Levelling Up: The employment and skills measures we need to build prosperity

by Naomi Clayton


28 01 2022


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The long-awaited levelling up white paper is due to be published shortly. Featured in the Conservative Party’s 2019 manifesto, MHCLG has since been rebranded to the Department for Levelling Up, Housing and Communities and Michael Gove, leading on the levelling up agenda, has called it the “defining mission of this government”. But with little detail to date, many are struggling to understand what levelling up means or have any confidence in it.  

What do we know so far? There are four key objectives: empowering local leaders and communities, growing the private sector and boosting living standards, spreading opportunity and improving public services, and restoring local pride. But there’s been little detail on how the Government is defining levelling up, how it will be implemented or what success looks like.  

A draft paper leaked earlier this month gave us more insight. It outlined an “ambition for every part of England to have a local leader with equivalent powers to London by the end of the decade”, delivered through a “new devolution framework for England” with a single tier system for local government. According to reports, this will be accompanied by 13 ‘missions’ on issues including crime, health and living standards, and a series of targets. Key metrics will be used to monitor progress.  

Successive governments have sought to address regional inequalities in the UK. The 1934 Special Areas Act was introduced to encourage businesses to locate to areas of high unemployment – and a long series of measures have followed since. Yet the UK is still described as one of the most geographically unequal countries in the developed world.  

So what would progress look like? Without a clear definition on levelling up, this is difficult to answer. But any strategy to improve prosperity and living standards across the country must focus on employment and skills as measures of success. We should aim to see tangible improvements in five key areas:  

  1. Work – employment rates vary from 90% in East Cambridgeshire to 61% in Gosport on the south coast of Hampshire. A reflection of just how persistent geographic inequalities can be: several of the areas targeted by the 1934 Special Areas Act, including Cumbria, parts of Tyneside and south Wales, still have some of the lowest employment rates today. Trends over the last decade show London has seen the largest increase in employment rates, despite the significant impact of the pandemic on the capital, while the North East with the lowest employment rate has seen a slower increase. 
  2. Earnings – average hourly earnings are partly a reflection of the types of jobs accessible in different parts of the country, and one measure of the quality of work. Workers living in Blackpool earn £11.50 per hour on average – less than half average earnings in Kensington and Chelsea. Nearly 40% of workers living in Blackpool earn less than the voluntary living wage.  
  3. Skills – Disparities in employment and pay are to some extent driven by differences in qualification levels. Less than 60% of people in Sandwell are qualified to at least level 2 (equivalent of five good GCSEs), compared to over 90% in Brentwood in Essex. Regional disparities have widened over the last decade with a 15 percentage point increase in residents in London qualified to at least level 2, compared with 10 percentage points in the North East. 
  4. Opportunity – Access to higher education can increase young people’s employment and earnings opportunities. But the gap in participation in higher education is striking. Only about quarter of young people from state-schools in Barrow-in-Furness in Cumbria go on to higher education by the age of 19, whereas closer to three-quarters from state-schools in Harrow do. Note: DfE recently published a dataset covering all higher-level learning (including apprenticeships) although the data only goes down to regional level. 
  5. Child poverty – the ultimate aim of the levelling up agenda should be to improve living standards. Child poverty has risen over the last decade and some of the highest rates of child poverty are found in London where costs of living tend to be higher. More than half of children in Tower Hamlets are estimated to be living in poverty compared to one in eight in parts of Surrey. Rates of child poverty are also high in other big cities including Birmingham, Manchester and Newcastle. 

Combining these measures provides a picture of the areas in most need of levelling up (see map below). Areas in the industrial and coastal areas stand out. Hull, a city that has struggled with the decline of its maritime and fishing industries, has one of the lowest overall scores and many other areas within the Northern regions sit in the bottom 25% on the index. Coastal areas across the country, including Cornwall, Great Yarmouth and Hastings, also score low. But there is no clear North-South, inland-coastal or urban-rural divide. And London, which scores better on other metrics, has some of the highest rates of child poverty in the country.   

The geography of levelling up (a composite measure based on the five measures listed above) 

Local authorities have been ranked on each measure (from 0 for lowest scoring to 1 for the best scoring) and an equal-weighted index created from the five measures. A score of less than 0.3 puts a local authority among the 20% lowest scoring local authorities on the index, while a score of more than 0.7 means a local authority is in the 20% top scoring (i.e. high employment and earnings, low rates of child poverty etc).  

Hover over the different areas to see their scores. Darker areas correspond to a greater need for Levelling Up in each of the measures.

It’s also important to look at the wider policy context for the Government’s levelling up agenda. Other policy decisions, e.g. the cut to Universal Credit and longer-term cuts to adult education, make levelling up harder.  

Skills are one of the most important determinants of the economic prosperity of places. More adults will need to upskill and retrain as a result of the pandemic, transition to net zero and the continued impacts of automation – and as people work longer. But the cuts to adult education funding over the last 10 years mean that fewer people are participating in training. Adult participation in government-funded FE and skills has fallen furthest in the North East and North West – regions with relatively few people qualified to level 2 and above. To reverse these trends, the Government will need to go further than the partial reversal of cuts announced in the spending review.  

Levelling up will require a great deal more investment in social infrastructure, not just physical infrastructure, to support private sector growth and enable people to access opportunity. How that money is spent matters too. Local leaders are best placed to align policies and integrate services in ways that respond to the local context. We’ve previously argued for Local Labour Market agreements, setting out how the employment and skills system will be tailored to local need and engage people least likely to access opportunities. To this end, the draft plans for further devolution are welcome. 

To succeed, the Government’s plans need to create long-lasting, transformational change that builds institutional capacity. The constant reinvention in areas of local economic growth, regional and local governance, and further education have created instability and fragmentation. The Government must develop a clear framework for devolution, showing what powers it is willing to devolve and compelling reasons for those excluded.  

It needs to establish longer-term funding settlements for local government and its partners that move away from resource-intensive competitive bidding rounds that make planning around local priorities difficult. 

The challenges facing places like Blackpool and Hull are deep-rooted and complex. Improving opportunities and living standards for people that live there – and in other parts of the country – requires a strategy with skills, social inclusion, local leadership and institutional capacity building at the heart of it. 

A shorter version of this article was first published in FE Week.