The levelling up outlook #1

CPP's quarterly levelling up outlook

5 October 2020

By Ben Franklin

4 minute read

The government’s levelling up agenda aims to address the structural inequalities that have held back the country’s economic progress for decades. It is at the heart of the promise made by the Conservative Party to Red Wall seats in the 2019 General Election but fulfilling it has been made harder by the Covid-19 pandemic.

The purpose of the levelling up outlook is to track the country’s progress in reducing economic inequalities in the context of the ongoing crisis. This is to:

  1. Help hold the government to account for its levelling up agenda;
  2. Identify priority areas to achieve the government’s aims; and
  3. Highlight longer term challenges to the levelling up agenda and suggest solutions.

We will be using the latest official statistics and other reliable data to publish the outlook every quarter.

This month’s edition is being published alongside CPP’s policy paper on levelling up – Beyond hard hats: what it will take to level up the UK.

Latest trends and their implications

London has seen the highest rise in unemployment-related benefit
claims due to the crisis, with many of London’s poorest boroughs
seeing the highest rises amongst UK local authorities. London has also seen the largest fall in online vacancies of any region, as the economic crisis takes a grip on the Capital.

Implications for levelling up: What was the initial epicentre of the virus
is now an epicentre of the economic crisis. The levelling down of London
may occur, although this will likely be driven by a worsening of economic
conditions for the poorest boroughs within London rather than a
levelling down of the region’s most affluent places.

The crisis is leading to an increase in inequalities between places as
claims rise most in deprived areas. Those places with high levels of
income deprivation have seen particularly large rises in the claimant

Implication for levelling up: The central challenge of levelling up –
tackling the endemic causes of place-based deprivation – has got

Local authorities with a higher proportion of people qualified to at
least Level 1 saw smaller rises in claimants in the first few months of
the crisis.

Implication for levelling up:
Having some level of formal qualification
seems to be associated with place-based economic resilience, at least in
the initial stages of the crisis.

Vacancies across many sectors are half what they were pre-crisis,
even in those sectors least initially impacted by the shutdown such as
financial and insurance services.

Implication for levelling up:
The economy is in a very weak position to
absorb the additional numbers of unemployed people once the Job
Retention Scheme ends.

The end of the furlough will exacerbate within area income inequality, as those furloughed are much more likely to be low earners and the new Job Support Scheme will result in many of those furloughed becoming unemployed.

Implication for levelling up: Levelling up must target inequalities within
and not just between places.

There has been a large decrease in the proportion of the poorest
who are saving – a group who had little by way of financial wealth
before the crisis. Households in the North East had much lower liquid
financial wealth going into the crisis than other regions, suggesting
they are particularly vulnerable to the economic shock.

Implication for levelling up: A living standards crisis including
heightened financial distress threatens to derail the levelling up project
before it has even started.

Insecure work is rising with health and social care driving an
increase in zero-hours contracts despite the renewed focus on
supporting key workers.

Implication for levelling up: Levelling up will require a new approach to
key workers which focuses on providing greater job security.

Underemployment is rising across the labour force as vacancies fall.

Implication for levelling up:
Plummeting vacancies and rising
underemployment will provide greater opportunity for worker
exploitation. Failure to clampdown on exploitation would fly in the face
of the goal to level up economic opportunity.