteed at EU levels; Scotland, Northern Ireland, Wales and Cornwall. This is, no doubt, a relief to members in those areas. However, the Chair pointed out that this does not cover all areas that, under EU calculations, would become eligible for funding – such as South Yorkshire. The SoS would not guarantee funding in the same way it was guaranteed for the four areas referred to above. He said that the ability to allocate funding was part of ‘taking back control’. He also wanted the committee to recognise there were many other regeneration funds that could be allocated to specific areas.
The committee was well aware of this – citing no less than 117 funding pots that places can apply to. The Chair asked if the number of funds and the short-term nature of bidding for ring-fenced funding was a problem given how much time local authorities were having to spend creating applications and understanding often overlapping criteria? The SoS agreed it was problematic but then went on to outline the benefits of competitive funding which suggests he is not going to be replacing it with revenue funding. He did commit to the simplification and rationalisation of the funding and said that his new Minister, Neil O’Brien MP will be leading on that.
The Committee was concerned that the word ‘devolution’ seemed to have disappeared from the lexicon of levelling-up. The SoS said he was still committed to devolution and talked about stronger relationships with the devolved regions. He also said he wanted relationships with individual local authorities in the devolved regions – which in my eyes undermines the idea of stronger relationships with the devolved region policymakers.
I think ‘strong local leadership’ has replaced devolution. Michael Gove wants people that can be trusted to use resources and his view is that quality leadership means there needs to be fewer strings attached to powers and funds. He is comfortable that local leaders should set their own priorities – and this is all part of levelling up. He went on to say more mayoral combined authorities were a way to devolve more power and funding and also suggested county councils, like Cornwall, could be given similar powers.
The issue here is that these structures represent lots of places. For levelling up to be successful then the challenges and opportunities of individual towns need to be understood and change needs to be led at that level. The type of local leadership the SoS is talking about, on its own, will not have the impact he is expecting – it is not local enough. Yes, leadership in many local authorities needs strengthening but even if you had a quality mayor/combined authority, and quality council leaders you still only have leaders within these structures. Places are more than their councils. Place transformation comes through collaboration and partnership working across the public, private and civic sector. We need quality place leaders coming forward from these sectors AND professional place managers to support them.
Funding and powers should be devolved to local authorities, county councils or combined authorities when they are in an effective partnership with other place leaders. The Town Boards that were set up for the Towns Fund are illustrative of such a cross-sector partnership but these could be formed (where they don’t already exist) for levelling up, in other words have a broader role than just administering one pot of funding. In short they can oversee the long-term evolution of a place; agreeing the challenges, priorities and vision, and coordinating the strategy and action that will bring the improvements that local people and government want to see.
Questions turned to the issue of business rates retention and the challenge of local authorities funding services through retaining 75% of rates revenue. This system means an inherent mismatch between the higher costs of levelling up in places where less revenue is likely to be collected. The SoS was clear that in the near future business rates will continue to be redistributed by central government to take account of need. This is good news for members in places that generate less revenue/have higher need, but will be disappointing for members who had plansdependent business rate funding.
Nevertheless, it is refreshing to have a Minister who can see the flaws in the model. Of course, for many members the issue of to retain or not retain the revenue from business rates locally is insignificant compared to the nature of the tax in the first place, and the burden it places on high street businesses. This wasn’t even mentioned as, like his many predecessors, the SoS lays that problem firmly on the doorstep of No 11 Downing Street.
The Committee was keen to know how many more local authorities would issue Section 114 notices (in other words declared bankrupt) and how the SoS would help LAs in financial difficulty. He reassured the committee he would continue to support LAs and offer them help with financial management but he was not prepared to identify a number of LAs at risk.
He was keen to make the point that local authorities working well was more than just passing a financial audit. He was asked specifically on the role of a new independent regulator, but he wanted to move away from a body that merely measured compliance. He said there were a number of other sources of data that could be used to know what was working well and what was not working well and more detail would be coming on this. Because he also referred to metrics that could be used to measure levelling up, I got the impression these would be used as a measure of local authority performance (e.g. what have you done to improve employment…environment….income…etc.). As long as ‘added value’ or distance travelled is measured that could be OK – but if LAs are compared just on the hard data then this will just reinforce, not solve, inequalities
Discussions moved on to planning reform, in particular who had the SoS consulted on the planning reforms? He answered firstly those in local government, as the owners of local plans. Organisations such as Shelter and CPRE. He made a point of saying he was not talking to individual developers (a nod to the previous criticisms of Robert Jenrick?) but had talked to representative bodies. He also mentioned talking to people that wanted to see beauty at the heart of new development (e.g. the mis-named ‘Office for Place’…it is really an Office for Design).
The purpose of the reform is to address issues and concerns around
The SoS talked about the importance of LAs having up to date plans – mentioning that only 50% of local authorities have an up to date local plan, and plans are the way to proactively manage development (whilst also saying there is more to housing policy than planning). He committed to simplifying the process and providing some resource to support.
For local authorities that are struggling with local plans I would point out that whilst the local authority has statutory responsibility for these plans, local people and businesses can be much more actively involved in their development. This approach brings more capacity and participatory planning and place management is another area in which our members have a lot of expertise to share.
In summary, the planning reforms will be reviewed but they won’t be abandoned, with the SoS mentioning housing numbers in particular. The Chair mentioned the ‘metropolitan uplift’ where some urban areas had their housing numbers lifted (seemingly plucked out of thin air). The SoS agreed to look at these again.
There was a clear commitment from the SoS that Net Zero will be at the heart of the planning policy, to make new housing carbon neutral. and he agreed to work with the committee on pre-legislative scrutiny of significant new planning policy.
The committee ended with questions about permitted development. The SoS said he needed to reflect on the changing nature of cities and did not want to stop the flexibility right now. Permitted Development was part of his ongoing review of planning reform. He agreed that a strategic view of development was needed as well as a review of the decision that permitted development would not contribute to 106 (local infrastructure). The Chair ended by informing the SoS about the current ‘loophole’ that allows out of town office space to be converted to retail space, avoiding the sequential test, which could negatively impact on high streets and town centres. The SoS thanked the Chair for brining that to his attention and agreed to review the measure.
A long session of cross-examination for Michael Gove was one of the first chances to gain some insight into government plans and intentions on specific policy measures in the new Department for Levelling Up, Housing and Communities. The Secretary of State is a confident and engaging politician and certainly gave the impression that he is very much across his brief. Questions were not dodged and, in the main, answers were not fudged although the specifics for many of the issues under scrutiny are not yet published.
As usual the devil is in the detail so IPM will be following up on the papers and written comments that will be put on record after this hearing.