04 Feb 2022
Slides from the event:
02 Feb 2022
“This white paper recognises the scale of the levelling up challenge. That lack of quick fixes, the long term perspective, and clarity about objectives are all very welcome, as is the recognition that real progress will require a change in governance in Whitehall and beyond.
This is all just a very first step though. The targets are largely in the right areas, but many look extremely ambitious - that is to say highly unlikely to be met, even with the best policies and much resource. There is little detail on how most of them will be met, and less detail on available funding. There is something for everyone, and hence little sense of prioritisation: ambition and resource will be spread very thin.
Meeting the core ambition of simultaneously improving education and skill levels and availability of high paying jobs in poorer regions will prove extremely challenging. Without that, levelling up will not happen. It will require the level of focus that has gone into this white paper being developed and maintained over decades.”
The aim of increasing pay and productivity in every part of the UK will be especially challenging given stagnation since 2008:
The Inequality: IFS Deaton Review chapter on spatial inequalities is now available to read here.
The White Paper sets out an ambition to have 90% of pupils leaving primary school meeting expectations in reading, writing and maths by 2030. A serious attempt to tackle the long-standing challenge of under-achievement in primary school is certainly welcome. But the scale of the challenge here is enormous, and will require even top-performing areas to improve more quickly than historical trends. And learning loss from the pandemic means that, rather than making progress over the last few years, we’ve very likely gone backwards.
The focus on health is very welcome, not least because health inequalities are an ultimate consequence of a whole host of other social and economic inequalities.
There is huge variation in health outcomes across the country. In 2017-19, male life expectancy at birth in Glasgow City was 11 years lower than in Westminster (74 compared to 85), and the pandemic has further widened geographical disparities in health.
However, the target of raising overall healthy life expectancy by five years by 2035 is extremely ambitious given recent trends:
The inclusion of wellbeing as a separate target also presents challenges:
Some obvious policy levers for levelling up (such as those relating to tax policy and funding for councils, public health and schools) are firmly within the government’s control, but barely feature in the White Paper.
Departments and public services will be expected to deliver on these ambitious ‘missions’ from within the budgets set at the Spending Review last autumn, with no new funding announced specifically to meet the challenges identified in the White Paper. There are three key issues here.
Third, deliberate policy choices since 2010 have made achieving some of the ‘missions’ in the White Paper more difficult to achieve. Between 2009-10 and 2019-20, local government spending (on non-education services) in England fell by £10.1 billion (17.3%), with bigger cuts in poorer areas. Schools’ funding was cut, and schools in more deprived areas faced bigger cuts than those in more prosperous areas. Now, the government wants to oversee a dramatic improvement in schools performance and for councils to help unleash local economic growth. To deliver on its new ambitions, the government may first have to unpick some of the choices made over the past 12 years.
Article in Public Finance magazine, by Ben Zaranko - 04/02/22
We should interpret this week’s Levelling Up White Paper not as a complete blueprint but as a welcome first step. It is a serious piece of policy work, into which a huge amount of civil service time, thinking and effort has clearly been invested. To deliver on the government’s core levelling up ambitions, this level of focus will need to be backed up by funding and sustained over decades.
01 Feb 2022
Levelling Up White Paper: A long term plan for jobs, education and skills essential to success
It is widely expected that Levelling Up Secretary Michael Gove will publish the Government’s ‘Levelling Up White Paper’. This is said to be a “blueprint for spreading opportunity more equally across the country”.
New IFS research shows that regional inequalities have been very persistent. Making a difference will take persistent focus over a long time, with no pretence that genuine or big change can be achieved quickly.
IFS director Paul Johnson said:
“Regional inequalities in incomes, wealth, health and education have persisted for decades. There are far more graduates in places like London and the South East where opportunities for high skilled, well paying jobs are much more plentiful than in other regions. Levelling up economic outcomes between places must mean getting high paid jobs more evenly spread - much easier said than done. Meanwhile, if people born in poorer areas are to see the full benefits of that then educational attainment in these areas must simultaneously be improved, or else many of the good jobs will be filled by graduates moving in. Decisions since 2010 to cut public spending in poorer areas more than in better off ones will not have helped.
