German-style levelling up would see £854 million annual pot for Yorkshire’s leaders

The UK government’s approach to funding for levelling up has been widely criticised – including by the influential Public Accounts Committee – for being competitive and opaque.  

But this Yorkshire Day, the leading think tank for the north of England has calculated what investment in Yorkshire might look like if funding to level up the country was devolved to local leaders and allocated not by competition, but by a transparent framework.  

First IPPR North looked at what Yorkshire would receive if the UK committed to investing 0.4 per cent of its GDP in reducing regional inequalities, following the same path as Germany’s ‘Solidarity Pact II’ devolved grant which ran for 15 years and helped to reduce the East-West divide after German reunification. IPPR North found that a flexible, long term devolved fund of 0.4 per cent of GDP would equate to around £7.6 billion every year for England, and that: 

• If distributed by population alone, this would be worth £737 million each year for Yorkshire and Humber.
• If distributed using a fair, needs-based method it would be worth £854 million each year for Yorkshire and Humber. 

Second, IPPR North looked at the UK government’s existing funds for levelling up – known as their local growth programme which includes flagship pots like the Levelling Up Fund – estimating that these represent £9.84 billion of investment across England over a multi-year period. They found that: 

• If these funds were devolved and distributed equally according to population, Yorkshire and Humber would receive £950 million, or 9.7 per cent of the funds. 
• If they were devolved and distributed by a fair, needs-based method, then Yorkshire and Humber would receive £1.1 billion, or 11.24 per cent of the funds. 

Researchers say that devolved and fairly allocated funding could lead to better decision making and stronger local economies. They say that devolving funding and making it fairer should be at the heart of government’s current plans to simplify local funding. 

Senior research fellow at IPPR North, Marcus Johns said: 

“When we imagine a world in which funding is devolved and allocated based on sensible measures like population or need, then we find that Yorkshire would receive significant, locally managed funding to unlock its potential. 

“Local leaders could have hugely transformative impacts on places like Yorkshire with substantial, long-term funding. It’s the norm in other, less unequal, countries where the evidence shows that local leaders are best placed to invest in their areas, and it ought to become the norm here too. 

“This Yorkshire Day, the government should celebrate everything that God’s Own Country is. But it must also commit to exploring fairer ways to devolve funding to places like and within Yorkshire, so that by Yorkshire Day 2024, funding for levelling up is sensible, sufficient and successful.”