In the UK – as in other developed economies - ‘levelling up’ to reduce inequalities between different places has become a key political debate. Reducing these deep-seated inequalities will not be easy. But here Diane Coyle and Andy Westwood discuss two significant new policies that would start to close the gap.
Recent local elections in England – as well as elections in France, Germany and Australia – demonstrate that voters in places ‘left behind’ during decades of industrial and technological change are continuing to express discontent with the resulting large spatial inequalities. As the economic geographer Andrés Rodriquez Pose says in his recent article ‘The Revenge of the Places that Don’t Matter’, there are consequences at the ballot box when populist politicians trade on such disconnection and resentment.
In many such communities the impacts of Covid-19 and now the cost of living crisis are making inequalities even worse. More places in England are falling still further behind the richest areas – not just so-called ‘red wall’ towns in the Midlands and the North, but many places in southern and eastern England too.
The policies tried so far have not achieved the aim of narrowing the geographic gaps; so what else might be done to support struggling communities?
First, it is important to acknowledge that fixing spatial inequalities and tackling national policy priorities such as health, crime, and education are not mutually incompatible. Indeed, national challenges play out in places. So it is possible both to address regional and local inequalities and help improve productivity and growth across the whole country. In the UK the ‘levelling up’ agenda set out in the White Paper earlier in 2022 goes part way toward this approach. It recognises the value of long-term investments in human capital, infrastructure and investment in R&D alongside the importance of improving social infrastructure and boosting ‘civic pride’. Its ‘six capitals’ framework helps identify the institutions and assets characterising thriving places, and sets out a framework for supporting the communities that don’t have the same attributes. But the White Paper stops short of identifying specific institutions and services places need if they are to turn around their fortunes.
How then might a coordinated policy effort to improve life chances, standards of living and pride in place move from the abstract to the specific? What are the public and private sector infrastructure, activities and services that make a place tick? How can government – local or national – best identify and then support them? And what are the likely multipliers or spillovers that will make policy choices and public spending as effective as possible?
We propose here two policies needed for effective levelling up.
One is a minimum offer to every place of public and social infrastructure – Universal Basic Infrastructure. Everybody should have access to a minimum level and standard of transport and communications networks, public services and local amenities, no matter where they live.
Another is the power for all local authorities to establish a Community Asset Register, so they can identify and fund certain specific important local assets, whether privately or publicly owned, that play a distinctive role for the community, and whose loss would contribute to a spiral of decline.
A Universal Basic Infrastructure would require a per capita formula below which services may not fall: core local services and facilities could not be closed or reduced below minimum standards in national or regional decision making. For instance, this would involve a minimum number of GPs and health centres given population. Likewise it would mean preserving or restoring a local police station (and a specified number of local police officers). There should be adequate childcare, schools, a post office, a library and a further education college if the area is of a sufficient size. Private sector institutions should also be included – banks and post offices (for example FCA powers are currently being used to maintain access to cash points and deposit facilities). Connectivity through broadband infrastructure is essential, and Ofcom should upgrade the minimum standards it sets and enforce affordable access. Public transport will also be critical – with specified and affordable local bus and rail services, likely requiring further moves on franchising powers such as those begun in Greater Manchester.
There is of course sometimes a trade-off between universality and economic efficiency. In public service, NHS Trusts or Police Forces are set efficiency targets. While value for money and effectiveness are obviously importance, the balance needs to tilt towards ensuring universal adequacy; public services must serve all of the public even if a strict Treasury efficiency calculus argues against it. Private companies providing utility-type services such as transport or broadband similarly should deliver minimum universal standards as part of their social licence to operate. School Multi Academy Trusts and merged FE college groups might need to be required to take a ‘place first’ approach based on a certain level of provision in any given location.
The private sector is more directly involved when it comes to businesses or buildings that are key to the health of local high streets and to people’s identity and pride in their communities. Department stores, pubs and cinemas, theatres or sports clubs are examples. In coastal towns we might add piers or funfairs and in post industrial towns it might be the iconic factory or mill buildings that still dominate local environments. Often these types of assets form part of the essential civic and social infrastructure too – facilities where people meet, exchange ideas, ask about each other’s welfare, and generally act as locations where members of communities come together. Often run by private businesses, these anchor assets have benefits that spill over into social and institutional capital, and they also bring footfall and spending to other businesses and services nearby.
How to preserve these privately owned assets and institutions is unfamiliar territory for public policy. But the health of many places – economic success, local identity and pride, civic participation – depends on them, and they should be considered by policymakers concerned with levelling up. Too many of them, from football clubs to iconic department stores, have been closed or left to decline. Yet the effect on a local economy of a department store chain being badly run and asset-stripped or an iconic seaside hotel, pier or theatre extracting profits and buildings falling into disrepair can be catastrophic.
Our proposal is to give local authorities powers and capacity to intervene before these types of amenities close or are asset-stripped by exploitative employers. Local government should have powers to establish community asset registers, with a requirement that listed assets are adequately maintained and invested to minimum standards. If their owners fail to meet the required standards, the local authority could raise a supplementary business rate to fund maintenance, and in the last resort compulsory purchase powers at the declared rateable value. The importance of such assets has been recognised – at small scale – by the central government’s Community Ownership Fund. The Shadow Secretary of State for Levelling Up, Housing and Communities Lisa Nandy advocated this policy in a recent speech, and others such as the Plunkett Foundation have advocated this approach. It needs scaling up.
This proposal links to the foundational economy – routine jobs and services often in undervalued sectors – that are essential everywhere but particularly in deprived areas. Community assets can form part of an infrastructure as well as an income base around which other economic activities can develop. They offer both a social and an economic platform for local growth. They require effort, investment and coordination – but it also offers connections, networks, income and services that will then support other business activity, wealth creation and social infrastructure. In other words, there is a social and economic multiplier around the immediate benefits.
The challenges of levelling up, and policies to address them, are best met by local government with adequate resources, powers and capacity. Local authorities understand their high streets and town centres as well as the needs of local businesses and people; national agencies and departments cannot possibly have such detailed information. Local authorities are also better placed to coordinate and convene efforts at a local level. But it will take time to rebuild their capacity and in any case change will require an active and supportive central government too; departments of state will always oversee schools and skills, health services and GPs, R&D, benefits and more. But local capacity will strengthen the accountability as well as the purpose of local government.
Finally, these suggestions deliberately take a place-based – rather than an individual – approach. An adequate level of individual benefits – especially Universal Credit – is absolutely vital, but individuals will benefit from a community approach to local infrastructure and the services and institutions that help support it. Universal Credit (or even a Universal Basic Income) will not help people access a decent education system or a functional bus network. Effective policy for levelling up involves a much deeper understanding of the links between public and private sectors, civic institutions and the value of the networks in communities. It demands a shift in the way we think about infrastructure, institutions and people and about the government’s role in supporting them.