Levelling up for the future

Levelling up for the future

There has been a lot of debate about the precise meaning of levelling up (see our take on it here) and lots of agreement about its importance. 

There continues to be a failure to grasp the big levers of the economy to deliver improvements in local outcomes (variously defined) that everyone agrees are needed.

It is worth putting one specific element of the debate into context. The big ‘stand-alone’ policy announcement linked to levelling up has been the £4.8bn levelling up fund. The fund brings together the Department for Transport, the Department for Levelling Up, Housing and Communities and the Treasury to invest £4.8 billion in high value local infrastructure. There is no question it is needed and important but let’s compare that to the truly large areas of government spending. By the end of this spending review period, we will be spending £152bn annually on healthcare (and £166bn on health and social care combined) plus a further £75bn annually on education. Over the course of the spending review period, we will spend over £1 trillion on health and education alone – compared to the £4.8bn levelling up fund (0.5% of that total). 

Clearly health, social care, education and, indeed, other funding needs to accomplish many objectives from maternity wards that will deliver the next generation to schools who will educate them to tackling Covid-19 and many other challenges. But if we are serious about levelling up, we need to examine much more systematically whether those funding flows can be better aligned to the different needs of local communities.

In many cases there is already an acceptance that funding varies based on need: education funding is adjusted to reflect the population of children requiring free school meals, primary care funding is adjusted to reflect indicators of the health of the local population. However, we could go much further. We could:

  • More systematically include persistent regional and local differences as factors that determine funding flows;
  • Increase the differentials, where appropriate, to align with levelling up objectives; and
  • Better coordinate funding to local areas across different government departments such that adjustments made by one department (e.g. to education funding flows) are better linked to adjustments made by others (e.g. to health funding flows).

Finally, and perhaps most importantly, we should make these funding flows more forward looking. We will only succeed in improving life-chances and wellbeing around the country when funding focuses less on the past and more on the future. That means funding linked to the skills of tomorrow (digital, low carbon manufacturing and sales, creative industries), to the (post-Covid) health needs of tomorrow (mental health, longer lives and co-morbidities) and to the ways in which people will want to live in the coming decades (infrastructure of the future including broadband, electric vehicle charging, smart infrastructure). 

The focus on creating new funds targeted at removing past inequalities is commendable – and should continue. More detailed focus also needs to shift to the much larger, existing, funding flows to make sure the formulae and processes that determine their allocation are aligned to ensure future generations face fewer hurdles to success.