Beyond hard hats

What it will take to level up the UK

5 October 2020

By Charlotte Alldritt and Zoë Billingham

9 minute read

The levelling up agenda began as a political project as Boris Johnson took office in 2019. By increasing “economic opportunity across all nations and regions of the country”, the government aimed to preserve the Union, deliver many of the expectations of Brexit and secure for the Conservative Party the former Red Wall areas in the North of England and Midlands that brought it an 80-seat majority. The coronavirus pandemic has since rocked the foundations of the entire UK economy. As the UK faces the deepest recession in 100 years, the levelling up challenge has become one of urgent, inclusive economic recovery for sectors and communities from Hastings to the Highlands.

Levelling up must not only be about economic growth and productivity improvements, but also tackling the entrenched economic and social inequalities that hold back people and places in communities across the country. Levelling up must be a driver of broad-based, inclusive economic growth - promoting better opportunities and outcomes. In turn it will generate long-term fiscal sustainability. Covid-19 has catalysed consensus across the political spectrum about the need for change in our economy. The question that follows is what this should mean in practice and where to focus efforts under the current fiscal stretch and uncertainty.

Key findings

  • Nearly all of England’s combined authorities suffer from a productivity gap with the rest of the UK, mainly related to poor health and a young workforce. Former Red Wall areas – including Ashfield, Lincoln and Bassettlaw – are held back by poor health and a high proportion of low productivity sectors.
  • Age, health, skills and education critical factors in determining local productivity. Age of the workforce accounts for over half of London’s productivity advantage over the rest of the country. Similarly, there is a positive correlation between places with high levels of skills and the presence of high productivity sectors in an area – as can be seen in Reigate and Banstead.
  • ‘Within region’ inequality rife across the UK. Broad regional trends disguise inequalities within regions. Rural Yorkshire, for example, has an ageing workforce, whilst its cities are young but in poor health. The differences within regions are as wide as the differences between them when it comes what influences productivity.

This paper sets out a blueprint for what levelling up should mean and how the UK government can deliver it, both through centrally-led interventions and by working with and through devolved tiers of government. It sets out the nature of the place-based productivity challenge and the key policies needed to redress these imbalances, within and between regions.

The opportunity of the levelling up agenda is huge. As the global pandemic continues to play out it is also increasingly needed. Done well, it will safeguard the most disadvantaged communities from the impact of Covid-19 and spur the recovery of the whole nation. It could also redress years of spatial and social inequalities between and within our regions and nations. What began as a thinly veiled political project has the potential to redraw the map of opportunity, productivity and prosperity in the UK for generations.

Recommendations

As CPP and others, such as the Greater Manchester Prosperity Review Panel, have argued, levelling up policy must not be limited to increased investment in physical infrastructure and R&D incentives – however welcome these might be.

To level up, the government must address the variations in social infrastructure and human capital that impact productivity by place. As such, we outline here four main ideas to address the variety of problems places face, comprising a renewed focus on education, skills, preventative health measures and a new role for local institutions and leadership.

The opportunity of education

  • We call on the government to expand the roll out of Opportunity Areas from 12 to over 100 local authorities, and broadened to include catch up teaching following the impact of the current crisis.

The opportunity of skills

  • We call for a Learners’ Living Allowance (LLA) to support those undertaking part- or full-time training, as an equivalent to maintenance loans available for higher education students, to be paid back under the same conditions upon employment.
  • We also recommend that those in work should be entitled to five days paid time off each year to undertake training.

The opportunity of good health

  • As the health crisis abates, we recommend that the NHS urgently pivots towards prevention, embedding social determinants within the inequality adjustment framework for local areas, accelerating the role of NHS trusts to become anchor institutions and strengthening education and training on the social determinants for clinicians.

The opportunity of local institutions and leadership

  • We recommend that central government continues to assess and make good the financial pressure on local government for increased costs and lost revenue due to Covid-19 acknowledging this will continue into 2021 and beyond, with an estimated £3.4bn in lost tax revenue forecast for next year alone.
  • We recommend that mayoral combined authorities (MCAs) have control of pooled and unringfenced public sector resources – building on Greater Manchester’s model for health and social care, and expanding out to include Further Education and skills, employment support, early years, housing and transport. This approach is predicated on aligning public sector boundaries (including LEPs and NHS bodies) as well as compulsory unitarisation to reduce the number, cost and complexity of local authority tiers.
  • We recommend that the mayoral combined authority model should be extended across England. In addition, the most demonstrably established MCA institutions should be awarded ‘full’ devolution with responsibility for achieving a set of agreed economic and social outcomes with central government
  • We call for central government to prioritise the distribution of resources to reduce inequalities between regions in economic policy making.

CPP will be tracking the UK’s progress in reducing economic inequalities and holding the government to account on the levelling up agenda via a quarterly Levelling up outlook, examining key trends based on official statistics. The first paper can be found here.

Charlotte Alldritt, Director at the Centre for Progressive Policy, said:

“The opportunity of the levelling up agenda is huge. As the pandemic continues to play out, it is also increasingly urgent. What began as a thinly veiled political project has the potential to redraw the map of opportunity, productivity and prosperity in the UK for generations.

But the UK’s long-standing regional economic and social inequalities are often characterised as a problem of ‘London vs The Rest’. CPP’s research shows that the reality is much more complex, with devastating differences within regions as well as between them.

The government must take these inequalities into account and channel investment now into skills, education and health where it is needed most. The government has made repeated promises on levelling up, but it’s time to see tangible action. The Centre for Progressive Policy will assess the governments’ progress on a quarterly basis.

Without real, rapid results, rather than building back better we risk falling back further”.

Dan Jarvis MP, Mayor of Sheffield City Region:

“The current crisis has worsened longstanding social and economic challenges affecting people in South Yorkshire and across the UK. The need to level up our country and to provide opportunities for everyone has never been greater.

Done right, the levelling up agenda has the potential to significantly improve the health, education and skills of our communities, raising productivity and living standards, reducing inequality, and making our country stronger, greener, and fairer.

Mayoral Combined Authorities like the Sheffield City Region play a major role in this process. We know our local obstacles and opportunities. We know what is needed to make our places and people prosper."

Chris Murray, Director of Core Cities said:

“We welcome this work as a vital step towards making sure 'levelling up' turns into a set of concrete policy proposals that improve quality of life and prosperity for the many.

As part of its work, Core Cities UK has set out an evidence-based case for decentralisation and devolution, backed by the OECD, showing that centralisation has held the UK economy back for decades. A largely centralised response to Covid-19 should not follow through into a one size fits all approach to economic recovery and renewal. A strong local as well as national state is vital to create a stronger, more inclusive, future economy.

Yet local government is facing an existential funding crisis in parts of the UK, and if the pandemic has taught us anything, it is that well-functioning public services and the economy are interlinked. Our key message to Government – and one echoed in this work from the CPP - is that recovery must be locally led and built on the foundations of adequately resourced public services”.