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Levelling Up the United Kingdom Levelling Up the United Kingdom Presented to Parliament by the Secretary of State for Levelling Up, Housing and Communities by Command of Her Majesty 2 February 2022 CP 604 © Crown copyright 2022 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/ version/3. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available at www.gov.uk/official-documents Any enquiries regarding this publication should be sent to us at: correspondence@levellingup.gov.uk ISBN 978-1-5286-3017-7 E02694177 02/22 Printed on paper containing 75% recycled fibre content minimum Printed in the UK by HH Associates Ltd. on behalf of the Controller of Her Majesty’s Stationery Office Contents Foreword by the Prime Minister viii Foreword by the Secretary of State and Andrew Haldane x Executive summary xii Chapter 1 The United Kingdom’s Geographical Disparities: Drivers and Potential Policy Approaches 1 1.1 A Brief History of Geographical Disparities 1 1.2 Geographical Disparities across the UK 16 1.2.1 The scale of geographical disparities across the UK 16 1.2.2 How the UK’s geographical disparities compare internationally 19 1.2.3 Broader measures of geographical disparities 21 1.2.4 Local level geographic disparities 27 1.2.5 Geographical disparities over time 30 1.2.6 Cities and productivity 33 1.2.7 Geographic differences and social mobility 37 1.2.8 Geographic and economic clustering 39 1.3 Explaining Economic Geographies 42 1.3.1 Economic growth theory 42 1.3.2 New economic geography 44 1.3.3 Social geography and infrastructure 45 1.3.4 Institutional capital and leadership 47 1.3.5 Complex adaptive systems 48 1.3.6 Synthesising the approaches 50 1.4 Future Structural Factors Driving the UK’s Economic Geography 51 1.4.1 The UK’s transition to Net Zero 52 1.4.2 The impact of COVID-19 55 1.4.3 Technological transformation 56 i 1.5 A Framework for Evaluating Geographical Disparities 58 1.5.1 Human capital 59 1.5.2 Financial capital 66 1.5.3 Social capital 69 1.5.4 Physical capital 71 1.5.5 Intangible capital 77 1.5.6 Institutional capital 84 1.5.7 Summary and synthesis 87 1.6 Interdependence between the Capitals 89 1.7 The Role of Public Policy 95 1.7.1 The desirability of Local Growth Policy 96 1.7.2 The feasibility of Local Growth Policy 100 Chapter 2 Systems Reform 105 2.1 Introduction 105 2.2 Principles for Successful Policy Regimes 105 2.2.1 History of public policy approaches in the UK 106 2.2.2 Lessons from past policy approaches 110 2.2.3 Lessons from other policy regimes 114 2.2.4 Principles for a successful policy regime 116 2.3 A New Policy Regime 117 2.3.1 Medium-term missions 117 2.3.2 Reshaping central government decision making 122 2.3.3 Empowering local decision making 133 2.3.4 The role of data, monitoring and evaluation 149 2.3.5 Transparency and accountability 156 Chapter 3 The Policy Programme 159 3.1 Introduction 159 3.2 Boost Productivity, Pay, Jobs, and Living Standards by Growing the Private Sector 160 3.2.1 By 2030, pay, employment and productivity will have risen in every area of the UK, with each containing a globally competitive city, and the gap between the top performing and other areas closing. 160 3.2.2 By 2030, domestic public investment in R&D outside the Greater South East will increase by at least 40%, and over the Spending Review period by at least one third. This additional government funding will seek to leverage at least twice as much private sector investment over the long term to stimulate innovation and productivity growth. 170 3.2.3 By 2030, local public transport connectivity across the country will be significantly closer to the standards of London, with improved services, simpler fares and integrated ticketing. 176 Levelling Up the United Kingdom White Paper ii 3.2.4 By 2030, the UK will have nationwide gigabit-capable broadband and 4G coverage, with 5G coverage for the majority of the population 183 3.3 Spread Opportunities and Improve Public Services 186 3.3.1 By 2030, the number of primary school children achieving the expected standard in reading, writing and maths will have significantly increased. In England, this will mean 90% of children will achieve the expected standard, and the percentage of children meeting the expected standard in the worst performing areas will have increased by over a third. 187 3.3.2 By 2030, the number of people successfully completing high-quality skills training will have significantly increased in every area of the UK. In England, this will lead to 200,000 more people successfully completing high-quality skills training annually, driven by 80,000 more people completing courses in the lowest skilled areas. 193 3.3.3 By 2030, the gap in Healthy Life Expectancy (HLE) between local areas where it is highest and lowest will have narrowed, and by 2035 HLE will rise by five years. 200 3.4 Restore a Sense of Community, Local Pride and Belonging 206 3.4.1 By 2030, pride in place, such as people’s satisfaction with their town centre and engagement in local culture and community, will have risen in every area of the UK, with the gap between top performing and other areas closing. 207 3.4.2 By 2030, renters will have a secure path to ownership with the number of first-time buyers increasing in all areas; and the government’s ambition is for the number of non-decent rented homes to have fallen by 50%, with the biggest improvements in the lowest performing areas. 221 3.4.3 By 2030, homicide, serious violence and neighbourhood crime will have fallen, focused on the worst-affected areas. 228 3.5 Empower Local Leaders and Communities 233 3.5.1 By 2030, every part of England that wants one will have a devolution deal with powers at or approaching the highest level of devolution and a simplified, long-term funding settlement. 234 Chapter 4 Next Steps 245 4.1 Introduction 245 4.2 Engagement and Informal Consultation 245 4.3 Future Legislation 247 4.4 Conclusion 248 Delivering for all parts of the United Kingdom 249 Contents iii List of Figures and Tables Figure 1.1 Largest Cities in the World since 7,000 BC 2 Figure 1.2 Change in population of selected UK cities 1821-2021 (1821=100) 5 Figure 1.3 Nominal (smoothed) GVA per hour worked (£), GB local authorities and Northern Ireland, 2019 6 Table 1.1 Size of the gap: Differences in GVA per hour worked in £ and percent, UK and GB countries and regions/local authorities, 2019 7 Figure 1.4 Distribution of GVA per hour worked (£), local authorities by GB countries and regions, 2019 7 Figure 1.5 Median gross weekly pay (£) for all employee jobs, UK local authorities, 2021 8 Table 1.2 Size of the gap: Differences in median gross weekly pay in £ and percent, UK countries and regions/local authorities, 2021 9 Figure 1.6 Distribution of median gross weekly pay (£) for all employee jobs, local authorities by GB countries and regions, 2021 9 Figure 1.7 Proportion of the population aged 16-64 with level 3 + qualifications by local authority, UK, 2021 10 Table 1.3 Size of the gap: Differences in Level 3+ qualifications population in percent, UK countries and regions/local authorities, 2021 11 Figure 1.8 Distribution of the proportion of the population aged 16-64 with level 3+, local authorities by UK countries and regions, 2021 11 Figure 1.9 Healthy life expectancy at birth (Males), UK local authorities, 2017-2019 12 Table 1.4 Size of the gap: Differences in healthy life expectancy (Male) in years and percent, UK countries and regions/local authorities, 2017–19 13 Figure 1.10 Distribution of healthy life expectancy at birth (Males), local authorities by UK countries and regions, 2017–2019 13 Figure 1.11 Healthy life expectancy at birth (Females), UK local authorities, 2017-2019 14 Table 1.5 Size of the gap: Differences in healthy life expectancy (Female) in years and percent, UK countries and regions/local authorities, 2017–19 15 Figure 1.12 Distribution of healthy life expectancy at birth (Females), local authorities by UK countries and regions, 2017-2019 15 Figure 1.13 Spatial patterns: Which places are most left behind? Local authorities in the bottom quartile for level 3+ equivalent skills in the adult population, Gross Value Added (GVA) per hour worked, Median Gross Weekly Pay and healthy life expectancy 18 Figure 1.14 Regional productivity, GB countries and regions, 1900-2019 19 Figure 1.15 Ratio of top 20% richest regions to 20% poorest regions, OECD countries, 2008 and 2018 20 Figure 1.16 Correlation between labour productivity (GVA per hour worked) and other metrics 21 Levelling Up the United Kingdom White Paper iv Figure 1.17 Measures of income and productivity compared to UK average, UK countries and regions, 2019 23 Figure 1.18 Life satisfaction, UK local authorities, 2020 25 Figure 1.19 Determinants of life satisfaction: Odds ratios of factors affecting life satisfaction, UK, April 2016 to March 2017 26 Figure 1.20 GVA per filled job, local authorities by UK countries and regions, 2019 28 Figure 1.21 Income deprivation in Kensington and Chelsea 28 Figure 1.22 Income deprivation in Middlesbrough 29 Figure 1.23 Income deprivation by Moran's I, England local authorities, 2019 29 Figure 1.24 Employment rates, British SSRs (Standard Statistical Regions), 1901 to 1971; employment rate (16+), UK countries and regions, 2004 to 2020 31 Figure 1.25 Life expectancy at birth, UK countries and regions, 2001-2003 to 2016-18 32 Figure 1.26 GVA per hour vs. population size, selected Western European cities, 2011 33 Figure 1.27 Productivity in Core Cities compared to second-tier cities in other countries, 2016 34 Figure 1.28 Population density in urban areas (excluding Urban areas below 10,000 people per square km), UK and other Western European countries 35 Figure 1.29 Median earnings at 28 for boys who were on FSM at age 16, across local authorities in England where they grew up 38 Figure 1.30 Illustrative map of the UK’s sectoral clusters and strengths 40 Figure 1.31 Productivity (GVA per hour worked) against income (gross disposable household income per capita), GB local authorities, 2018 43 Figure 1.32 Productivity and economic complexity, GB urban areas, 2019 49 Figure 1.33 Net emissions of carbon dioxide per capita, UK local authorities, 2019 53 Figure 1.34 Potential employment opportunities and skills needs from Net Zero transition, UK countries and regions 54 Figure 1.35 Proportion of jobs at high risk of automation, England local authorities, 2017 57 Figure 1.36 Real Human Capital per head (16-65 years old), UK countries and regions, 2018 59 Figure 1.37 Proportion of population aged 16 to 64 with different qualifications levels, UK countries and regions, 2019 60 Figure 1.38 Proportion of population aged 16 to 64 with level 3+l qualifications, GB local authority districts and Northern Ireland, 2020 61 Figure 1.39 Correlation between level 3 and equivalent or higher qualifications and GCSE attainment, by local authority (England only) 62 Figure 1.40 Employment Support Allowance caseload rate (working-age population), UK countries and regions, February 2021 63 Figure 1.41 Overweight and obesity prevalence, England local authorities, 2019/2020 and smoking rates, GB local authorities 2019 64 Figure 1.42 Share of equity and debt finance deals compared to GVA, UK countries and regions, 2021 67 Figure 1.43 Distribution of equity activity across UK local authorities, 2011-2020 68 Figure 1.44 Geographic location of investor-investee pairings, UK countries and regions, 2011-2020 69 Figure 1.45 Local Trust Community Need Index Score, England local authorities, 2019 70 List of Figures and Tables v Figure 1.46 Satisfaction with local area, England regions, 2020-21 71 Figure 1.47 Jobs reachable within 60 mins for each job within five miles 72 Figure 1.48 Ratio of house price to residence-based earnings, England and Wales local authority districts, 2020 73 Figure 1.49 Capital stock per worker, UK ITL2 subregions, 2019 75 Figure 1.50 Gross fixed capital formation compared to London, UK countries and regions, 2000-2019 76 Figure 1.51 Foreign Direct Investment per workforce job, UK countries and regions, 2019 77 Figure 1.52 Income from intellectual property by HE providers, UK ITL2 subregions, 2018 78 Figure 1.53 Patent applications, UK ITL2 subregions, 2012 79 Figure 1.54 High tech patents, UK ITL2 subregions, 2012 80 Figure 1.55 Percentage employment in STEM jobs, UK ITL2 subregions, 2019 81 Figure 1.56 High-tech employment, UK ITL2 subregions, 2019 82 Figure 1.57 Management practices score, GB countries and regions, 2020 83 Figure 1.58 R&D expenditure, UK countries and regions, 2019 84 Figure 1.59 Percentage of adults who agree they can influence decisions affecting their local area, England regions, 2020/21 85 Figure 1.60 Onward Social Fabric Score, GB local authorities and Northern Ireland, 2020 86 Figure 1.61 Strength of LEP's local networks – Percentage of LEPs agreeing/disagreeing that the following bodies play a full and active role in the LEP, 2015 87 Figure 1.62 Levelling Up Capitals Framework 88 Figure 1.63 Shares of population cohort moving ITL1 region and employer, 2017 90 Figure 1.64 Share of all moving graduates by institution and class of degree 2013/14 to 2014/15 90 Figure 1.65 Mobility patterns of graduates, age 16 to age 27, 2013/14 to 2016/17 91 Figure 1.66 Share of graduates moving regions and changing jobs and variance in the graduate employment rate 93 Figure 1.67 Hypothetical increase in disposable earnings (median earnings less median rent) as a result of moving local authority 93 Figure 1.68 Share of people moving region and employer, for those born outside the UK and those born in the UK, 1994 to 2017. 