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Written on 9 Mar 2021

The role of public services in levelling up the UK

As the Spring Budget had a clear focus on 'Levelling Up' all regions across the UK, and Professor Michael Kenny advised Parliament on the role that public services ought to play in their strategy to do this, Tom Kelsey, Research Assistant, reflects on the government's thinking and how they're tackling it.

“If we are serious about wanting to level up, that starts with the institutions of economic power.”

This is the view of the Chancellor, who used his Budget speech on Wednesday to announce a new campus in Darlington to house parts of the “critical economic departments” of government, including HMT, BEIS, DIT and MHCLG.

His announcement tells us much about how the government thinks about ‘levelling up’.

Most commentary on it focuses on the need to rebalance the economic prospects of the UK’s towns, cities and regions. To this end, major announcements under the banner of levelling up have, until the Budget, involved plans to improve the physical infrastructure in and around ‘left-behind’ places. For example, the £4.8 billion Levelling Up Fund will “focus on capital investment in local infrastructure” to drive high street regeneration, improve local transport networks and support the preservation of heritage assets. The Towns Fund – a £3.6 billion fund to support struggling towns, £1 billion of which has been allocated to 45 towns so far – has a similar focus on local regeneration, transport improvements and digital connectivity. The Chancellor’s attempt to link the new Darlington campus to the levelling up agenda also reflects an economic understanding of levelling up, but equally represents the introduction of a new tool (moving parts of government out of London) in relation to it.

Important as this ambitious economic objective is, an approach to tackling inter- and intra-regional inequality that imagines economic improvements alone will solve the multiple challenges facing left-behind communities misses an important point. Many of the obstacles to local development and many of the factors affecting economic performance, are social in origin. For example, as Professor Sir Michael Marmot has shown, deprivation is clearly associated with poor educational and health outcomes.

According to Professor Marmot’s recent Health Equity in England report, there is a 17 percentage point gap between the proportion of children in the least and most deprived deciles that achieve five GCSEs with grades A* to C. The consequences of ill-health for regional productivity are no less important. As the Greater Manchester Independent Prosperity Review has demonstrated, the proportion of working adults suffering with long-term health conditions in Greater Manchester is nearly 13 percentage points lower than it is for Greater Manchester’s adult population as a whole. “This demonstrates that poor health outcomes have a significant negative impact on the productivity of city regions.” (Coyle et al. 2019, p.19)

Given the importance of education and health outcomes to the productivity and economic growth of a place, and also to the wellbeing and resilience of the people who live there, it is surprising that the role of public services does not feature more prominently in discussions of levelling up. This is a gap that the House of Lords Public Services Committee is currently attempting to address in its 'Levelling Up’ and Public Services’ inquiry.

Speaking to the Committee at its oral evidence session on 24 February, Professor Michael Kenny, Director of the Bennett Institute, set out the role that public services ought to play in the government’s levelling up strategy: “Often, the focus has been... on physical infrastructure projects... and, actually, we’ve tended to forget that public services are also forms of infrastructure and that they’re key to generating the kinds of social relationships and community resilience which create the conditions in which prosperity and growth can happen.”

Appreciating the vital importance of public services to levelling up, he went on to say, will require a shift in the government’s mindset. These services ought to be understood not as costs to be controlled, but as investments in the fabric of places. In the wake of such a paradigmatic shift, the focus for policymakers should be on how different kinds of infrastructure – physical infrastructure, public services and social infrastructure – can be designed in concert with one another, as mutually supportive and synergistic systems, rather than as separate spending commitments.

Given the different ways in which public services can support the levelling up agenda, it is reasonable for government – and the House of Lords’ Public Services Committee – to consider which of these services ought to be the priority. As Kenny argued in his evidence to the Committee, this will depend upon what are the core objectives the government decides to pursue under this heading. Conceived of in narrowly economic terms, the government is likely to prioritise those services it considers instrumental in improving skills, productivity and growth. If, however, a broader vision of levelling up is developed, then the government is more likely to consider the role of a wider raft of public services, which are relevant to tackling a variety of different geographical inequalities.

Achieving either of these goals is made even harder because much of the data on which decisionmakers will need to rely in making judgements about how to prioritise investments does not align at the same  geographical scales. Much of the data on health outcomes, educational attainment, crime rates, wellbeing, productivity, skills and income is collected at different geographical levels, making it very difficult to make the kinds of evidentially informed trade-offs that government will inevitably need to make when developing interventions for specific places.

This is especially true at the very local level. Much more granular data on these and myriad other variables at the neighbourhood level is needed if investment is to be targeted at smaller areas which are particularly in need of support. There is an urgent need to develop a coherent data infrastructure on which government – as well as academics, business and the third sector – can draw in developing policy to support the levelling up objectives, however defined. Otherwise, as Kenny argued, we risk falling into the trap of valuing what we can measure, rather than measuring what we decide to value.

For decades, governments of all stripes have developed policies which aim at tackling geographical inequalities. In the main, these initiatives have had little significant impact. While this uninspiring track record should not dampen the current government’s ambitions, it does suggest the need for caution and remind us that the project to level up Britain on which this government has embarked is very unlikely to achieve much within a single electoral cycle. In practice, the government would do well between now and the next national election to establish a sense of momentum for this ambitious agenda, and signal that it is serious about addressing some of the most ingrained challenges facing different kinds of left behind community.  Such an endeavour is much less likely to succeed, if it does not take seriously the integral role of public services.

Watch a series of clips of Professor Michael Kenny delivering oral evidence to the House of Lords Public Services Committee on "Public Services and Levelling up" on 24 February 2021.