This is Part 2 of an adapted version of my essay on how to support left-behind areas to catch up that was shortlisted for the 2018 Bennett Prospect Prize. You can read all of last year’s shortlisted pieces here, and find out more about this year’s prize here.
In my last post I attempted to set out a working definition of ‘left-behind’ places in England, and to explore some of their characteristics. The simple answer is that it’s complicated: these are places with different characteristics and historical drivers of their poor economic performance, and with different challenges to overcome today. What works in North Dorset might not work in Hastings, and Waltham Forest might need something different entirely.
What this means is that any policy intended to support all of these places needs to be flexible, and capable of tackling the wide range of combinations of challenges faced by different places. It also needs to work at scale; setting up new universities to revive left-behind places, for example, might have some benefits, but unless you’re willing to establish another seventy or so, it’s not enough.
That doesn’t mean it’s impossible to use policy to support left-behind places, and I can think of two broad ways it could be achieved. One is through an ambitious cross-government programme: the Department of Health, the Department for Education, the Department for Transport, BEIS, and so on all working together to identify and tackle the challenges faced by different places.
This sort of cross-departmental strategy often sounds good. But it risks getting bogged down in the mud of endless strategy meetings, framework development, and so on. And then there’s the challenge of sustained collaboration. Any one of these departments failing to hold up their side of the bargain through (for example) poor communication, a policy focus on other areas, or a Minister’s political power play will leave places — and more importantly people — continuing to languish. Targeted central government initiatives can and should be part of the solution, but they can’t form the backbone.
So where does this leave us?
If top-down initiatives aren’t the answer, we need to look at devolution. This has several advantages: local areas are likely to have a better idea of the problems they face, and even if some local authorities don’t hold up their end of the bargain, the policy can still deliver a large impact in those that do. In contrast, any failure of the top-down approach affects large numbers of places; it’s a more breakable model.
What I propose is a Place Premium. If the name rings a bell to UK readers, it’s supposed to. The Pupil Premium, introduced by the 2010–15 coalition government, recognises that schools with a high proportion of pupils from disadvantaged backgrounds face more barriers in education, and provides these schools with additional resource to complement the additional challenges.
A similar dynamic exists in local areas. Places with a cohort (for pupils, read population) with various challenges will always find it harder to succeed (for GCSEs, read GVA). And while there’s no formal or high-stakes measure of accountability for local authorities in the same way as for schools, the feedback loop of poor performance leading to poorer performance is similar.
The Place Premium should have two clear, central goals: to reduce the number of local authorities that are left behind, and to reduce the gap in GVA per head between the bottom 25% and the rest. As a matter of mathematics there will always be areas of the country in the bottom 25%, but there is no law of mathematics that says the same local authorities need to be in there year after year, nor that the gap needs to keep widening.
I haven’t tackled here the size of the Place Premium. It will, if it’s to be effective, need to be sizable. But as important as the size are some key design features of the Premium, which affect both how usable it is by local authorities, the extent to which it supports genuine long-term improvements, and how its use is accountable nationally.
The first essential feature is that the money is long-term, secure, and not ring-fenced. The problems the Place Premium is intended to solve are ingrained and will take time to address. Short-term, uncertain, or inflexible funding will be useful for some problems, but far from all.
This also means that in the first years at least the focus cannot be on outcomes. That might seem perverse, especially from someone who thinks outcomes are the primary goal of policy. But if outcomes from the Place Premium are judged annually, or even every five years, it will incentivise only activities that can have effect in that time period. Immediate interventions have their place, to take the edges off the problems faced by an area (this could be improved crisis mental health support, or substance abuse treatment, for example). But they need to be complementary to, not instead of, more fundamental changes.
That doesn’t mean that money should be handed over with no expectations. But in the early years of the policy the expectations should not be based on outcomes, but inputs: after a period of (say) five years, local authorities should be required to report two things to MHCLG. The first is how they have used the Place Premium: what they have done with it, what services it has enabled or provided, or what longer-term changes it has set in motion. The second is why they have used it in that way. What analysis was undertaken to identify the types of problems the place faces? And once those problems were identified, what actions has the local authority taken to address them and why those actions?
The second essential feature is that the allocation of the Premium should not just be limited to those places that are left behind on a given date. Places that are not left behind now may become so (Southend and the East Riding of Yorkshire have spent the last six years in the bottom 25% for GVA per head, but the four before that outside of it, so just missed my threshold; several others have periodically been in and out of that bottom 25%). And if the policy is successful places that are currently left behind will no longer be. So it needs to be flexible enough to support places that are becoming left behind, and to not whip the funding away from places that may no longer be left behind but whose gains remain fragile.
This means each year we should re-apply the threshold to see if new places are left behind. And if somewhere is no longer left behind, its Place Premium should be gradually reduced, not just removed (much like the taper rate for Universal Credit). This could be a reduction based on the number of consecutive years no longer left behind, or linked to the degree to which the place is now above the 25th percentile GVA threshold, perhaps on a rolling three-year average to deal with fluctuations.
At one level this risks sounding like “throw money at the problem”. And at one level it is. But crucially that’s not all it is — this isn’t just about increasing budgets. The Place Premium has a rationale, a purpose, an end goal, oversight, and a long-term outlook; these are things all too often lacking when increased funding is touted as an answer. And over time, if the policy is successful, the need for it will reduce: fewer places will be left behind, and so the funding will be withdrawn.
So if we’re serious about supporting left-behind places and the millions of people who live in them, Brexit or no Brexit, we could do worse than consider introducing a Place Premium.