94 Figure 1.69 Shares of graduates remaining at home and in non-graduate jobs 95 Table 1.6 The Income-Equivalent Benefits of Levelling Up – an illustration 97 Figure 1.70 GDP per capita annual growth and interregional inequality, OECD TL3 regions (excluding former transition economies), 2000–2017 99 Figure 2.1 100 years of local growth policy 108 Table 2.1 Levelling Up Missions 120 Figure 2.2 Local growth funding pots introduced in the UK since 2011-12 127 Table 2.2 Places for Growth: Number of roles moving outside London by 2025 and 2030’ 131 Figure 2.3 English Devolution Deal and City and Growth Deal geographies 134 Table 2.3 Devolution Framework 140 Table 2.4 Illustrative private sector initiatives 147 Figure 2.4 ONS subnational data explorer 152 Levelling Up the United Kingdom White Paper vi Figure 3.1 Gigabit coverage improvements, UK countries and regions, 2019, 2021 and 2025 (forecast) 184 Figure 3.2 4G coverage improvements, UK countries and regions, 2021 and 2026 184 Figure 3.3 Attainment 8, England local authorities, 2018/19 188 Figure 3.4 Education Investment Areas, England 191 Figure 3.5 Life Expectancy and Healthy Life Expectancy, England neighbourhoods by deprivation decile, 2017-2019 201 Table 3.1 Brownfield Funding 210 Figure 3.6 LUF and Towns Fund recipients, UK local authorities 240 List of Figures and Tables vii Foreword by the Prime Minister From day one, the defining mission of this government has been to level up this country. To take the radical steps needed to make us more prosperous and more united by tackling the regional and local inequalities that unfairly hold back communities and to encourage private sector investment right across the UK. Because while we are without doubt one of the biggest and strongest economies in the world we are also one of the most unbalanced. A country in which the place of your birth is one of the clearest determining factors in how you’ll get on, what opportunities will be open to you, even the number of years for which you can expect to live. This is not a new observation. Politicians have been aware of this regional inequality for as long as it has existed, yet have been content to focus instead on the big picture of national growth – a waste of talent and a waste of this country’s economic potential. The answer to it lies not in cutting down the tall poppies, or attempting to hobble the areas that are doing well. Instead I am determined to break that link between geography and destiny, so that it makes good business sense for the private sector to invest in areas that have for too long felt left behind. If places that are currently underperforming start firing on all cylinders, national GDP will rise by tens of billions each year. That means more growth, more jobs, and higher wages right across the UK. And if we can level up this country – and close our productivity gap – we will have the most prosperous economy in Europe. That is the theory; this White Paper describes the practice. The practical steps this government will take in everything from education to art to investment that will make this a better, fairer country for us all. It’s no small task. The challenges we face have been embedded over generations and cannot be dug out overnight. But this White Paper is the crucial first step in doing so. The most comprehensive, ambitious plan of its kind that this country has ever seen. A vision for the future that will see public spending on R&D increased in every part of the country; transport connectivity reaching London-like levels within and between all our towns and cities; faster broadband in every community; life expectancies rising; violent crime falling; schools improving; and private sector investment unleashed. viii We’ll usher in a revolution in local democracy. Harness the incredible power of data not just at a national and regional level but all the way down to neighbourhoods. Introduce a whole new way of thinking in central government, recognising that national success alone is not enough if it masks local failings. We’ll use the freedoms restored by Brexit – in trade, regulation, immigration, public procurement and more – to help businesses, communities and individuals in every part of the country. And that is just the beginning. Because everyone knows that talent and energy and enthusiasm and flair are not located solely in isolated pockets of our country. They are and have always been evenly spread right across the UK. It is opportunity that is not. Fixing that is the economic, social and political challenge of our time. And, with this White Paper, it is a challenge to which this government will continue to rise. Foreword by the Prime Minister ix Foreword by the Secretary of State and Andrew Haldane “Stay local, go far.” This was the rallying cry on a recent poster in Teesside. Teesside is making good on that ambition, with the recent rebirth of its high tech, high skill, high wage economy under mayor Ben Houchen’s inspirational leadership. We see similar success stories throughout the country. But this is not the whole picture of the UK. There are stark geographical inequalities between and within our cities, towns and villages. For every local success, there is a story of scarring and stagnation elsewhere. While talent is distributed evenly across the UK, opportunity is not. For many, if you want to get on you need to get out. Levelling up is a mission – part economic, part social, part moral – to change that for good. It is about unleashing opportunity, prosperity and pride in places where, for too long, it has been held back. It is about growing the pie and everyone sharing in the fruits of this success, increasing not only peoples’ living standards but the length and quality of their lives. No single, short-term intervention can effect this change. We need to mobilise all the forces that drive progress and human flourishing – investment, skills, innovation, finance, trust and institutions. And we need to bring all sectors of society together, with the very best of government, the private sector and civil society working in partnership. It is these forces that transformed Renaissance Florence, that spurred the Industrial Revolution in Britain and which drive today’s super-cities like Seoul, New York and London. To level up and unite our country, we must follow a similar path. This requires a new model of government and governance of the UK. This new model is anchored around an ambitious set of missions, galvanising action across sectors to improve jobs, incomes, health, skills, transport, pride in place, safety and well-being across the UK. These clear, quantified missions mean no-one can any longer be in any doubt about what is meant by success in levelling up. Meeting these missions will require a country-wide effort, with the UK Government working with all tiers of government, including the devolved administrations, civil society and the private sector. At the same time, we are rewiring Whitehall to put place at the heart of decision making, including by moving more civil servants outside London. It also requires a further devolution of decision-making powers to local leaders where decisions are often best taken. A new devolution framework provides a roadmap for doing so. x Underpinning all of this will be improved data and transparency, oversight and analytics, evaluation and experimentation. With local powers come local responsibilities. Monitoring local performance and policies is crucial if they are to be understood and responded to by local citizens and improved by local leaders over time. A new local government body will have oversight and drive transparency, and there will be a statutory responsibility on government to report on progress towards the missions. This is a clear, measurable, actionable plan for levelling up the UK, from Aberdeen to Antrim, Newport to Norwich. And while the White Paper is a long-term plan for changing the UK, it also establishes some important first steps. They include inviting local leaders representing nine million people to begin negotiations to agree new devolution deals; a transformative new online UK National Academy and 55 new Education Improvement Areas; 20 new transformative regeneration projects; significantly increased R&D spending outside the Greater South East, with new Innovation Accelerators to catalyse innovation clusters; a transformation in the quality of housing, in particular in the private rented and social housing sectors; details of the £2.6bn Shared Prosperity Fund to restore pride in place across the UK; boosting investment in culture where it’s been absent for too long; and greater powers and money for local communities. As this long-term programme of change is delivered, the difference will begin to be felt in communities, high streets, workplaces, pubs, restaurants, football grounds and theatres. People deserve to live in a country where life is not a postcode lottery, where by staying local you can go far. The publication of this White Paper marks an important step towards that goal. Foreword by the Secretary of State and Andrew Haldane xi Executive summary The United Kingdom is an unparalleled success story – a multi-cultural, multi-national, multi-ethnic state with the world’s best broadcaster; a vibrantly creative arts sector; a National Health Service which guarantees care for every citizen; charities and voluntary groups which perform a million acts of kindness daily; globally renowned scientists extending the boundaries of knowledge every year; entrepreneurs developing the products and services which bring joy and jobs to so many; and millions of citizens whose kindness and compassion has been so powerfully displayed during the COVID-19 pandemic. But not everyone shares equally in the UK’s success. While talent is spread equally across our country, opportunity is not. Levelling up is a mission to challenge, and change, that unfairness. Levelling up means giving everyone the opportunity to flourish. It means people everywhere living longer and more fulfilling lives, and benefitting from sustained rises in living standards and well-being. This requires us to end the geographical inequality which is such a striking feature of the UK. It needs to begin by improving economic dynamism and innovation to drive growth across the whole country, unleashing the power of the private sector to unlock jobs and opportunity for all. While there are world-leading and enterprising businesses and innovators right across the UK, economic growth and the higher productivity which drives it has been over-concentrated in specific areas, particularly the South East of England. A long tail of low-productivity businesses and places explain why UK productivity growth is too low compared to competitors. It is vital that we preserve and enhance the economic, academic and cultural success stories of the UK’s most productive counties, towns and cities. But it is equally critical that we