Is public service spending aligned with the ‘levelling up’ agenda?

The government plans to spend almost £700 billion on public services in the coming financial year. These public services – including healthcare, education, policing, housing, social care and other council-provided services – matter to people’s well-being and life chances. And at the heart of the government’s ‘levelling up’ agenda is a desire to improve well-being and life chances in the UK’s most disadvantaged communities. The funding of public services is therefore of central importance to this objective. However, to date, we have heard little about how the ways funding is allocated between different parts of the country will be adjusted to help ‘level up’ the country.

This observation launches a new project, funded by the Health Foundation, to examine how spending on public services is allocated across different parts of England and how and why this has been changing in recent years. To what extent are the spending needs of different areas taken into account when funding is allocated? And have policy changes been helping or hindering the effort to reduce geographic inequalities?

Initial analysis shows that in two areas – local government and schools – funding for poorer areas fell by much more than funding for richer areas during the 2010s. But the coming year will see councils in poorer areas get a bigger funding increase than councils in richer areas for the first time in over a decade. While a break from the recent past, will it be a one-off or a start of a trend?   

David Phillips, Associate Director at IFS and lead on this new project, said:

“The government’s “Levelling Up” White Paper, published last month, rightly emphasises the role of public services in helping reduce inequalities in health, education, well-being and life chances across the country. But while there is some discussion of channelling more of the budgets for research and culture to areas outside of London and the South East, there is little mention of how spending on public services more broadly can be reoriented to help reduce geographic inequalities. This is a big gap as there is increasingly robust evidence that funding really does matter for health and educational outcomes.

“With this in mind, we’re excited to be starting a new project with the Health Foundation, to examine how funding is allocated between places in England, and the extent to which this is aligned with the government’s stated aims of reducing inequalities and levelling up the country. Our initial analysis already shows how the 2010s saw funding for councils and schools fall by more in more deprived parts of England, although for councils in the coming year there will be a very partial step in the opposite direction. What remains to be seen is whether this will be a one-off or a start of a new trend of funding being reallocated to level up the country.”

You can read the full observation on our website here: https://ifs.org.uk/publications/15997