Levelling up will not address everything
The Levelling Up Fund is by no means a silver bullet solution to a long-standing issue. The complex nature of the challenge, which varies across and within regions, means levelling up should also consider a suite of socio-economic factors. This includes physical and mental health, access to local services, digital connectivity and infrastructure, affordable housing, and deprivation in general.
The requirements to level up differ across the country to such an extent that a ‘one-size-fits-all’ approach might miss areas in need of critical intervention. For example there is a greater need for high value employment opportunities in the north east given the weaker market dynamics there, but in London there is a greater need to focus on accessible housing and community safety.
So while the Levelling Up Fund is a good starting point to tackle the UK’s long-standing regional disparities and address intra-regional disparities, an opportunity to evolve the methodology to incorporate more detailed place-based analysis will be required to truly level up. Local authorities will need to factor their circumstances when considering how to use the money they bid for.
Guarding against a ‘K-shaped’ recovery
Place-based analysis will be even more important following a pandemic that has exposed and exacerbated inequalities, leading to concerns of a K-shaped economic recovery. The concept of a ‘K-shaped’ recovery (Figure 3) has risen in prominence following the sharp recessions that have accompanied the pandemic across the world. It describes a diverging economic recovery across different sectors, industries, groups of people, and ultimately areas across a country.
Areas and communities where the dominant employment industries have been able to adapt and shift to online and remote working are likely to recover quickly. Conversely tourism and hospitality dependent communities are more vulnerable to the economic fallout from the pandemic. They could see output continue to decline as restrictions remain in place, inhibiting recovery but also resulting in long term scarring to their economies.
Some of these communities may already have been deemed to be ‘left behind’ prior to the pandemic, resulting in a two-pronged negative effect. Intra-regional impacts may also exist with cities with home-working office-based sectors adapting quickly also being home to large populations employed in hospitality sectors that have remained closed for the last year.