improve productivity, boost economic growth, encourage innovation, create good jobs, enhance educational attainment and renovate the social and cultural fabric of those parts of the UK that have stalled and not – so far – shared equally in our nation’s success. The UK Government has made progress towards spreading opportunity around the country since 2019, alongside mitigating the worst effects of the pandemic, with: • £5bn for Project Gigabit to bring gigabit-capable broadband to 85% of the UK by 2025, and the £1bn Shared Rural Network deal with mobile operators delivering 4G coverage to 95% of the UK by the end of 2025; • five-year consolidated transport settlements amounting to £5.7bn in eight city regions outside London, £5bn of funding for buses and active travel over this Parliament; and £96bn for the Integrated Rail Plan delivering faster, more frequent and more reliable journeys across the North of England and the Midlands; The United Kingdom is an unparalleled success story Levelling up means giving everyone the opportunity to flourish Levelling Up the United Kingdom White Paper xii • a new schools funding formula in England ending the previous postcode lottery, and an extra £4bn for schools in England next year, rising to £4.7bn in 2024-25 • investment of £3.8bn in skills planned by 2024-25 and a Lifetime Skills Guarantee in England, enabling 11m adults to gain an A Level or equivalent qualification for free, as well as a new UK-wide adult numeracy programme and skills bootcamps; • £23.3bn extra for the NHS in England over the 2021 Spending Review (SR21) period, a commitment to build 40 new hospitals by 2030 and an ambition to deliver 50,000 more nurses; • a lower Universal Credit taper rate – down from 63% to 55% – and a higher National Living Wage, making work pay for millions of people, and letting them keep more of what they earn; • 20,000 more police officers on our streets by 2023 and a £70m Safer Streets Fund to improve the environment and cut offending in high-crime areas; • control of our immigration system by ending free movement and introducing a new points-based immigration system, giving the UK the freedom to decide who comes to our country based on the skills people have to offer; • £1.49bn in City and Growth Deals in every part of Scotland, £791m across Wales and £617m for deals covering the whole of Northern Ireland; • eight innovative Freeports bringing jobs, investment and prosperity across England with a commitment to deliver more Freeports in each of Scotland, Wales and Northern Ireland; • 101 towns across England receiving £2.4bn from the Towns Fund to unleash their economic potential, and the £830m Future High Streets Fund regenerating 72 towns and high streets and helping them recover from the pandemic; • a £2bn Culture Recovery Fund helping museums, theatres, cinemas and heritage organisations survive the pandemic; • £4.8bn infrastructure investment in towns across the UK via the Levelling Up Fund; • a £150m Community Ownership Fund, giving people across the UK the chance to become owners of their local pubs or football grounds; • £26bn of public capital investment for the green industrial revolution and transition to Net Zero; and • the movement of UK Government functions and civil servants out of Whitehall, ensuring levelling up is not directed from London, creating local jobs and taking decision-making closer to the communities the Government serves, including HM Treasury to Darlington, the Cabinet Office to Glasgow, the Foreign, Commonwealth and Development Office (FCDO) to East Kilbride and the Department for Levelling Up, Housing and Communities (DLUHC) to Wolverhampton. Executive Summary xiii This paper sets out the next stages in this programme to level up the UK. This programme has to be broad, deep and long-term. It has to be rooted in evidence demonstrating that a mix of factors is needed to transform places and boost local growth: strong innovation and a climate conducive to private sector investment, better skills, improved transport systems, greater access to culture, stronger pride in place, deeper trust, greater safety and more resilient institutions. History illustrates what is possible by following this path. The Renaissance flourished in Italian city states that combined innovation in finance with technological breakthroughs, the cultivation of learning, ground-breaking artistic endeavour, a beautiful built environment and strong civic leadership. And the first Industrial Revolution in Britain came about through the interplay of innovative financial instruments, sharper rewards for enterprise, new institutions of learning, improvements in transportation and rivalrous emulation between local leaders and entrepreneurs. Those same concerted forces are needed to drive productivity, innovation and growth across the UK today. This contemporary Medici model, our twenty-first century recipe for a new Industrial Revolution, depends on harnessing an array of interventions and catalysing a range of sectors. Levelling up will require us to: a. boost productivity, pay, jobs and living standards by growing the private sector, especially in those places where they are lagging; b. spread opportunities and improve public services, especially in those places where they are weakest; c. restore a sense of community, local pride and belonging, especially in those places where they have been lost; and d. empower local leaders and communities, especially in those places lacking local agency. Levelling up is not about making every part of the UK the same, or pitting one part of the country against another. Nor does it mean dampening down the success of more prosperous areas. Indeed, by extending opportunity across the UK we can relieve pressures on public services, housing and green fields in the South East. And levelling up can improve well-being in the South East by improving productivity in the North and Midlands. So, it is about the success of the whole country: realising the potential of every place and every person across the UK, building on their unique strengths, spreading opportunities for individuals and businesses, and celebrating every single city, town and village’s culture. This will make the economy stronger, more equal and more resilient, and lengthen and improve people’s lives. The economic prize from levelling up is potentially enormous. If underperforming places were levelled up towards the UK average, unlocking their potential, this could boost aggregate UK GDP by tens of billions of pounds each year. Levelling up skills, health, education and wellbeing would deliver similarly-sized benefits. Accumulated over time, those gains could easily surpass annual UK GDP. Success in levelling up is about growing the economic pie, everywhere and for everyone, not re-slicing it. This programme has to be broad, deep and long‑term Levelling Up the United Kingdom White Paper xiv The United Kingdom’s Geographical Disparities: Drivers and Potential Policy Approaches What does the economic and social geography of the United Kingdom look like? The UK has larger geographical differences than many other developed countries on multiple measures, including productivity, pay, educational attainment and health. Urban areas and coastal towns suffer disproportionately from crime, while places with particularly high levels of deprivation, such as former mining communities, outlying urban estates and seaside towns have the highest levels of community need and poor opportunities for the people who grow up there. These disparities are often larger within towns, counties or regions than between them. They are hyper-local and pockets of affluence and deprivation may exist in the same district. Indeed, many of the worst areas of deprivation are found in the UK’s most successful cities. While change is possible, in some cases, these differences have persisted for much of the last century. And some of the UK’s most successful cities – such as Birmingham, Manchester, Leeds, Glasgow and Cardiff – lag behind their international comparators when it comes to productivity and incomes. What are the current and future drivers of geographical disparities? Over the past century, many trends have combined to create the spatial patterns seen across the UK today. Globalisation, technological progress, advances in transport, logistics and power, and the shift from heavy industry to knowledge-intensive sectors, as well as the rise of foreign holidays and shift from technical training to university education, have had a large and lasting impact on the economic geography of the UK. These dynamics of the global economy have benefited the UK overall, improving productivity, increasing wealth and driving up living standards through more innovation and competition. These dynamics, however, have not had the same positive economic and social impacts across the UK. While London and much of the South East have benefited economically, former industrial centres and many coastal communities have suffered. This has left deep and lasting scars in many of these places, damaging skills, jobs, innovation, pride in place, health and wellbeing. What are the factors that will help drive levelling up? Levelling up requires a focused, long-term plan of action and a clear framework to identify and act upon the drivers of spatial disparity. Evidence from a range of disciplines tells us these drivers can be encapsulated in six “capitals”. • Physical capital – infrastructure, machines and housing. • Human capital – the skills, health and experience of the workforce. • Intangible capital – innovation, ideas and patents. • Financial capital – resources supporting the financing of companies. • Social capital – the strength of communities, relationships and trust. Executive Summary xv • Institutional capital – local leadership, capacity and capability. The six capitals in this framework are individually important. But their real significance comes in combination, when they act in a mutually reinforcing fashion as in Renaissance Italy or in the UK at the time of the Industrial Revolution. The sum of these factors is then greater than its individual parts, a process known as agglomeration. Places with rich endowments of all six capitals benefit from a virtuous circle of agglomeration. They are home to skilled people with high quality jobs and have access to outstanding schools and globally-competitive universities. They have good roads, trains and fast internet. Residents live in fine housing. Funding is available for local businesses to invest and innovate, and communities are bound together by good relationships and a strong sense of belonging. Local leaders are able to build on these foundations to deliver improvements for their local community. By contrast, where endowments of these capitals are weak or depleted, places are unable to attract or retain talent, businesses are less likely to invest and innovate, civic institutions tend to lack capacity and capability, and pride in local communities is depleted. This vicious and self-reinforcing cycle in some places has seen a depletion of skills, businesses, finance and culture, with communities and town centres declining for decades. These cumulative forces – in some places positive, in others negative – have widened geographical disparities in the UK over time. Without policy action, they will continue to do so. Levelling up is about aspiring for every place in the UK to have a rich endowment of all six capitals, so that people do not have to leave their community to live a good life. It means taking action to replenish the capitals where they are weak or depleted, transforming vicious circles into virtuous ones. With opportunity spread more equally across the UK, people in places that were once struggling would then fulfil their potential, living longer, healthier and happier lives. With each part of the UK achieving its potential, the economy as a whole would be both larger and more equal. System Change: A New Policy Regime for Levelling Up There has been no shortage of attempts to tackle geographical disparities in the UK over the past century. These have been insufficient to close the widening gaps. That is because these efforts have tended to be short-term, lacked scale and coordination, and were hamstrung by a lack