Factcheck false - levelling up cash doesn’t favour the southeast despite claims from The Times

This article is by Matt Latham, a Consultant Economist at Bradshaw Advisory. You can email him here.

Late last night came the announcement of the winners of the much-awaited second round of the Levelling Up Fund. The announcement was rapidly greeted by some quarters with jeers, claims that the North and Midlands had been left behind in comparison to wealthier areas in the South and that Conservative-held areas were favoured over Labour ones. 

While these headlines are exciting and may provide great clickbait and the stoking of the long-running North versus South argument, they do not hold up to scrutiny.

Let’s start by having a look at the regional story. 

“Levelling-up cash favours southeast over red wall” is the headline front-page claim from The Times.

As we can see below, the region most favoured by the funding awards, by a margin of £144m, is in fact the North West, which was The Times analysis decided was not located in the North of England. 

At first glance, it does indeed stick out that the South East came in second in the funding race, while the more deprived regions of Yorkshire & the Humber, the North East and Northern Ireland coming in bottom of the pile. However, it is not fair to look at funding in this way. A much fairer analysis is to look at allocations per head of the population. By this method we see Wales, the North West and the North East steaming ahead, with residents receiving £67, £48 and £41 per head respectively, compared to £23 per head in the South East or £17 per head in London. It is worth noting, however, that Yorkshire & the Humber comes second from the bottom in the rankings.

If we tot up the absolute figures correctly, we can clearly see the North actually comes out in a better position than the South, with its regions (defined as the North East, North West and Yorkshire & the Humber) winning £583m in investment, compared to £548m in the South. The Midlands were given £332m, and the devolved administrations got £456m.

What about the political picture? 

“In England 52 Tory constituencies benefit, more than twice as many as those represented by Labour MPs” is another claim from The Times.

Unsurprisingly, the allocation of £19m to Rishi Sunak’s patch, Richmondshire, did get some boos, with one Tory MP saying “It feels we’ve given up on the red wall. It seems bizarre that Richmondshire is getting levelling-up funding.”  The wider claims of Tory-held areas getting more funding than Labour-held ones is, however, patently false. 

Labour controlled councils brought in £716m, compared to £654m garnered in Tory-held councils.

It might be tempting to break down these figures by parliamentary constituency - most people (understandably) have no interest in what an upper-tier or lower-tier local authority is and it certainly makes grabbing headlines easy. However, it’s not constituencies which get the funding, nor their MPs who fill out the eye-watering 100-page application forms for the bids, the relevant things to look at here are the local authorities, their councils and administrative teams. Indeed, given how the data was published by the government (not by constituency) and the lack of public information on who submitted bids this round it seems highly unlikely that an accurate analysis converting local authorities into constituencies could have happened in such a short timeframe.

Additionally, there are 160 more Conservative MPs than Labour ones (355 versus 195) so once the analysis at a constituency level has been properly undertaken you would expect far more awards in seats held by the Conservative Party.

A third round?

Between the £2.1bn allocated in this funding round and the £1.7bn from the first round, there is £1bn left in the £4.8bn Levelling-up fund, which could well imply that we’ll be in for another round of investment. The question arises as to where the gaps are for these funds.

Any local authority could have made a bid to the Levelling Up Fund, but their projects must be backed by an MP, with MPs not being able to back more than one project. 

Taking into account what’s been funded thus far, we see a wide spread in the number of investment opportunities per region. 

The North East and Wales, for example, both have 19 ‘unused’ funding allocation slots, compared to 59 and 58 in London and the South East respectively. While we might not expect to see a huge swathe of bids being awarded in the Greater South East, these figures may suggest that competition could be hot in Wales, the North East and the East Midlands. 

Yorkshire and the Humber, who only saw six awards this round, may well be in for a comeback in round three, with a potential 38 bids to be funded.