There are deep-rooted regional inequalities in health and wealth across England. ‘Levelling Up’ is the UK Government’s flagship policy to redress these inequalities through additional investment, with the Community Renewal Fund (CRF) one strand of this funding. In this article, Christine Camacho and Dr Luke Munford examine the allocation of the first round of the CRF across English regions, and whether more economically deprived regions are getting a proportionate share of the pot.

• Based on an economic resilience index, Northern regions received £21 million less than their expected share of the first round of the CRF.
• Nationally, there was no significant correlation between regional economic resilience and funding allocations.
• As such, the current allocation method may widen, rather than reduce, regional disparities – and jeopardise the levelling up agenda.

People living in the North of England have an average life expectancy 2 years lower than the rest of the country, and a £4 per-person-per-hour gap in economic productivity. These inequalities are persistent and have widened during recent decades. Existing geographical divides were exacerbated by austerity, and feelings of being ‘left behind’ are considered to have contributed to a reshaping of the UK’s political landscape, including spurring the Conservative Party to propose a regional development policy of ‘Levelling Up’ as a centrepiece of their successful 2019 election manifesto.

The COVID-19 pandemic laid bare existing inequalities, with the North experiencing 17% higher mortality rate compared to the rest of England. In March 2021, the UK Government announced a £220 million Community Renewal Fund (CRF) to support national recovery following the COVID-19 pandemic. The CRF is a precursor to the £1.5 billion Shared Prosperity Fund (SPF), and forms part of the Government’s ‘Levelling Up’ agenda to address place-based inequalities.

Measuring resilience

To support CRF allocation, the government developed a composite index to measure economic resilience. The index is comprised of five indicators covering productivity, skills, unemployment, population density, and household income. Indicators were selected to identify places with poor economic performance, which would be less able to resist and recover from shocks. The government used this index to identify 100 places whose applications would be prioritised and which would receive capacity funding for bid development. We used the same indicators and methodology to calculate resilience scores for English local authorities. Regional resilience scores were produced by calculating the weighted mean score of the constituent local authorities.

The CRF allocation process involved multiple stages, with the economic resilience index being used at the outset to identify 100 priority places. There are more than 10 steps from the identification of priority places to CRF bid approval, with the final decision made by the Secretary of State for the Department of Levelling up, Housing and Communities. Of the total funding allocation for England, £96.4 million (76.8%) went to lead authorities in which a priority place was identified. Most longlisted projects were from priority places which scored over 50%, but less than the 80% threshold for guaranteed shortlisting (Band C). Band C projects were only progressed to the shortlist if there was sufficient funding within the national budget allocation.

A Ministerial decision was taken to allocate funding between the UK countries to create these national budgets. The rationale for this was not explained, but does not appear to be based on the distribution of priority places (England, 73%; Scotland, 13%; Wales 14%). In Wales, which received 23% of the CRF funding allocation, projects from non-priority areas scoring less than 80% were shortlisted in order to fill their national allocation.

Was it proportionate?

A total of £125.56 million was allocated to England in the first round of the CRF. We used regional economic resilience index (ERI) values to generate a ‘fair share’ funding allocation and compared these to the actual allocation. Regional resilience scores ranged from 28.5 (North East) to 66.6 (London); a higher score means higher resilience. The North East was the least resilient region, yet it received £7.7 million in funding; £13.4 million less than expected based on its resilience score.

At the other end of the scale, the South East – with an ERI of 61.7, the second highest after London – received £12.8 million, £3 million more from the CRF than expected. Overall, our analysis showed no significant correlation between regional ERI and CRF allocations.

The CRF was allocated across 2 rounds and is a precursor to a larger £1.5 billion SPF. If a similar allocation methodology were used for the SPF, Northern regions could be underfunded by £250 million.

Policy recommendations

Composite indicators can be used to support decision making and the allocation of funding, but they are not a perfect metric. Economic resilience is only one part of the story as to why some communities are being left behind. A multidimensional index of community resilience could be used to assess place-based disparities.

A transparent approach for the distribution of levelling up funding based on need is essential if this policy is to have its desired impact. The current methodology for community renewal funding allocation runs the risk of widening existing inequalities rather than ‘levelling up’. Allocation of funding at a regional level, based on an objective measure of need and involving local leaders in decision making, could mitigate this risk.

Previous research from the University has demonstrated the inextricable link between health and wealth. Unequal distribution of ‘levelling up’ funds doesn’t just risk locking in economic disparities, but also health inequalities across the UK – creating a vicious cycle for those in the most deprived communities.