Challenges for Levelling Up
On 4th February the Institute for Fiscal Studies (IFS) hosted an online webinar about the ‘Levelling Up White Paper’ published by the government. This paper highlights twelve missions tackling different aspects of geographical inequality, to be achieved by 2030 across areas such as pay employment, education, and health. During this event, IFS researchers outlined the current pattern of taxes and public spending in the country and exposed a new work focused on geographic inequalities in labour market outcomes, which was part of the flagship Deaton Review of inequalities publication.
To start, we should understand what a “White Paper” is. White papers are policy documents produced by the Government that set out their proposals for future legislation. White Papers are often published as Command Papers and may include a draft version of a Bill that is being planned. According to Paul Johnson, IFS director, “The white paper recognizes the scale of levelling up the challenge. That lack of quick fixes, the long-term perspective and clarity about objectives are all very welcome, as is the recognition that real progress will require a change in governance in Whitehall and beyond”.
Furthermore, the presentation explains the patterns of geographical inequalities in pay and employment. There are many factors mentioned such as education, migration, geographic location, average wages as well as the demand for different skills. For example, the demand for graduates has increased in recent years and these graduates tend to leave their current zones for areas with high wages and amenities. However, higher-paying places have higher living costs, therefore some of them have a high poverty rate. For example, London has the highest poverty rate.
The implications of policy highlighted by the IFS included:
Need to be realistic about the extent to which outcomes can be “levelled up” across places based on the scale of investment needed and agglomeration benefits: Focus on a few places
Need to boost skills in left-behind places, as most of the difference in wages across areas are driven by differences in skills
Need simultaneous action across educational attainment (supply) and graduates moving to where the jobs are (demand)
On the other hand, the impact of taxes and spending varies across England. Revenues per person in London have pulled away from the rest by around 69 percentage points (it has increased 15 percentage points since 1990) while the regional spending gaps have narrowed. Concerning local government spending, it has increasingly targeted the neediest. However, a reform of funding arrangements is vital.