Levelling up needs billions more than Government offering, says think tank

Levelling up the UK’s cities will require investment that goes “far beyond anything currently being contemplated” by the Government, a think tank has said.

A report published on Monday by the Resolution Foundation found that differences in income were both “significant” and “persistent”, with only traditionally poorer areas of inner London such as Hackney and Newham significantly improving their position over the last 25 years.

At its most extreme, the report found that income per person in the richest part of the country, Kensington and Chelsea, was 350% higher than income per person in Nottingham, the poorest part.

Even at less extreme levels, the difference remains stark. Per capita income in Oxford, in the top 25% of local authority areas, is still 20% higher than that in Torbay, in the bottom 25% of areas.

These gaps are reinforced by differences in income from investments. In 2019, residents of Camden received an average of £9,135 from investments, while those in Knowsley – one of the most deprived boroughs in the country – received an average of just £806.

Lindsay Judge, research director at the Resolution Foundation, said: “Britain is beset by huge economic gaps between different parts of the country, and has been for many decades. While progress has been made in reducing employment gaps, this been offset by a surge in investment income among better-off families in London and the South East.

“People care about these gaps and want them closed, as does the Government via its ‘levelling up’ strategy. The key to closing these gaps is to boost the productivity of our major cities outside London, which will also lead to stronger growth overall.”

But closing those productivity gaps will be challenging and expensive.

In another report due to be released on Thursday, the Resolution Foundation will argue that current Government policies do not go far enough.

Taking Manchester as an example, where productivity is 30% lower than in London, the think tank said closing that gap would require tens of billions of pounds of investment, more graduates working in the city and an extra 300,000 workers moving to Greater Manchester.

The changing face of the high street
Huyton, in Knowsley, where average income from investments is more than 10 times lower than wealthy Camden (Peter Byrne/PA)

Henry Overman, professor of economic geography at the LSE, said: “Those looking for Britain’s productivity problems can find them in our under-performing major cities.

“Addressing this challenge will require Britain to completely turn around its poor record on investment, to take hard-headed decisions on where this investment should be prioritised, and for cities to embrace growth.”

A Government spokesperson said: “We welcome this report and its findings, which highlight the vital importance and urgency of levelling up all parts of the UK.

“Out Levelling Up and Regeneration Bill will enshrine in law our commitment to closing the gap in pay and productivity across regions.

“By investing in the areas that need it most, improving schools, supporting regeneration and generating higher paid jobs we will improve the lives of the poorest in areas across the UK.”