of data and effective oversight. Local leaders have also lacked the powers and accountabilities to design and deliver effective policies for tackling local problems and supporting local people. The direction of travel since 2010 has been towards greater local empowerment – with the introduction of the Localism Act, Police and Crime Commissioners, City Deals and democratically elected metro mayors. But a renewed and coordinated focus is now needed to take this forward. Levelling Up the United Kingdom White Paper xvi Learning lessons from the past, a new policy regime is needed to reverse these embedded historical trends. At root, that is about creating the right information, incentives and institutions to deliver profound changes to how decisions are made, where they are made and who makes them. System change is not about a string of shiny, but ultimately short-lived, new policy initiatives. It is about root and branch reform of government and governance of the UK. It is about putting power in local hands, armed with the right information and embedded in strong civic institutions. This new policy regime is based on five mutually reinforcing pillars. First, the UK Government is setting clear and ambitious medium‑term missions to provide consistency and clarity over levelling up policy objectives. These will serve as an anchor for policy across government, as well as catalysing innovation and action by the private and civil society sectors. These missions are ambitions that the UK Government has for all parts of the UK. Delivering on them, while being fully respectful of the devolution settlements, will require close and collaborative work with the devolved administrations. The missions are rolling decade-long endeavours and will be reviewed periodically by the UK Government. Levelling Up Missions Focus Area Mission Boost productivity, pay, jobs and living standards by growing the private sector, especially in those places where they are lagging Living Standards By 2030, pay, employment and productivity will have risen in every area of the UK, with each containing a globally competitive city, and the gap between the top performing and other areas closing. Research & Development (R&D) By 2030, domestic public investment in R&D outside the Greater South East will increase by at least 40%, and over the Spending Review period by at least one third. This additional government funding will seek to leverage at least twice as much private sector investment over the long term to stimulate innovation and productivity growth. Transport Infrastructure By 2030, local public transport connectivity across the country will be significantly closer to the standards of London, with improved services, simpler fares and integrated ticketing. Digital Connectivity By 2030, the UK will have nationwide gigabit-capable broadband and 4G coverage, with 5G coverage for the majority of the population. The UK Government is setting clear and ambitious medium‑term missions Executive Summary xvii Levelling Up Missions Focus Area Mission Spread opportunities and improve public services, especially in those places where they are weakest Education By 2030, the number of primary school children achieving the expected standard in reading, writing and maths will have significantly increased. In England, this will mean 90% of children will achieve the expected standard, and the percentage of children meeting the expected standard in the worst performing areas will have increased by over a third. Skills By 2030, the number of people successfully completing high-quality skills training will have significantly increased in every area of the UK. In England, this will lead to 200,000 more people successfully completing high-quality skills training annually, driven by 80,000 more people completing courses in the lowest skilled areas. Health By 2030, the gap in Healthy Life Expectancy (HLE) between local areas where it is highest and lowest will have narrowed, and by 2035 HLE will rise by five years. Well-being By 2030, well-being will have improved in every area of the UK, with the gap between top performing and other areas closing. Restore a sense of community, local pride and belonging, especially in those places where they have been lost Pride in Place By 2030, pride in place, such as people’s satisfaction with their town centre and engagement in local culture and community, will have risen in every area of the UK, with the gap between top performing and other areas closing. Housing By 2030, renters will have a secure path to ownership with the number of first-time buyers increasing in all areas; and the government’s ambition is for the number of non-decent rented homes to have fallen by 50%, with the biggest improvements in the lowest performing areas.1 Crime By 2030, homicide, serious violence and neighbourhood crime will have fallen, focused on the worst affected areas. Empower local leaders and communities, especially in those places lacking local agency Local Leadership By 2030, every part of England that wants one will have a devolution deal with powers at or approaching the highest level of devolution and a simplified, long-term funding settlement. 1 Government will consult on the impact on the private rented market and particularly those on the lowest incomes. Further detail will be set out once the review of the Decent Homes Standard has concluded. Levelling Up the United Kingdom White Paper xviii Second, central government decision‑making will be fundamentally reoriented to align policies with the levelling up agenda and hardwire spatial considerations across Whitehall. This will require greater transparency around the geographic allocation of funding and simplification of local growth funding. It will mean running levelling up through central government decision-making as a golden thread for which departments are held accountable. And it will mean extra resources being deployed to local areas, including moving 22,000 civil servants out of London by 2030. Third, the UK Government will empower decision‑makers in local areas by providing leaders and businesses with the tools they need. A new framework will extend, deepen and simplify local devolution in England. Ongoing support will be provided to existing City and Growth deal areas in Scotland, Wales and Northern Ireland, pan-regional partnerships like the Northern Powerhouse and Midlands Engine, and local private sector initiatives. The UK Government will support existing and embryonic private sector clusters of economic activity, which exist in all parts of the UK and are the wellspring of new innovation and job creation. Fourth, the UK Government will transform its approach to data and evaluation to improve local decision-making. In the past, it has been difficult to see what is being spent, where and how it is being spent, and its impact. The Office for National Statistics’ Subnational Data Strategy aims to improve the UK’s subnational data, mapping local economic geographies and helping improve transparency and accountability to the public. The UK Government is making available interactive tools and maps to facilitate this process. It will also encourage innovative uses of real-time data at the local level, giving leaders across the UK the information they need to deliver, experiment and evaluate swiftly and effectively. Fifth, the UK Government will create a new regime to oversee its levelling up missions, establishing a statutory duty to publish an annual report analysing progress and a new external Levelling Up Advisory Council. The Council will support Ministers by advising on the design, delivery and impact of levelling up policy. The annual report will update the public on progress against the missions so that levelling up is subject to rigorous external scrutiny, including by Parliament. Over time, these five pillars acting in combination will improve the information and incentives facing decision-makers locally and nationally, and strengthen the institutions driving local transformation. And it is those shifts in the system of governance and government across the UK that will anchor success in meeting the medium-term levelling up missions. How will levelling up be delivered across the Union? Levelling up can only succeed as a shared national project. The six capitals – physical, human, intangible, financial, social and institutional – straddle areas of responsibility and tiers of government across the UK. The capitals are interdependent and success will only be achieved if each of them is thriving in a given place. For example, the UK Government can use its collective economic might to attract investment and job creation, but education outcomes, Central government decision‑ making will be fundamentally reoriented to align policies with the levelling up agenda Executive Summary xix delivered by devolved administrations, are crucial to developing a workforce able to take advantage of these opportunities. Devolution settlements in Scotland, Wales and Northern Ireland recognise that devolved governments are best placed to deliver certain services, like health and education. But outcomes are a shared interest for the whole of the UK. Our broad UK-wide tax base already funds public services across the UK, ensuring for example that the NHS can deliver for people whether in Scotland, Wales, England or Northern Ireland. In practice, this means all layers of government need to come together with a common purpose. The UK Government is committed to facilitating collaboration and engagement with the devolved governments and stakeholders in Scotland, Wales and Northern Ireland. The Policy Programme: Policy Initiatives to Level Up the United Kingdom Achieving the ambitious medium-term missions will require a new model of economic growth, public and private investment, a business friendly environment, incentives for inward investment and a high skill, high wage labour market. The time horizon for our missions is 2030. But we also recognise that certain communities and people need greater support in the more immediate term. The policies set out here will begin to have visible effects, on high streets and in local communities, in the next few years. Boosting productivity, pay, jobs and living standards by growing the private sector A well-functioning and productive economy in every part of the UK is essential to levelling up. By 2030, the UK Government wants to ensure that pay, employment and productivity has risen in every area of the UK, with the gap between the top performing and other areas closing (Mission One). That means supporting the private sector – the real engine of wealth creation – to invest more, grow more and take more risks. As well as developing a more flexible and better regulatory model for business outside the EU, we will also reform outdated EU rules restricting investment from pension funds and others so we can see more money flow into long-term capital assets. And also, outside the EU, the UK is putting competitive advantage in science and technology at the heart of a new economic model. A series of new Research and Development (R&D) investments will strengthen our science base across the country. The increase in public R&D investment to £20bn by 2024-25 and the target for total UK R&D investment to reach 2.4% of GDP by 2027 must see every region of the UK experience an uplift in investment. The Department for Business, Energy and Industrial Strategy (BEIS) will aim to invest at least 55% of its total domestic R&D funding outside the Greater South East by 2024‑25; the Department of Health and Social Care (DHSC) will increase National Institute for Health Research investment outside London, Oxford and Cambridge; and the Ministry of Defence (MoD) will expand the regional footprint of the Defence Science & Technology Laboratory (Dstl). These will contribute towards our ambition to increase total domestic public The UK government wants to ensure that pay, employment and productivity have risen in every area of the UK Levelling Up the United Kingdom White Paper xx R&D investment outside the Greater South East by at least a third over the Spending Review period and at least 40% by 2030, with that additional government funding seeking to leverage at least twice as much private sector investment over the long-term