Levelling Up: On the right track?
As vaccines enter arms and Covid case numbers drop, the government is beginning to turn from managing the crisis to managing the recovery. As it does so, levelling up is becoming more than an ambition or a campaign slogan. Levelling up is becoming a policy reality. The government has now announced a range of measures to begin the process of levelling up – from the creation of new departmental offices outside of Whitehall, to the £4.2billion Levelling Up Fund published alongside the Budget.
With each new announcement, it becomes clearer what levelling up really means. It also raises new questions as to whether the government will truly be able to improve people’s lives in a meaningful way.
“That’s your bloody GDP. Not ours.” That was the heckle to Professor Anand Menon, when he asked an audience in Newcastle to imagine the likely impact of Brexit on the UK’s GDP. While policy makers and economists focus on big numbers that can be measured and tracked, clearly what matters most to people isn’t the rate of GDP growth or gross value added. What matters is the quality of their lives.
The overwhelming majority of new levelling up measures the government has announced since the election are centred around economic growth outside London and the South East. This is an important goal to pursue, given the range of economic inequalities that exist across the UK. However, inequalities across the regions of the UK do not only exist at the economic level.
At least some of the rhetoric on this topic suggests politicians understand this. As the Prime Minister stated during his first speech as the holder of Downing Street’s keys, levelling up ‘means uniting our country, answering at last the plea of the forgotten people and the left behind towns by physically and literally renewing the ties that bind us together.’
But as further details of the government’s levelling up plans are revealed, it’s increasingly clear that the this is an agenda almost entirely focused on productivity growth, transport and physical infrastructure. This is a much narrower answer to the challenge the Prime Minister set his government, which risks missing what makes the most difference to the quality of people’s lives.
What has the government done so far?
The vast majority of spending that sits under the levelling up agenda is spending on grey infrastructure – namely transportation infrastructure, but with significant additional spending to encourage housebuilding, broadband connectivity, and urban regeneration. The top five levelling up programmes announced to date by value, worth at least £150billion, are all investments in grey infrastructure. This vastly outweighs the £8.7billion of levelling up funding that has been allocated to programmes with broader deliverables, seeking to increase everything from the number of tourists in a location to land values, and to reduce everything from emissions to crime. Indeed, a large proportion of both the Levelling Up Fund and the Towns Fund – the largest of the four broad funds announced to date – are likely to be spent on yet more transportation infrastructure. New Philanthropy Capital estimate that just 13 per cent of the Community Renewal Fund, Levelling Up Fund and Community Ownership Fund combined is likely to be spent on social infrastructure. And even funds with an eye to community infrastructure are shaped by economic criteria – the Levelling Up Fund methodology uses productivity, building vacancy rates and transport links to identify priority areas for investment.
The vast majority of levelling up funding announced to date focuses on physical infrastructure
Figure 1: Levelling up funding announced, as of March 2021
Source: PBE analysis of Build Back Better: our plan for growth, HM Treasury, March 2021
Notes: The Shared Rural Network and UK Gigabit programme are aimed at rural inequality
This significant investment in grey infrastructure may well fulfil the Prime Minister’s objective of ‘physically renewing the ties that bind us together’, but the ‘literal renewal’ is likely to require far more focus on community infrastructure. Recent analysis from the British Academy on how the UK can recover from Covid identifies strengthened and expanded community-led social infrastructure as one of seven key strategic goals for policy makers. Yet the civil society organisations which often make this possible have featured little in the levelling up policy agenda to date.
Meanwhile, the data suggests that this almost-total focus on economic measures will fail to meet the test of making people’s lives more fulfilled.
