Progress on levelling up 'glacial', think tank says

Next government must be "decisive" if it wants to meet aims of levelling up white paper by 2030, IFS warns
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Progress on the government’s levelling up agenda has been “glacial”, the Institute for Fiscal Studies has said in a report assessing work on the flagship policy to reduce regional inequality.

The UK as a whole “has gone into reverse” on many metrics since the release of the levelling up white paper – unveiled in February 2022 as the flagship policy of then-prime minister Boris Johnson’s government – according to the IFS.

The levelling up white paper presented an “admirably clear, ambitious and transparent account of the Conservative government’s aims to reduce regional inequalities in the UK” but few of its aims are on track to come to fruition, the think tank said.

The report warns that meeting the targets – or 12 levelling up “missions” – set out in the white paper will likely require “both substantial resources and changes in how they are allocated around the country”.

“The main parties’ manifestos give little sense of how much they propose to spend on health, education and other public services, but existing plans likely imply cuts to at least some areas of spending. And some pledges, such as ruling out council tax revaluation and reform, make levelling up harder rather than easier,” it says.

Christine Farquharson, an associate director at IFS and an author of the report, said the levelling up white paper was “a substantial piece of careful thinking about the challenges of reducing regional inequalities in the UK, and should heavily inform the thinking of any future government interested in reducing inequalities between places”.

“In key areas such as employment, primary school attainment and self-reported life satisfaction, the country’s overall performance has got worse even as gaps between areas have widened,” she said.

“Clearly, a pandemic and a cost-of-living crisis have made the last five years an exceptionally difficult time to level up. But if these missions are to be achieved by 2030 as intended, then the next parliament will be decisive.”

Areas where the UK has lost ground include education, wellbeing and R&D spending, the IFS report shows.

The paper said the number of primary school children achieving the expected standard in reading, writing and maths will have “significantly increased” by 2030 – hitting 90% in England, with the percentage of children meeting the expected standard in the worst performing areas up by more than a third.

But as of June 2023, just 60% of 11-year-olds in England met the expected standard in reading, writing and maths – up from 59% the year before but down from 65% in the year before the pandemic. Performance is “strikingly better” in London than elsewhere in England.

And while the white paper said people’s self-reported wellbeing will have improved in every area of the UK by 2030, the IFS found a sharp drop in life-satisfaction scores in 2020-21 had more than reversed a decade of progress leading up to that point. In 2022-23, life satisfaction was “barely better” than at the height of the Covid pandemic.

Inequality in life satisfaction across local authorities has also increased – the opposite of what the white paper promised. The gap between the 10% of local authorities with the most and least satisfied residents rose from 0.72 in 2019-20 to nearly a full point in 2022-23 – “by some distance the biggest gap in this measure since records began in 2011-12”.

The paper sets a target to increase domestic public investment in R&D outside the greater southeast of England by at least 40% by 2030, and by at least a third over the spending review period – which was set to end in March 2025.

But rather than increasing, public R&D spending outside the southeast – intended to stimulate innovation and productivity growth – fell from 39% in 2018 to 37% in 2021, the latest date for which data is available. This means the government has more ground to make up than thought when the white paper was released. Meanwhile, business spending on R&D fell by £3.1bn outside the greater southeast but increased by £1.8bn, further exacerbating the existing imbalance.

Progress in other areas, such as public transport, has been marginal.

The paper said local public-transport connectivity across the country would be “significantly closer to the standards of London” by 2030, with “improved services, simpler fares and integrated ticketing”. In 2018-19, more than 40% of journeys in London were made by public transport but just 8% outside the capital.

“While public transport use collapsed during the pandemic, levels in London have nearly returned to their pre-pandemic peak. But so too has the gap between the capital and the rest of England, which has nudged down by less than half a percentage point since 2018–19 – leaving the gap at its second-highest level since 2002-03,” the report said.

“With the cancellation of the northern leg of HS2 and the reallocation of its budget towards pothole repair, the emphasis of transport policy has shifted back towards drivers and road users.”

The report also highlights some “bright spots”, including digital connectivity – noting that in just the nine months from April 2023 to January 2024, the share of premises outside London covered by 5G rose from 67% to 78%.

“If such rapid progress continues, the UK will be well on track to meet or exceed the stretching targets on digital connectivity,” it says.

And there have been new devolution deals in the East Midlands, the North East, and York and North Yorkshire since the white paper was published – in line with the goal for every part of England that wants one to have a devolution deal with powers by 2030, or at least “approaching the highest level of devolution and a simplified, long-term funding settlement”.

The share of England’s population living in areas with a directly elected mayor has risen from 41% in January 2023 to 48% in May this year.

Summing up its analysis, the report says: “It is still early days, some of these changes will take time, and in many cases data are only available with a substantial lag.

“But the missions relate to 2030, which is not that far off. The slow pace of change speaks to the challenges of shifting deep-seated geographic inequalities, and the importance of a long-term strategy with consistent delivery if progress is to be made.”

Commenting on the report, Mubin Haq, chief executive of abrdn Financial Fairness Trust, said: “The regional inequalities in the UK are stark and on numerous measures there are wide disparities.

“Quite rightly, the government has tried to address these gaps through its levelling up agenda. However, this has not been matched with the resources to deliver the step change needed. On too many indicators, inequalities are growing or at a standstill.”

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