to stimulate innovation and productivity growth (Mission Two). In addition, the UK Government will target £100m of investment in three new Innovation Accelerators, private-public-academic partnerships which will aim to replicate the Stanford-Silicon Valley and MIT-Greater Boston models of clustering research excellence and its direct adoption by allied industries. These pilots will be centred on Greater Manchester, the West Midlands and Glasgow City-Region. These new clusters will be our Fourth Industrial Revolution Foundries, leveraging our global lead in scientific research. We must support high-growth businesses and reverse the historic decline in manufacturing in the UK with more of the sort of innovation which characterises economies such as South Korea and Israel. The new Britishvolt gigafactory in Blyth, the investment by GE to establish a new wind turbine blade manufacturing centre at Teesworks in Redcar, the renewed commitment by Nissan and Envision to manufacture electric vehicles in Sunderland, and the new hydrogen buses being built in Ballymena, which are already on the streets of Aberdeen, are all examples of green manufacturing innovation bringing high-skill and high-wage jobs to areas which have faced economic headwinds in the past. So we must also spread financial capital and investment to the places, projects and people that need it most. The £3bn the UK Government is investing in the next generation of British Business Bank Regional Investment Funds and the new Global Britain Investment Fund will improve access to finance for SMEs and increase globally mobile investment across the UK. This builds on progress made to support local banking, through more challenger banks and mutuals. Levelling up requires mobilising previously underutilised sources of capital. That is why we’re using the tax system to incentivise private sector investment, through Freeports, Enterprise Zones and the Super-deduction. It is also why the Prime Minister and Chancellor have called on the UK’s institutional investors to seize the moment for an “Investment Big Bang” to boost Britain’s long-term growth. The UK Government will go further and work with Local Government Pension Funds to publish plans for increasing local investment, including setting an ambition of up to 5% of assets invested in projects which support local areas. Outside the EU, we will harness the power of public procurement to support communities, moving away from the complex EU rules-based approach that was designed first and foremost to facilitate the EU Single Market, and adopting instead a new simplified approach that prioritises growth and productivity in the UK. We have already introduced a policy which allows smaller contracts to be reserved for UK suppliers and will legislate to put social value at the heart of government spending – weaving a thread of social improvement and civic responsibility through the UK Government’s £300bn annual expenditure on procurement. Cities, towns and communities must be physically and digitally connected if they are to thrive. We want transport networks in all our major urban centres These new clusters will be our Fourth Industrial Revolution Foundries Executive Summary xxi to be significantly closer to the standard of London. We will implement the £96bn Integrated Rail Plan, improving the rail network in the North and Midlands, and invest £24bn in our busiest roads and motorways, £5.7bn in City Region Sustainable Transport Settlements and £5bn for buses, cycling and walking networks. Together, this will bring local public transport connectivity across the country closer to London’s standards (Mission Three). We will enhance digital connectivity through Project Gigabit and the Shared Rural Network so that by 2030, the UK Government and private sector will deliver nationwide gigabit-capable broadband and 4G coverage, with 5G coverage for the majority of the population (Mission Four). To help address the disparities of low pay seen in areas across the country, the UK Government will continue to increase the National Living Wage. Meanwhile, the introduction of a points-based immigration system gives the UK greater control over who comes to this country based on their skills, aligning this to the needs of the economy. The support of the private sector is essential to deliver on these missions. The UK Government is committed to enabling and empowering the private sector to increase investment, jobs and growth at a local level. Spreading opportunities and improving public services Improving productivity, and spreading prosperity, crucially depends on enhancing people’s education and skills – giving everyone access to good schools and the opportunity to receive excellent education and training. Good health is just as important in spreading opportunity, contributing not only to the economy but also ensuring that everyone, wherever they live, can enjoy fulfilling, happy and productive lives. Strong public services not only support positive health and educational outcomes but also attract new talent and investment to an area, boosting local economies. The UK Government will drive further school improvement in England through 55 new Education Investment Areas (EIAs) in places where educational attainment is currently weakest. The Department for Education (DfE) will support strong multi-academy trusts to expand into these areas and offer retention payments to help schools with supply challenges in these areas to retain the best teachers in high-priority subjects. More intensive investment will be available across some EIAs to tackle wider issues that may be limiting school improvement. The UK Government will ensure that talented children from disadvantaged backgrounds have access to a post-16 provider with a track record of progress on to leading universities by opening new 16-19 free schools targeted in areas where they are most needed, such as high priority EIAs. In addition, we will create the UK National Academy. Just as the UK pioneered the Open University, this new digital education service will support pupils from all backgrounds and areas of the UK to succeed at the very highest levels. The UK National Academy will be free and made available online to support the work of schools up and down the country. It will allow students to acquire additional advanced knowledge and skills, offering even more opportunities for every child to thrive. Levelling Up the United Kingdom White Paper xxii With the help of these reforms, we will focus on eliminating illiteracy and innumeracy. By 2030, our aim is that 90% of all primary school children in England will achieve the expected standard in reading, writing and maths, with the percentage of children meeting the expected standard in the worst performing areas improving by a third (Mission Five). We will also step up efforts to give all students the skills employers need. Our reforms will aim to put local employers at the heart of skills provision; to strengthen locally accessible institutions, notably the national network of further education colleges; ensure that all individuals have lifetime access to training; and offer new opportunities to access high quality work and progress in the workplace. The funding of courses and the governance of colleges will be overhauled in line with employers’ needs. Local Skills Improvement Plans, together with supporting funding, will be set up across England to set out the key changes needed in a place to make technical skills training more responsive to skills needs. Nine new Institutes of Technology with strong employer links will be established in England, helping to boost higher technical skills in STEM subjects. We will introduce the In‑Work Progression offer to help people on low incomes address barriers to better employment opportunities. The Department for Work and Pensions (DWP) will provide £1.3bn over the SR21 period to provide employment support for disabled people and people with health conditions. This builds on the National Disability Strategy, Health and Disability Green Paper and Health is Everyone’s Business consultation. The Multiply scheme will target disparities in numeracy levels across the UK, investing £560m in courses for adults. Through our skills reforms and investment, by 2030, we will aim to have significantly increased the number of people to have successfully completed high quality skills training in every part of the UK, including 200,000 more people successfully completing high quality skills training annually in England, driven by 80,000 more people completing courses in the lowest skilled areas (Mission Six). One of the gravest inequalities faced by our most disadvantaged communities is poor health. The COVID-19 pandemic powerfully underlined the disparities in health across this country. The DHSC will shortly publish a White Paper designed to tackle the core drivers of disparities in health outcomes. However, we will act now to deal with one of the biggest contributors to ill health: poor diet and obesity. We will take forward recommendations from Henry Dimbleby’s independent review towards a National Food Strategy including piloting Community Eatwell and a school cooking revolution. We will introduce a new Tobacco Control Plan and set up at least 100 Community Diagnostic Centres in England by 2025 to improve access to diagnostic services. These and other changes will contribute to narrowing the gap in Healthy Life Expectancy (HLE) between local areas where it is highest and lowest by 2030, and increasing Healthy Life Expectancy by five years by 2035 (Mission Seven). Taken together, these missions will help achieve the overarching ambition to improve well-being in every area of the UK, with the gap between top performing and other areas closing (Mission Eight). Our reforms will aim to put local employers at the heart of skills provision Executive Summary xxiii And because responsibility for spreading opportunity and improving public services sits across all tiers of government, we will work with local leaders from across the UK and devolved administrations to bring together evidence on “what works” from policies to reduce spatial disparities, particularly in areas where policy responsibility has been devolved and different groups have delivered policies in innovative ways. Restoring a sense of community, local pride and belonging The £2.6bn UK Shared Prosperity Fund will be used to restore local pride across the UK by focusing investment on three main areas for investment: improving communities and place, people and skills, and supporting local business. We will slash away the bureaucracy of the old EU regional funds. Instead, local leaders will be empowered to direct funding towards their own, locally identified priorities, whether that be promoting new outdoor markets, reducing litter, graffiti and anti-social behaviour, reviving high streets, supporting local businesses or introducing skills provision to match local labour market need and support those furthest from the labour market. We will also regenerate 20 of our towns and cities by assembling and remediating brownfield land and working with the private sector to bring about transformational developments combining housing, retail and business in sustainable, walkable, beautiful new neighbourhoods. These new developments amongst others will be supported by an Office for Place which will pioneer design and beauty, promoting better architectural aesthetics to ensure they enhance existing settlements, gladden the eye and lift the heart. We will explore what further measures can make high streets and town centres the thriving hearts of our communities again, including ways to incentivise landlords to fill vacant units. For instance, powers for local authorities to require landlords to rent out long-term vacant properties to prospective tenants, such as local businesses or community groups. Ensuring natural beauty is accessible to all will be central to our planning system, with improved Green Belts around towns and cities, supported by Local Nature Recovery Strategies reflected in plan making, and woodland creation supported across the UK. Building on this White Paper, we will publish the second report on rural proofing in England this spring. This report will set out how government