It is really important to remember in all this that, while high paid jobs are unevenly spread, low paid jobs, and indeed poverty, are not. A higher fraction of London’s population is in poverty than that in any other region. We need to worry about places, but we need to worry about people too”.
IFS research - including new research that will soon be published as part of the flagship IFS Deaton Review of Inequalities, funded by the Nuffield Foundation - shows that geographical inequalities in the UK are large and persistent.
There are large wage inequalities across regions.
That said, we shouldn’t forget that poor people live all across the country.
Taxes and public spending redistribute significant sums of money from London and the South East of England to the rest of the country, and from richer to poorer areas.
London and the South East pay a higher share of the tax burden
But a lower fraction of public spending goes to the North than twenty years ago
Over the last decade, cuts to English council and schools’ spending have been larger in more deprived areas.
These trends matter for aims to level up health and education across the country. There is a growing body of evidence that spending on schools and council services matter for outcomes, especially among the most deprived and those with greater needs.
It is important that funding for public services is based on appropriate and up-to-date estimates of the needs of different places.
The white paper will need to recognise that differences between regions are longstanding and persistent, with differences in wages largely reflecting where high skilled people and good jobs are located.
An effective strategy will have to address the big differences in educational attainment across different parts of the country. But it will also have to consider the extent to which the jobs and amenities that encourage highly skilled people to stay in or move to an area can be spread across all places, or whether certain cities and towns should act as regional ‘hubs’ for high-productivity jobs.
The role of broader tax, public spending and public services policy should not be forgotten. Public services matter for people’s outcomes, and in recent years the way funding has been allocated to different places has often worked against ‘levelling up’.
The ‘levelling up’ agenda is not the first attempt to address the UK’s geographical inequality. Significant progress will require a long-term plan, across multiple policy areas, not least education, skills and economic development.
Making sure tax and spending policy is aligned with the levelling up agenda through, for example, updated funding formulas that target funding at poorer areas, and a revalued and reformed council tax, is a key test of the government’s commitment. It could also be an early ‘win’ in a task that will take many years.
Is public service spending aligned with the ‘levelling up’ agenda?
Observation - 18/03/22
While oft-repeated claims that the UK is the most geographically unequal large developed country are somewhat overstated, the differences in not only economic outcomes but also health, education and public safety across places are striking.
Press release - 30/11/21
The cuts to education spending over the last decade are effectively without precedent in post-war UK history, including a 9% real-terms fall in school spending per pupil and a 14% fall in spending per student in colleges. Whilst we have been choosing to spend an ever-expanding share of national income on health, we have remarkably reduced the fraction of national income we devote to public spending on education.
Event - 30/11/21
The next few years are likely to be particularly challenging for schools, colleges, universities and nurseries. There have been significant squeezes on all areas of education spending over the last decade, which will only be partially unwound over the next few years. The pandemic has led most children to missing months of normal education, is likely to widen educational inequalities and has created acute financial challenges for some providers.
Observation - 08/10/21
At its recent conference, the Labour party committed to removing charitable status from private schools and the associated exemptions from VAT and business rates. The extra funding would then be used to increase state school spending and would be targeted at pupils from disadvantaged backgrounds.
In this article, we provide further context by showing that the gap between private school fees and state school spending per pupil has more than doubled over the last decade. Such figures will naturally feed into longstanding concerns about inequalities between private and state school pupils, such as differences in access to particular universities and occupations. These have come into sharp focus during the pandemic and will not be easily addressed while the sectors enjoy such different levels of resourcing.
Newspaper article - 19/07/21
I hesitate to dive into the discussion about levelling up. I have no answers. Nor, really, does anyone else, least of all the prime minister, who certainly provided none in last week’s much trailed but ultimately empty speech. Then again, he’s in good company. This ambition to level up is not a new one, after all. Efforts to reduce the UK’s spatial disparities date back at least as far as the 1934 Special Areas Act. Disparities between the regions of the UK are longstanding and in some dimensions, at least, haven’t actually changed that much in decades.
