The cost of living crisis poses an existential threat to levelling up

4 May 2022

By Ross Mudie and Annabel Smith

5 minute read

The original version of this article was published by The MJ, and can be viewed here.

The rising cost of living will strike directly at the places that the government claims to be most committed to levelling up. Analysis by the Centre for Progressive Policy has revealed it is the places that the government have pledged to level up that are most vulnerable to rising inflation - former ‘Red Wall’ places such as Burnley, Blackpool, and Sandwell, make up half of the list of most vulnerable localities. Meanwhile much of the North and Midlands, several of the most deprived London boroughs, and many seaside communities across the South and East Coasts such as Hastings, and Dover, are also highly vulnerable to rising poverty without further government action.

Price surges in household essentials such as bills, energy and groceries will undoubtedly correspond to higher levels of fuel and food poverty. This means that many of our poorest places, held back by low wages, high economic inactivity, and high levels of deprivation, now stand on the tipping point of catastrophe.

The pandemic showed that shielding the most vulnerable from economic devastation through targeted, purposeful support is fundamental to protecting an economy from sudden, external shock. Yet the Chancellor’s Spring Statement offered nothing resembling this. Poorly targeted and underfunded, its failure to protect those living on the brink shows the Treasury firmly turning its back on the levelling up agenda. Many of those who managed to withstand the worst of the pandemic with difficulty - keyworkers earning low wages, those with long-term illnesses, the disabled, their carers, and those on benefits, all stand to be pulled into poverty. And so long as the government maintains its current programme of inaction, those already living in fuel poverty and food poverty face destitution.

Plunging yet more people into hardship will lead to a rise in material deprivation within places most in need of levelling up and make achieving several of the levelling up missions set out in the government’s white paper unfeasible. Maintaining a healthy diet is already unattainable for many families experiencing food poverty, and rising food poverty will further impede the mission to reduce gaps in healthy life expectancy. How can we possibly expect the attainment of primary schools in the poorest places to improve when children's learning is being hindered by their own hunger? None of this bodes well for other missions to improve wellbeing and pride in place in these places, either.

After over a decade of local government disinvestment, local authorities – the first port of call in supporting people through crisis – also continue to highlight their lack of backroom staff capacity to compete for and make the most out of existing centrally held funding pots such as the Levelling Up and Towns Funds. Across the country, localities are drawing on the limited formal levers available to them to support citizens through a protracted period of crises. With budgets having been stripped to their bare bones, local leaders are largely being left to firefight this crisis alone.

Many places, including the members of our own Inclusive Growth Network, are showing ingenuity by putting forward creative solutions to some of these challenges, building on ways of partnership working developed during the pandemic response. The London Borough of Barking and Dagenham, for example, has created community food clubs which gives access to roughly £20 of food shopping a week and access to a wide range of services providing advice on finances, health, employment, training and skills. Bristol’s One City Approach is building on cross-sector relationships in the face of the cost-of-living crisis to transform city-wide discussion into improved resilience and successes for Bristolians. And more local and combined authorities than ever are working alongside the Living Wage Foundation and local partners to gain ‘living wage place’ status and push for more employers to pay workers fairly.

But there is only so far that their creativity will get them without meaningful central government intervention. If the current status quo of pitting local authorities against one other for scraps of funding, whilst ignoring the true extent of the crisis on their hands continues, the lofty ambitions and warm words of the levelling up agenda will prove meaningless.

The core objective of our national pandemic response was to shield the most vulnerable from harm. Acting on this with truly targeted support gave our economy a necessary lifeline. Yet in the absence of robust and targeted support, the most severe consequences of the cost-of-living crisis will be distributed unevenly across our most deprived places, posing an existential threat to the government’s ambitions reduce regional inequality across the UK. If the government is still serious about its levelling up agenda, then it must take seriously the need to target support where it is needed the most. The present moment poses an opportunity for government to show that actions speak louder than words.