departments are working to support levelling up in rural areas, through targeted approaches where needed, and how we are strengthening the rural economy, developing rural infrastructure, delivering rural services and managing the natural environment. For levelling up to mean something to people in their daily lives, we need to reach into every community in the country, from city centres to rural areas, in order to start to rebuild social capital and self-reliance in our most abandoned neighbourhoods. This needs to flow through central and local government, through MPs and their local offices, philanthropists, volunteers, schools, GPs and other community leaders. We will pilot a set of Community Covenant approaches: new agreements between councils, public bodies and communities themselves to empower communities to shape the regeneration of their areas and improve public services. The £2.6bn UK Shared Prosperity Fund will be used to restore local pride across the UK Levelling Up the United Kingdom White Paper xxiv Community-led regeneration cannot be achieved with a stop-start funding stream that first builds hope, then destroys it, leaving people less optimistic and trusting, and feeling more disempowered than ever. We will consider a Community Wealth Fund, financial inclusion and other social investment as part of our consultation on £880m in Dormant Assets funding, and focus lottery cash to reach into the most deprived small areas of the country. In this spirit of civic renewal, we will also ensure that access to sporting and cultural excellence is spread more equitably across the UK. With the Football Foundation in England, and Football Associations in Scotland, Wales and Northern Ireland, we are delivering grassroots pitches across the UK – this year the UK Government has contributed funding to enable over 800 new grass pitches and 60 new artificial grass pitches in England alone. The UK Government has committed £205m to build on this across the UK over the next three years. This will ensure local clubs and school teams have the facilities they need to thrive. We have also endorsed in principle the main recommendation of the Fan Led Review of Football Governance that football requires a strong, independent regulator, and have written to Football Authorities to ask what action they will take immediately to protect local identities, traditions and facilities. We will also ensure that great cultural institutions play their part in spreading access to excellence. As we significantly increase cultural spending outside the capital, 100% of the Arts Council England funding uplift announced at SR21 will be directed outside London, with support for theatre, museums and galleries, libraries and dance in towns which have been deprived of investment in the past. We will explore how more flagship national cultural institutions can support the strength of our historic cultural heritage in great cities such as Stoke and Manchester. Further, £560m will be invested in young people for new and improved youth facilities, services and experiences in England where they are needed most, launching a new National Youth Guarantee so that by 2025 every young person in England will have access to regular out of school activities, adventures away from home and opportunities to volunteer. We will ensure the Duke of Edinburgh Award is offered to every state secondary school in England. We will give more students the transformative opportunity to join the cadets, providing more support to the state school sector to increase Combined Cadet Force participation. This will include linking funding of cadet units in private schools with a requirement to ensure support for the expansion of cadet forces in state schools and open access to nearby state school students. Government will also lead by example, relocating more senior civil service roles out of London. We have already established a new economic campus in Darlington, a Home Office hub in Stoke and DLUHC’s second headquarters in Wolverhampton. More civil service roles will move to locations across the UK, including Glasgow, Edinburgh, Cardiff, Belfast, Manchester, Newcastle, Birmingham, Bristol and Leeds, as key decision-makers are re-deployed to be closer to those they serve. The White Paper reinforces our commitment to the Places for Growth programme and confirms departments’ detailed numbers and locations for relocation of roles to 2025 and 2030. Executive Summary xxv Our aim with these reforms is to improve pride in place in every area of the UK, with the gap between top performing and other areas narrowing (Mission Nine). Poor housing quality, overcrowding and a reliance on temporary accommodation for vulnerable families also contribute to unnecessarily poor health and quality of life for many. We will take action on two fronts. First, building more housing in England, including more genuinely affordable social housing. Second, we will launch a new drive on housing quality to make sure homes are fit for the 21st century. We will ensure home ownership is within the reach of many more people. The Help to Buy scheme launched last year is focussing entirely on first time buyers and we will build on the success of the Mortgage Guarantee Scheme by working with the lending industry to maximise the availability of low deposit mortgages. Alongside this, we will improve the home buying and selling process, working with the industry to ensure the critical information buyers need to know is available digitally wherever possible from trusted and authenticated sources. We will also scrap the 80/20 funding rule that focused investment in Greater London, and instead invest in more homes in the North and Midlands to relieve pressure on the South East. To deliver our mission to improve housing conditions, we will introduce new legislation to improve the quality and regulation of social housing, give residents performance information so that they can hold their landlord to account and ensure that when residents make a complaint, landlords take quick and effective action to put things right. And we will publish a landmark White Paper in the spring to consult on introducing a legally binding Decent Homes Standard in the Private Rented Sector for the first time ever, explore a National Landlord Register and bring forward other measures to reset the relationship between landlords and tenants, including through ending section 21 “no fault evictions”. This will all help to ensure that by 2030, renters will have a secure path to ownership with the number of first-time buyers increasing in all areas; and our ambition is for the number of non-decent rented homes to have fallen by 50% with the biggest improvements in the lowest performing areas (Mission Ten). We are intent on tackling the crime, drug abuse and anti-social behaviour which blight so many communities. We are investing £50m from the Safer Streets Fund every year of the SR21 period to give Police and Crime Commissioners and local authorities in England and Wales the resources they need to tackle crime and anti-social behaviour. Through this, by 2030, we will have reduced homicide, serious violence and neighbourhood crime, focused on the worst-affected areas (Mission Eleven). We will also clamp down on the factors that damage people’s pride in their area and expect that people will give back to their communities when they are found to have broken the law. Too many communities are blighted by anti-social behaviour and criminality, sometimes committed by children. We will therefore work with partners across the youth justice system to make sure 16- and 17-year olds who commit crimes pay their community back with visible labour to improve the local environment. We will introduce new legislation to improve the quality and regulation of social housing Levelling Up the United Kingdom White Paper xxvi Empowering local leaders and communities Mayors have already shown how strong local leadership can enhance economic and other opportunities in urban areas, and we will ensure that the model is strengthened, extended and adopted more widely. With a direct mandate, fixed term, convening power, a clear incentive to demonstrate economic improvement and accountability for extending opportunity, mayors work for their communities. And meaningful devolution of power and responsibility for economic growth to an accountable local leader has been proven to help once declining areas to recover. We will extend, deepen and simplify devolution across England so that by 2030, every part of England that wants one will have a devolution deal with powers at or approaching the highest level of devolution with a simplified, long-term funding settlement (Mission Twelve). We want to usher in a devolution revolution, introducing a new model for counties with mayors or “governors”. We will open negotiations on trailblazer deeper devolution deals with the West Midlands and Greater Manchester combined authorities. These deals will act as the blueprint for other mayoral combined authorities (MCAs) to follow, with bids for more powers welcome. We will likewise recast the geography of MCAs, where necessary, to ensure there is greater economic coherence. We will further invite nine areas to agree new County Deals and seek to agree further MCA deals, extending devolution to much more of England. It is also important that devolution is accompanied by sharper and clearer accountability. Across the local government sector, we will strengthen transparency for local people and publish rigorous, comparable data on performance. A new independent body will be set up to drive this, empowering citizens, strengthening local leaders’ knowledge of their services, and increasing central government’s understanding of the sector. And we will support local leaders to make a difference in their communities by simplifying the disparate funding landscape so that local leaders can better support economic growth, as well as bringing local leaders into the heart of government decision-making with a new role for mayors and strong local leaders in the shaping of local growth strategy. Next Steps Levelling up is a long-term endeavour. It is a programme of change that requires a fundamental shift in how central and local government, the private sector and civil society operate. The UK Government will embark on a process of sustained and systematic engagement and consultation with a wide range of stakeholders, including devolved administrations, on the White Paper. We will be setting out further detail on a number of these policy commitments in future publications. In addition, we will introduce legislation to Parliament to underpin in statute the changes fundamental to levelling up, alongside wider planning measures. This White Paper is the catalyst for delivering a long-term programme of change to unlock the potential of people and places in every part of the UK. This will create jobs, drive productivity, improve people’s quality of life and help restore their pride in the places where they live. We will extend, deepen and simplify devolution across England Executive Summary xxvii Levelling Up the United Kingdom White Paper xxviii 1 Chapter 1 The United Kingdom’s Geographical Disparities: Drivers and Potential Policy Approaches To reduce spatial disparities, it is first important to understand what causes them. This chapter draws on historical, theoretical and empirical evidence to explain the drivers of spatial disparities, in the UK and internationally. It then sets out a framework for assessing and understanding these disparities; the benefits of addressing them; and how public policy might most effectively do so. 1.1 A Brief History of Geographical Disparities All natural and social systems undergo slow-moving fluctuations over the course of decades or even centuries. These long waves of expansion and contraction are driven by shifts in the natural environment, technology and behaviour. Economic systems are no exception.2 As economies expand and contract over time, so do the economic fortunes of the places and communities embedded in them. Differences in the economic geography of a nation or locality at any one point in time, and changes in economic geographies over time, are an inevitable feature of dynamic, evolving economies. To some extent, these changes can be desirable as economies adapt to new circumstances and seize new opportunities. For that reason, the Austrian economist Joseph Schumpeter called this dynamic process “creative destruction”.3 The history of economic growth, nationally and subnationally, shines a light both on the opportunities it presents for places expanding but also the challenges for places contracting. It illustrates the natural undulations in economic performance over time and the cumulative growth process in expanding cities and communities. It also illustrates the long-term economic scars left when places contract. At the spatial scale, change is often as destructive as it is creative. 