LEVELLING UP

Measuring Up for Levelling Up

How the Government should measure progress on levelling up, and examines how the economy has been performing in different parts of the country over recent decades.
Neil O’Brien OBE MP
September 7, 2020
Measuring Up for Levelling Up
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The coronavirus crisis has only made the case for levelling up stronger so we can get the economy moving in areas that are less well off. Our new Taskforce will be spearheading this vital agenda.

Neil O'Brien OBE MP

 

The Conservatives now hold more low-pay seats than Labour

This report was the first serious attempt to explore how to measure progress on levelling up. It was launched alongside the creation of a new Parliamentary group, the Levelling Up Taskforce, to campaign for policy change on levelling up.

The report looks at how government can best measure progress on levelling up, and examines how the economy has been performing in different parts of the country over recent decades. It reveals that:

  • Seats gained by the Conservatives in 2019 don’t just have lower earnings than the seats the party already held, but earnings on average 5% lower than seats currently held by Labour. Of the bottom quarter of seats in Great Britain with the lowest earnings, more are now held by the Conservatives (77) than Labour (74).
    Compared to the seats the Conservatives gained in 2019, homes in seats held by Labour were on average £62,000 (a third) more expensive.
  • Since the mid-1990s London has pulled ahead of the rest of the country. Having been the same size as the economy of the north of England as recently as 2004, London’s economy is now a quarter bigger. London’s gross value added (GVA) before the coronavirus crisis was the size of the North plus Edinburgh, Swansea, Belfast, Bristol and Birmingham: it is as though it has added all those national and regional capital cities to itself since the middle of the last decade.
  • In London income before tax and benefits grew two-thirds faster than the rest of the UK, and income before tax and benefits is now nearly 70% higher in London than the rest of the UK, up from around 30% higher in 1997.
  • On a wide range of measures the UK is one of the most geographically unbalanced developed economies. In Germany 12% of people live in areas where the average income is 10% below the national average, while in the UK 35% do.
  • Opportunity is not evenly spread: In Greater London over 45% of poorer pupils who were eligible for free school meals progressed to higher education in 2018/19. Outside London there were 80 local authorities where richer pupils not on free school meals were less likely than this to go to university.
  • Large cities in the UK grew both their total GDP and their productivity per worker faster than their surrounding areas since 1997. However, on average cities saw slower growth in income per resident than their surrounding areas. That may reflect a different and changing composition to the population in the cities compared to the surroundings (e.g. more students, more migrants, different age groups), and/or reflect faster growth in commuting and commuter incomes.
  • In rural areas defined by the ONS as “sparse”, people’s income levels are 17-18% lower, and are lower even after controlling for people’s age and qualifications.

measuring-up-for-levelling-up-onward

Summary of recommendations

The report looks at the strengths and weaknesses of different possible measures of progress on levelling up.

Given that different indicators can suggest quite different things, Government should track a wide range of measures including productivity and overall income. However, if policy has to focus on a couple of measures, earnings and employment rates should be key because they allow for analysis of smaller areas than productivity or income, because of the way the data is produced. They are also more timely.

The report proposes that government should produce geographical analysis of all budgets and fiscal events, setting out the different impact that tax and spending changes will have on different areas. It argues the Treasury’s Labour Markets and Distributional Analysis unit should have geographical analysis added to its remit.

The government should set itself three key tests of levelling up.
  • Are the bottom fifth and bottom half of local authorities by earnings growing their earnings more quickly than they have in recent years?
  • Are the bottom fifth and bottom half of local authorities with the worst unemployment seeing unemployment rates falling and converging with the national average?
  • Are the bottom fifth and bottom half of local authorities with the lowest employment seeing employment rates rising and converging with the national average?

Summary of recommendations

The report looks at the strengths and weaknesses of different possible measures of progress on levelling up.

Given that different indicators can suggest quite different things, Government should track a wide range of measures including productivity and overall income. However, if policy has to focus on a couple of measures, earnings and employment rates should be key because they allow for analysis of smaller areas than productivity or income, because of the way the data is produced. They are also more timely.

The report proposes that government should produce geographical analysis of all budgets and fiscal events, setting out the different impact that tax and spending changes will have on different areas. It argues the Treasury’s Labour Markets and Distributional Analysis unit should have geographical analysis added to its remit.

The government should set itself three key tests of levelling up.
  • Are the bottom fifth and bottom half of local authorities by earnings growing their earnings more quickly than they have in recent years?
  • Are the bottom fifth and bottom half of local authorities with the worst unemployment seeing unemployment rates falling and converging with the national average?
  • Are the bottom fifth and bottom half of local authorities with the lowest employment seeing employment rates rising and converging with the national average?

Our work on the UK’s regional disparities has been the engine behind the levelling up agenda. This programme focuses on bridging the UK’s longstanding spatial inequalities and bringing economic opportunity to places which have lagged behind for too long.

Find out more about our Levelling Up programme.

 

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