So what is the problem, what might we do about it and how will we know when we have succeeded?
Presentation - 02/10/20
Chancellor Rishi Sunak faces a difficult balancing act at this year’s Spending Review. Major public spending decisions will be made amidst the ongoing fallout from COVID-19, with the end of the Brexit transition period looming on the horizon, and with great pressure for austerity to be brought to a decisive end. The Spending Review is also a natural point to lay out the beginnings of a coherent ‘levelling up’ agenda. What can we expect for public services? Which areas might the government target for ‘levelling up’, and how? How might COVID-19 and Brexit complicate the picture?
Press release - 02/10/20
The UK ranks at or near the top of the international league table on most economic measures of inequality between regions. The government has pledged to tackle these inequalities by ‘levelling up’ left-behind areas.
Chapter - 02/10/20
This government has pushed geographic inequalities to the top of the policy agenda. In his very first speech as Prime Minister, Boris Johnson made clear his intent to boost economic performance outside of London and the South East, to ‘level up’ across the country and to revive the fortunes of the UK’s ‘left-behind’ towns and cities. This is an ambitious agenda, and one that will not be quickly achieved with off-the-shelf policy solutions.
Briefing note - 03/08/20
The COVID-19 crisis has brought to the fore increasing concerns about inequalities not only between different population groups – such as the gap between the rich and poor, young and old, and different ethnic groups – but also between people living in different places. Even prior to the crisis though, there was a sense that the UK is not only a highly geographically unequal country, but also an increasingly geographically unequal one.
Such concerns are of significant political import. The Johnson government has made ‘levelling up’ the economy, living standards and life chances across the country a mantra, and has announced a review of guidance for infrastructure investment aimed at increasing the proportion going to the Midlands and North of England.
But just how geographically unequal is the UK? Is it true that these inequalities have been getting worse? Are there particular regions or types of places that have been doing particularly well or poorly? And what risks of widening and opportunities for narrowing these gaps might the COVID-19 crisis bring?
Report - 13/07/20
European Structural and Investment (ESI) funds help to pay for initiatives supporting business development, research and development, investment in digital and green infrastructure, as well skills and training interventions and support for job-seekers. But with the UK having formally departed the European Union, the country will stop receiving new ESI funding at the end of 2020. Thus, for 2021 and beyond, the UK government faces choices over what to replace ESI funding with. This is important as ESI funding forms a substantial component of spending on regional economic development in the UK, especially in the poorest regions. The government has announced the creation of the UK Shared Prosperity Fund (UKSPF) to this end, but has so far given few details around its scale, design and implementation.
Press release - 13/07/20
With less than six months until the UK leaves European regional development funding schemes, the UK government has yet to confirm details of its proposed replacement: the Shared Prosperity Fund. A new report from IFS researchers, funded by the Economic and Social Research Council, looks at the issues and options for the design of this scheme, including how different regions would fare if different indicators are used to determine funding levels.
Press release - 19/03/20
Property values in London have risen over six-fold since the mid 1990s, compared to less than three-fold in the North East of England. Values in Hackney are over 9 times what they were then, compared to just over 2.5 times in County Durham. But council tax bands and bills, as well as central government top-ups to councils’ revenues, are still based on relative property values in 1991, almost 30 years ago. These bills and funding arrangements are increasingly arbitrary and unfair.
Observation - 09/03/20
This may be a budget dominated by the coronavirus but the government’s priority to “level up” across the UK is still likely to be a theme. This promise has so far been rather light on details, but the ultimate goal of a ‘levelling up’ agenda would presumably be to reduce the disparities in productivity and earnings across the UK. Recent IFS research has documented these regional inequalities, showing for instance that in London both productivity and earnings are more than 30% higher than the national average, but that in Wales they are 15% lower.