2 Economists call these long cycles Kondratiev waves. Kondratiev, N. D. The Major Economic Cycles (in Russian). The Long Wave Cycle. Richardson & Snyder, 1984. 3 Schumpeter, J., Capitalism, socialism, and democracy. Harper & Brothers. 1942. Note: Throughout this chapter, UK-wide data is used where it is available on a consistent basis. As economies expand and contract over time, so do the economic fortunes of the places and communities embedded in them Levelling Up the United Kingdom White Paper 2 Figure 1.1 Largest Cities in the World since 7,000 BC4 7000 BC 5000 BC 3600 BC 3500 BC 2500 BC 2300 BC 2100 BC 1650 BC 1300 BC 1000 BC 700 BC 3800 BC 6500 BC 4000 BC 3700 BC 3550 BC 3100 BC 2400 BC 2250 BC 1800 BC 1360 BC 1200 BC 900 BC 650 BC Jericho Çatalhöyük Tell Brak Uruk Dobrovody Eridu Maydanets Talianki Abydos Memphis Lagash Mohenjo-daro Girsu Akkad Ur Mari Avaris Thebes Yinxu Chengzhou (Luoyang) Linzi Pi-Ramses Nineveh Haojing (Xi’an) 500 BC 460 BC 200 AD 575 AD 800 AD 1100 AD 1180 AD 1300 AD 1400 AD 1700 AD 1925 AD 200 BC 479 BC 300 BC 100 BC 500 AD 600 AD 935 AD 1160 AD 1210 AD 1350 AD 1500 AD 1850 AD 2000 AD Babylon Pataliputra Ctesiphon Kaifeng Hangzhou Ayutthaya Rajagriha Rome Baghdad Polonnaruwa Jinling New York (urban area) Carthage Constantinople Cordova Merv Beijing Tokyo (urban area) Sravasti Alexandria Daxing (Chang’an) Fez Cairo London Largest Cities in the World since 7,000 BC 4 The Guardian. From Jericho to Tokyo: the world’s largest cities through history. Exploring Urban Data Hub. Chapter 1 Explaining Economic Geographies 3 As social animals, humans have always congregated in groups. These communities were typically found close to natural resources and seaways, for food and trade. The earliest known permanent settlement to be classified as urban was Jericho around 10,000 years ago (Figure 1.1). The city had natural irrigation from the Jordan River, allowing it to produce and export the most expensive essential oil in the ancient world. This enabled Jericho to become a hub not only for commerce and trade, but for people and skills, culture and finance. Constantinople was the capital of the Roman/Byzantine Empire (330-1204 and 1261-1453), the Latin Empire (1204-1261) and the Ottoman Empire (1453-1922).5 Its growth followed a similar model. Built on the Bosphorus Strait, it was easily accessible to other parts of the Roman Empire via the Mediterranean Sea, Black Sea and Danube River. It too became a magnet for commerce, culture and finance. The strategic importance of London’s location was first recognised by the Romans, with the town of Londinium established around AD 47-50.6 Its location on the deepest and second longest river in the UK allowed large military and trading vessels access to the world’s seaways. This quickly established London as a multicultural hub for people, commerce, finance and culture, a position (unusually by historical standards) that it has retained for 2,000 years. Across Europe, the Renaissance period in Italy and the Golden Age in Holland offered examples of similar periods of transformative, city-centric growth.7 In both cases the recipe was a familiar one – the magnetic attraction of people, culture, commerce and finance spreading ideas, innovation and ultimately growth. Indeed, in deference to the role of the Medicis in driving success in 15th century Renaissance Italy, this creative crucible is sometimes referred to as the “Medici effect”.8 This process was replicated throughout pre-Industrial history. By the time of the Industrial Revolution in the late 18th century, similar patterns of growth had been in place for several millennia. Cities emerged and grew rapidly as creative and commercial hubs were formed and built cumulatively, and persisted for centuries. But it was not permanent, and few of the world’s largest cities of the pre-Industrial past are in the world’s top 100 today and a number are now small and poor by global standards. 5 See Turnbull, S. The Walls of Constantinople AD 324-1453. Osprey Publishing. 2004. and World History Encyclopaedia. Constantinople Timeline. 6 Williams, T. The foundation and early development of Roman London: A social context. Antiquity, 64(244), 599-607. 1990. 7 Fouquet, R., Broadberry, S. Seven Centuries of European Economic Growth and Decline. Journal of Economic Perspectives, pp. 227-44. 2015. 8 The Medici effect is innovation that happens when diverse industries, cultures and disciplines intersect, bringing ideas from one field into another. See Johansson, F. The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts, and Cultures. Harvard Business Review Press. 2004. Few of the world’s largest cities of the pre‑Industrial past are in the world’s top 100 today Levelling Up the United Kingdom White Paper 4 After the Industrial Revolution, these spatial forces continued, but widened and deepened due to the world’s first-ever period of sustained economic growth. This was led by industrial cities, which transformed the world’s economic geography. In 1750, more than 50% of the world’s industrial output was produced in China and India, compared to 18% in Western Europe. The following 80 years saw Western Europe’s industrial output more than double and the UK’s rise seven-fold.9 Subnationally, the Industrial Revolution saw the emergence of large industrial cities. These were typically still located close to waterways and natural resources such as coal. But these benefits were now amplified by the needs of industry. The rapid growth in industrial cities followed a similar spatial pattern to the past, with a convergence of business, finance, people and culture. But as economies grew as never before, this process of clustering of assets and people occurred at a greater pace and scale than had ever happened previously. By 1900, all 20 of the US’s largest cities were on major waterways.10 Europe was now home to half the world’s urban population and more than half of its 100 largest cities, including industrial centres such as Hamburg, Munich, Milan, Rotterdam, Turin and Lille.11 In the UK, the industrial powerhouses of Manchester, Birmingham, Glasgow and Liverpool were all among the world’s 20 largest cities, with their populations rising tenfold (Figure 1.2).12 Since the turn of the 20th century, the forces of globalisation and technological progress had once again reshaped the world’s economic geography. Advances in transport, logistics and energy had reduced the cost advantages traditionally offered by industrial cities. And increasing globalisation meant that manufacturing businesses have often found it cheaper to offshore lower skilled, more routine activities such as assembly production lines.13 That has resulted in a seismic shift away from heavy industrial cities in advanced economies. At the end of the 19th century, Detroit was a hotbed of innovation. Its economic power peaked in 1950 when it became the third richest city in the US.14 As car production has shifted towards cheaper competitors, Detroit has been losing residents for 50 years. Its population today is the same as a century ago. A third of its residents now live below the poverty line, even if in more recent times, regeneration efforts are helping the city turn the corner.15 9 Crafts, N. & Venables, A. Globalization in History: A Geographical Perspective. Globalisation in Historical Perspective. University of Chicago Press. 2003. 10 Glaeser, E. Triumph of the city: how our greatest invention makes us richer, smarter, greener, healthier, and happier. Penguin Publishing Group. 2011 11 Satterthwaite, D. The world’s 100 largest cities from 1800 to 2020, and beyond. International Institute for Environment and Development. 2020. 12 GB Historical GIS / University of Portsmouth. Cardiff District through time, Population Statistics, Total Population. A Vision of Britain through Time.; Census of Ireland 1911. The Online Historical Population Reports Accessed: via Histpop in Dec 2021. 13 Swinney, P., Thomas, E. A century of cities: Urban economic change since 1911. Centre for Cities. 2015. 14 Moretti, E. The new geography of jobs. Houghton Mifflin Harcourt. 2012. 15 Moretti, E. The new geography of jobs. Houghton Mifflin Harcourt. 2012. Globalisation and technological progress had once again reshaped the world’s economic geography Chapter 1 Explaining Economic Geographies 5 Figure 1.2 Change in population of selected UK cities 1821-2021 (1821=100)16 0 200 400 600 800 1000 1200 1400 Belfast Edinburgh Leeds Sheffield Manchester Bristol Liverpool Glasgow Birmingham London 1821 183 1 184 1 185 1 1861 187 1 188 1 1891 190 1 191 1 192 1 193 1 194 1 195 1 196 1 197 1 198 1 199 1 20 01 20 11 20 20 Population (1821 = 100)Change in Population of Selected UK Cities, 1821-2020 (1821 = 100) This pattern has been replicated elsewhere. Eight of the ten largest US cities in 1950 have lost at least a sixth of their population. Six of the 16 largest cities in 1950 – Buffalo, Cleveland, Detroit, New Orleans, Pittsburgh and St. Louis – have lost more than half their population. In Europe, cities like Liverpool, Glasgow, Rotterdam, Bremen and Vilnius are all much smaller than a century ago.17 At its peak in 1937, Liverpool had 867,000 residents. Since then, it has lost nearly half its population (Figure 1.2).18 In place of these fallen industrial powerhouses, a new generation of knowledge-intensive super-cities emerged during the late 20th and early 21st centuries.19 This includes London, New York, San Francisco and Tokyo. These super-cities have benefited from a modern-day version of the Medici effect, with a creative and commercial critical mass developing through the clustering of people, business, finance and culture. Digital technologies have made agglomeration effects more powerful than at any time in the past as globalisation has reduced the barriers on cross border trade and investment.20 16 GB Historical GIS / University of Portsmouth. Population Statistics. Taken from UK Census data 1801-2011, Total Population. A Vision of Britain through Time.; ONS. Estimates of the population for the UK, England and Wales, Scotland and Northern Ireland. Mid 2020. Note – data not available on a consistent basis for all years. Changes in the population of selected UK cities might reflect changes to the geography used to report these figures. Census figures for Belfast for 1926 and 1937 have been moved to 1921 and 1941. 17 Glaeser, E. Triumph of the city: how our greatest invention makes us richer, smarter, greener, healthier, and happier. Penguin Publishing Group. 2011 18 Glaeser, E. Triumph of the city: how our greatest invention makes us richer, smarter, greener, healthier, and happier. Penguin Publishing Group. 2011 19 United Nations, Department of Economic and Social Affairs, Population Division. World Urbanization Prospects: The 2018 Revision. United Nations. 2019. 20 OECD. Foreign direct investment and reverse technology spillovers: The effect on total factor productivity. 2015.; Tranos E., Ioannides, Y.M. Ubiquitous digital technologies and spatial structure; an update. PLoS ONE 16(4): e0248982. 