Matthew Oakley: Levelling up. We need to measure it in order to deliver it – and know that it’s worked

12 Oct

Matthew Oakley is the Director of WPI Economics and a former Treasury economist.

Aside from Getting Brexit Done, the promise to strengthen and level up every part of the country was perhaps the most salient part of the Prime Minister’s 2019 general election manifesto.

The nine months since then have changed many things, but the need to level up is still just as strong. Yet despite this need, we are no still no clearer on what levelling up actually means, how we will know if the Government has been successful and how people, families and communities across the UK might actually benefit.

Today’s report from the Covid Recovery Commission, tackles this question; showing why levelling up is needed, how the Covid-19 pandemic has impacted on this, and how the Government must frame this issue as they seek to tackle it.

The first thing to consider is why some sort of levelling up is needed. Many reports, over many years, have focussed on headline estimates of output and productivity across the UK’s four nations and England’s regions. This comes as little surprise given that some measures of productivity put output per head in the North East at less than half of that in London.

Of course, output, productivity and the jobs and opportunities which they are related to, are of prime importance in understanding the relative success of different areas. However, focusing on such broad economic concepts, misses two important points.

First, that levelling up should be about more than just broad economic concepts and second that inequalities and the need to level up are just as apparent within regions, cities and towns as they are between them.

This is the main finding from the Covid Recovery Commission’s first report, published today. It shows that, up and down the country, there are individuals, families and communities that are struggling. Most striking here are findings from the Social Metrics Commission that poverty rates in London are ten percentage points higher than in some parts of the North of England.

More broadly, whilst the North of England is host to many of the most deprived neighbourhoods in the UK, more than half of people living in the ten per cent most deprived neighbourhoods are found in other parts of the county (36 per cent in the rest of England, 15 per cent in Scotland, Wales or Northern Ireland).

The links between the economic success of regions and local authorities and deprivation is also not clear cut, with some of the highest levels of deprivation being found in some of the wealthiest areas of the country (18 per cent of people in the most deprived neighbourhoods – 1.15 million people – in the UK are living in local authorities with the highest economic output).

Broader research shows that inequalities, or the need to level up, are not just about finances and economics. In fact, across the UK there are huge disparities in outcomes including life satisfaction, happiness and mental and physical ill health. Most concerningly, it is those struggling financially who are often the hardest hit.

For example, people from lower socioeconomic groups are more likely to have long-termhealth conditions, and the King’s Fund highlights that those living in the most deprived areas spend around a third of their lives living in poor health; twice the level of those in the least deprived areas.

Concerningly, these inequalities have been seen for decades and under Governments of all colours. And they are also about to get a lot worse.

In this respect, the Covid Recovery Commission’s report also shows emerging findings of where the health, social and economic fall out from the Covidpandemic have hit hardest.

Amongst other findings it highlights that mortality rates from Covid-19 are highest in the most deprived neighbourhoods in the UK. Even after controlling for a range of other factors, in the 20 per cent most deprived neighbourhoods there has been an average of 21 more Covid-19 deaths per 100,000 population compared to the least deprived neighbourhoods. Unemployment benefit claims have also risen most in those areas that were already suffering from high rates of claims.

Those neighbourhoods in the highest 10 per cent of unemployment benefit claims prior to Covid-19 have seen a 5.4 percentage point increase in claims, compared to a 2.3 percentage point increase for those in the 10 per cent with the lowest claim rate prior to Covid-19.

So what can be done? At the start, recognise that the Government has set off in the right direction; levelling up and promoting opportunity for people right across the country is exactly what needs to happen. Putting this front and centre of a strategy to drive the economy and strengthen society post-Covid is a clear priority.

But for this to be a success the Government now needs to do three things.

First, it needs to recognise that levelling up can only truly be a success if it delivers better outcomes for left behind people, families and communities in central London as much as it improves productivity and the economic success of towns and cities in the North of England.

This leads to the second point: that it must define what it wants to achieve in levelling up and set out a range of metrics with which that can be judged. Without this, it will be impossible to track progress or to design and implement effective policies.

Our work has shown that these metrics should be as local as possible (ideally evaluating impacts and progress at a neighbourhood level) and consider measures beyond economic fortunes to focus on underlying issues like mental and physical health and family and community resilience.

In turn, this leads to the third point, that central Government is too far removed from much of what will drive progress in these areas. As such, politicians and policymakers in councils, mayoral combined authorities and the UK’s devolved nations have a key role to play in driving forward this agenda. The Government must provide these areas with the remit to focus and report on levelling up and the policy and financial tools they need to tackle inequalities. A future Devolution White Paper is a prime opportunity to start to take that forward.

To many in Government, setting out a clear way of measuring success against a key manifesto commitment and devolving more power and funding away from Whitehall might sound like a risky agenda. But it is also a significant opportunity. It would show that the Government is committed to making the UK work for everyone and, if successful, could provide the electorate clear evidence of impact that Government has had on the lives of people and communities across the UK. 

In a UK faced with continued health and economic struggles, that evidence might be just what the Government needs in the next election.