Figures 2 and 3 below show the 100 UK local authority districts that rank highest and lowest (respectively) in terms of life satisfaction. The green plot shows where those districts sit in the ranking of local authority districts by GDP per capita. The purple plot shows their rank in terms of social relationships (part of the Social Fabric index created by Onward, based on measures of community assets, volunteering & group membership, charity, socialising & leisure time, and religion). As the charts show, neither GDP nor social relationships alone appear to be particularly good predictors of life satisfaction. Local authority districts that rank highest in terms of life satisfaction do not necessarily have a correspondingly high rank either for GDP per capita or for social relationships. Clearly, life satisfaction depends on a wide and complex array of factors.
However, the charts below highlight that places that rank most highly in terms of life satisfaction are more likely to also rank highly on a measure of social relationships, than on a measure of their economic output. Similarly, areas ranking lowest on life satisfaction are more likely to rank lower on this measure of relationships than on GDP per capita.
Places that rank highly for life satisfaction are more likely to also rank highly for measures of social relationships than to rank highly for GDP. The inverse is also true, places that rank lower for life satisfaction are more likely to also rank lower for measures of social relationships than GDP.
Source: PBE analysis of: Headline estimates of personal well-being from the Annual Population Survey (APS): by counties, local and unitary authorities, ONS, October 2019, Regional gross domestic product local authorities, ONS, December 2019, Social Fabric Index, Onward, September 2020
This suggests that by focusing too narrowly on economic measures, the government’s levelling up policies to date may miss many of the things that improve people’s lives, and other factors like social relationships may have a bigger role to play.
The analysis presented here is only illustrative – comparing measures of economic success to wellbeing scores tells a fairly superficial story about the relationship between economic factors and how satisfied people are with their lives. Moreover, it’s important to note that economic factors do make contributions to our wellbeing. Employment status is a strong predictor of life satisfaction, as is housing tenure. Household income also matters, though much less than might be expected. And clearly the economic fortunes of an area shape a wider range of outcomes that impact how happy people are.
But there are other drivers that really matter. Mental and physical health (which vary significantly by area) are major drivers of individuals’ wellbeing – much more so than income – as are relationships, our environment and community connection (which also vary by place). The Indices of Deprivation captures many of these inequalities, but even that fails to capture many important drivers of wellbeing differential by place. The Thriving Places Index, for example, provides scores on 25 different local conditions for wellbeing.
How can the levelling up agenda better deliver what matters?
Civil society has a key role to play in ensuring levelling up improves the quality of people’s lives in left behind areas. Civil society organisations often sit closest to communities who know best what they need to make a difference, and as figures 2 and 3 suggest, while the strength of civil society is by no means the only contributor to wellbeing, it is very likely one of them, and may provide more explanation for wellbeing differentials than measures of economic output.
If the Government analyses the success of its investments on economic measures alone, it risks side-tracking organisations and activities whose impacts aren’t always quantified in economic assessments and missing what really matters. The adoption of wellbeing as both an explicit objective for levelling up, and as a method of measuring the success of levelling up investments, could provide policymakers with the assurance that their plans are being grounded in what truly makes a difference to people’s lives.
A growing body of literature already provides a strong base of evidence about what impacts wellbeing at the level of the individual. The next step is to start exploring what drives wellbeing in different places. This, and the specific role civil society has to play in explaining those differentials, is exactly what the Law Family Commission on Civil Society’s next paper on levelling up will explore.
The government has begun to put forward levelling up plans that use broader policy levers to ensure levelling up can drive a real recovery, but that process is – understandably – in its early stages. As the government continues to act to truly level up the many regional inequalities the UK faces, will it meet the test set by the woman in Newcastle who demanded more or will it continue to be driven by economic measures people don’t recognise? Will it truly deliver on what is most important in improving all facets of people’s lives, or will it continue to focus on one kind of infrastructure above all else? The evidence certainly suggests that a more nuanced approach will be crucial if left behind voters aren’t just to see changes, but to feel their benefits.
 When making comparisons between funds, it should be noted that the sums announced span different spending timescales.
 Equivalized household income “explains under 1% of the overall variance of life-satisfaction in the population, while all the factors we can identify together explain around 15% of the variance” (Clark et al., The Origins of Happiness 2019, 19).