2021. Levelling Up the United Kingdom White Paper 6 Productivity Productivity varies substantially across and within regions. Although London and the South East are the only regions above the UK average, they also host some of the UK’s least productive local authorities. Local authorities in Scotland, the Midlands and the North West are also some of the most productive. Figure 1.3 Nominal (smoothed) GVA per hour worked (£), GB local authorities and Northern Ireland, 2019 Chapter 1 Explaining Economic Geographies 7 Table 1.1 Size of the gap: Differences in GVA per hour worked in £ and percent, UK and GB countries and regions/local authorities, 2019 Lowest performing Difference compared to UK average in £ and (%) Highest performing Difference compared to UK average in £ and (%) Regional (ITL1) Northern Ireland £6.41 (-18.24%) London £11.23 (+31.95%) Sub‑regional (district/ unitary local authorities, Great Britain only) Powys £14.90 (-42.39%) Runnymede £27.20 (+77.38%) Figure 1.4 Distribution of GVA per hour worked (£), local authorities by GB countries and regions, 2019 15 20 25 30 35 40 45 50 55 60 65 Ea st Ea st Midla nd s Lo nd on No rth Ea st No rth W es t Sout h E as t Sout h Wes t Wes t M idl an ds York sh ire an d Th e Hum be r Sc ot lan dWale sDistribution of GVA per hour worked (£), local authorities by GB countries and regions, 2019 Source: ONS. Subregional productivity in the UK: February 2020. 2020. Levelling Up the United Kingdom White Paper 8 Earnings Incomes track productivity closely, with average pay in the South East and London significantly above the national average. However, there is significant variation within regions. In the East of England median weekly pay in South Cambridge and St Albans is nearly double that of Norfolk, whilst median pay in Monmouthshire/Sir Fynwy in Wales is higher than half of London’s local authorities. Figure 1.5 Median gross weekly pay (£) for all employee jobs, UK local authorities, 2021 Chapter 1 Explaining Economic Geographies 9 Table 1.2 Size of the gap: Differences in median gross weekly pay in £ and percent, UK countries and regions/local authorities, 2021 Lowest performing Difference compared to UK average in £ and (%) Highest performing Difference compared to UK average in £ and (%) Regional (ITL1) North East -£41 (-8.21%) London £109 (21.59%) Sub‑regional (county/ unitary local authorities) Ards and North Down -£128 (-25.3%) Westminster £267 (52.97%) Figure 1.6 Distribution of median gross weekly pay (£) for all employee jobs, local authorities by GB countries and regions, 2021 300 350 400 450 500 550 600 650 700 750 800 Ea st Ea st Midla nd s Lo nd on No rth Ea st No rth W es t Sout h E ast Sout h Wes t Wes t M idl an ds Yorks hir e a nd Th e Hum be r Sc ot lan dWale s Source: ONS. Earnings and hours worked, place of residence by local authority: ASHE Table 8. 2021 Levelling Up the United Kingdom White Paper 10 Skills The North East is the lowest performing region with seven out of twelve Local Authorities falling in the bottom quartile of the UK distribution. The East Midlands has the largest within region variation, with the population of Rushcliffe having a level 3+ attainment rate of 77.2% compared to 37% for Bolsover. Figure 1.7 Proportion of the population aged 16-64 with level 3 + qualifications by local authority, UK, 2021 Chapter 1 Explaining Economic Geographies 11 Table 1.3 Size of the gap: Differences in Level 3+ qualifications population in percent, UK countries and regions/local authorities, 2021 Lowest performing Difference compared to UK average (%) Highest performing Difference compared to UK average (%) Regional (ITL1) North East (-6.1%) London (+9.8%) Sub‑regional (district/ unitary local authorities, Great Britain only) Bolsover (-24.2%) City of London (+38.8%) Figure 1.8 Distribution of the proportion of the population aged 16-64 with level 3+, local authorities by UK countries and regions, 2021 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Ea st Ea st Midla nds Lo nd on No rth Ea st No rth W es t Sout h E as t Sout h Wes t Wes t M idl an ds York sh ire an d Th e Hum be r Sc ot lan dWale s Distribution of the proportion f the population aged 16-64 with level 3+, local authorities by UK counties and regions, 2021 Source: ONS. Annual Population Survey: All people aged 16-64 with Level 3+ skills, by local authority. NOMIS. 2021. Levelling Up the United Kingdom White Paper 12 Health At the national level, male and female healthy life expectancy between 2017 and 2019 was highest in England (63.2 and 63.5) and lowest in Scotland (61.7, 61.9). At a local level, people in the top decile (least- deprived) areas of the UK can expect to live around a decade longer than people in the bottom decile (most-deprived) areas. Figure 1.9 Healthy life expectancy at birth (Males), UK local authorities, 2017-2019 Chapter 1 Explaining Economic Geographies 13 Table 1.4 Size of the gap: Differences in healthy life expectancy (Male) in years and percent, UK countries and regions/local authorities, 2017–19 Lowest performing Difference compared to UK average in years and (%) Highest performing Difference compared to UK average in years and (%) Regional (ITL1) North East -3.5 years (-5.61%) South East +2.4 years (+3.85%) Sub‑regional (county/ unitary local authorities) Blackpool -9.2 years (-14.59%) Rutland +8.6 years (+13.64%) Figure 1.10 Distribution of healthy life expectancy at birth (Males), local authorities by UK countries and regions, 2017–2019 50 55 60 65 70 75 80 Ea st Ea st Midla nds Lo nd on No rth Ea st No rth W es t So ut h E as t Sout h Wes t Wes t M idl an ds York sh ire an d Th e Hum be r Sc ot lan dWale s North er n I re lan d Distribution of healthy life expctancy t birh (Male), local authorities by UK countries and regions, 2017 - 2019 Source: ONS. Health state life expectancy at birth and at age 65 years by local areas, UK. 2019 Levelling Up the United Kingdom White Paper 14 Figure 1.11 Healthy life expectancy at birth (Females), UK local authorities, 2017-2019 Chapter 1 Explaining Economic Geographies 15 Table 1.5 Size of the gap: Differences in healthy life expectancy (Female) in years and percent, UK countries and regions/local authorities, 2017–19 Lowest performing Difference compared to UK average in years and (% Highest performing Difference compared to UK average in years and (%) Regional (ITL1) North East -4.2 years (6.70%) South East +2.6 years (4.06%) Sub‑regional (county/ unitary local authorities) Blackpool -8.0% years (12.61%) Orkney Islands +11.7 years (18.6%) Figure 1.12 Distribution of healthy life expectancy at birth (Females), local authorities by UK countries and regions, 2017-2019 50 55 60 65 70 75 80 Ea st Ea st Midla nds Lo nd on No rth Ea st No rth W es t Sout h E as t Sout h Wes t Wes t M idl an ds York sh ire an d Th e Hum be r Sc ot lan dWale s North er n I re lan dDistribution of healthy life expctancy at birh (Female), local authorities by UK countries and regions, 217 - 2019 Levelling Up the United Kingdom White Paper 16 1.2 Geographical Disparities across the UK These global economic growth dynamics have been mirrored in the UK over recent decades, with long waves of expansion and contraction. But these dynamics appear to have been both more powerful and persistent in the UK than in some other countries. They also appear to have left deep and long- lasting economic and social scars. The result has been larger spatial differences across the UK than elsewhere, which have persisted and widened over time. This section outlines the nature and evolution of these spatial differences. This section shows that the UK displays large spatial disparities compared to most other OECD countries (1.2.1), with a large gap between London and most other regions – in both absolute and relative terms (1.2.2) – contributing to substantial differences in living standards (1.2.3). These differences are long-lived and mean that the UK is not taking full advantage of the economic potential that all parts of the country have to offer. This in turn holds back aggregate productivity and growth and imposes costs on both poorly and well-performing places alike. These differences are also typically hyper-local and differences within UK regions or cities are often larger than differences between regions on most performance metrics (1.2.4). It is also clear that while the UK has a large number of clusters of innovative economic activity (1.2.8), its second tier cities underperform international counterparts (1.2.6). All of these differences in place performance matter since they have a lasting impact on the life outcomes of the people who grow up there (1.2.7), not just in economic terms but across a wide range of social indicators. 1.2.1 The scale of geographical disparities across the UK Across a broad range of economic and social metrics, geographic differences in the UK are large in absolute terms and have widened over recent decades. Figures 1.3 to 1.12 plot four different areas of performance of the UK at the local authority level: productivity, pay, educational attainment and health. For each of these areas, there is a relatively high degree of geographic similarity, with the most productive places generally having higher earnings, longer life expectancy and higher levels of skills. . As the Commission on Race and Ethnic Disparities emphasised, geography is a key factor affecting equality of opportunity and social mobility.21 The differences between the best and worst performing areas are large. For productivity at the regional level, the gap between the highest (London) and lowest (Northern Ireland) is around 60%. In general, productivity tends to be higher in larger city-regions due to economies of scale and scope. Nonetheless, even this pattern is not entirely uniform. Even in high productivity cities, such as London, there are areas with low productivity. Haringey and Lewisham have productivity levels of 91% and 82% of the UK average respectively.22 In some of the UK’s other large cities, such as Birmingham and Sheffield, productivity also lies below the national average.23 Cities are not always highly productive. 21 The independent report of the Commission on Race and Ethnic Disparities. 2021. 22 ONS. Subregional productivity in the UK: July 2021. 2021. 23 ONS. Subregional productivity in the UK: July 2021. 2021. Across a broad range of economic and social metrics, geographic differences in the UK are large Chapter 1 Explaining Economic Geographies 17 Nor are towns and rural areas always underperforming. Some towns and rural areas are thriving in productivity terms. For example, Darlington has the same level of productivity as central Manchester.24 These differences in productivity are mirrored, broadly, in measures of pay and skills. Pay in the top region for earnings (London at £823 per week) is 1.5 times greater than the lowest region (the North East at £550 per week).25 The difference in the proportion of the adult population with a level 3 qualification or equivalent between these two regions is almost 16 percentage points.26 These differences are larger still at a more local level. Nearly half of adults aged 16-64 have a qualification at level 4 or above in York compared to a quarter in Doncaster.27 Some of the most striking spatial disparities are in health. The difference in healthy life expectancy at birth for females between England and Scotland is only 1.6 years.28 But at a local level, these differences are much larger. Females born in Wokingham can expect to live twelve years longer in good health than those born in Southampton.29 This is mirrored in other health-based metrics, such as the incidence of obesity and smoking.30 Figure 1.13 combines these four performance measures. There are clear typologies of places that have poor socioeconomic outcomes. These include coastal communities previously associated with tourism, parts of the North and Midlands with industrial legacies, and rural parts of Scotland, Wales and Northern Ireland. The UK’s cities tend to perform better in general, but often harbour both some of the best and the worst-performing areas. 24 ONS. Subregional productivity in the UK: July 2021. 2021. 25 ONS. Apr-June 2021 gross weekly earnings data – not seasonally adjusted. Gross weekly earnings of full-time employees by region. 2021. 26 ONS. Annual Population Survey, 2004-2021. Data from: Jan-Dec, 2020. UK Data Service. 2021. 27 ONS. Annual Population Survey, 2004-2021. Data from: Jan-Dec, 2020. UK Data Service. 2021. 28 ONS. Health state life expectancy at birth and at age 65 years by local areas, UK. 2019. 29 ONS. Health state life expectancy at birth and at age 65 years by local areas, UK. 2019. 30 ONS. Health state life expectancy at birth and at age 65 years by local areas, UK. 2019. Even in high productivity cities, such as London, there are areas with low productivity