Supporting our communities: Time to move from false competition to needs-based investment

The winners of the new Community Renewal Fund, the precursor to the post-Brexit Shared Prosperity Fund, were recently announced. What does this tell us about the Government’s approach to investing in our communities and the desire for ‘levelling up’ across the UK, and what can we learn from past iterations of area-based funding?

“If you wait around long enough, the old ideas come around again presented as new ones, largely because the current civil servants weren’t around when this was tried last time,” I remember my former Director of Public Health lamenting, “after a while you recognise that everything goes in cycles.” I used to look at him and his colleagues, working for what were then Primary Care Trusts, and feel relatively lucky that, by contrast with the health sector, Local Government was only sporadically restructured (little did I know that before long I would be working on Norfolk’s Local Government Review process).

Years later I realised that what I thought at the time was the inevitable cynicism of a late-career GP and public servant, was in all probability a frustration that the continuous cycle of history repeating itself is counter-productive, demotivating and a misuse of resources. The constant tinkering with structures and funding always distracts more than it improves – and not simply because it shifts the focus of everyone in the affected organisations from the public and patients to small-p politics and a personal jostling for position.

It also offers the illusion of control and progress; a practical set of steps that can be taken, but which rarely serve to improve anything except the career prospects of those who happen to be in the right place at the right time. An additional bonus is that in implementing a restructure, a politician or organisational leader gains a Get Out Of Jail card for free, one to save up and use judiciously when the hoped-for and anticipated service improvements, budget savings and efficiency gains fail to materialise: “clearly, the fault is not in the idea nor the design, but in the implementation. Staff will need to learn how to better manage change.”

There is another, equally paternalistic approach to change beloved by politicians and Whitehall civil servants: the area-based initiative. This in many ways feels anachronistic, given how area-based funding has been a casualty of the ongoing austerity regime. It’s re-emergence is less an attempt to improve local quality of life than it is to gain political kudos for ‘making things happen’ across the UK. As though scattering a few millions here and there to our chronically cash-starved towns and places is really going to make a difference to the entrenched challenges we face.

There has been a conscious funding triple-whammy which has significantly contributed to the need to Level Up. First, funding has been significantly yet disproportionately cut from many local communities. Between 2010 and 2020 local authorities saw their funding from central government more than halved. This was the decade in which youth services, early years, community health, lifelong learning, library services, parks, and more disappeared from the treasured fabric of our communities. Between 2010 and 2020 the proportion of income spent on social care alone rose form 41% to over 60%. The JRF highlighted in 2015 that the most deprived local authorities have seen cuts of £220 per head, compared to £40 per head in the least deprived. This is both chicken and egg; people who are living under volatile and disadvantaged circumstances have seen their lives made worse by the loss of vital services which might have offered a lifeline; the loss of those services in turn pulls more people into vulnerable situations, compounding their situation and deepening need. This was a perfect storm, even before Covid-19 cruelly exposed these structural fault-lines.

Next, the mechanisms to redistribute resources to areas of greatest social need have been removed. This has been compounded by the move to council tax as the main form of revenue. In the 2000s Local Government had 85% of its spend determined by central government. In 2018 local authorities were drawing 60% of their funding locally from Council Tax, meaning that local conditions determined how much funding each local authority could raise. Areas with most deprivation – and therefore most need – are also the least able to raise funds from Council Tax compared to more prosperous areas. For example in Wokingham 67% of funding was raised by Council Tax and in and in Knowsley just 24%.

Finally, funding has been linked to local economic growth. By tying council funding directly to the economic growth of an area, place-based inequality has been further exacerbated. Business rates retention, the new homes bonus, social care precept and others all favour prosperous, low deprivation areas with low service demand and strong economic growth. Areas with the most acute socio-economic conditions, where disadvantage is concentrated, where services are most needed and where the Brexit vote was the highest have been the hardest hit.

These structural shifts represent a desperate lack of coherence in the way government funds local places leading to a bifurcation into winners and losers. While this might be congruent with the prevailing economic paradigm of free-market competition and individualism it represents an unhelpful expansion of that ideology into a domain unsuited for its application, one where cooperation and collective effort are more helpful in securing the sustainable development of places across the UK. Do we not expect that the places in which we are born and raised are supported not through arbitrary Government-sanctioned competition for scarce resource but through our collective investment?

As a result we have consciously and deliberately abandoned a swathe of communities, leaving them with a reduced resilience and a heightened vulnerability to social and ecological shocks – as painfully illustrated by Covid-19. The agenda of ‘levelling up’ in this respect seems to represent less an opportunity and more a necessity. Whilst there is some tentative, emerging rhetoric around linking funding to need, the immediate signs are not promising. The levelling up agenda has reintroduced a slew of new area-based initiatives. Most contentiously the £3.6bn Towns fund which, NAO and other analysis shows, has targeted marginal Conservative seats over those with higher levels of deprivation, prioritising Richmond over Barnsley and Hackney. The UK Community Renewal fund in turn had no London Boroughs in the top 100 priority areas.

The £5m Partnerships for People and Place project has been established with the ambition of taking “a place-based approach to improving poor social and economic outcomes by empowering areas to develop locally-led solutions”. It intends to “explore how central and local government can collaborate in "more joined-up" ways, with the aim of influencing future policy”. Total Place was the 2010 attempt to do the same, building as it did on the 2006 Local Area Agreements which sought to offer a contract of sorts between central and local government to address the issues local people prioritised. This was in turn a development from pilots looking at total public sector place-based spend.

The recent publication of the ‘winners’ of  the Community Renewal Fund, the pilot for the UK shared prosperity fund that is to replace EU funding from 2022, continues this trend. The fund is designed to support investment in “skills, community and place, local business, and supporting people into employment”. Whatever the rhetoric, these places now have until next July to spend their funding, projects which range in scale from £2.5m in Peterborough and Cambridge to £13.6k in Blackpool. In total, 225 projects received funding which averaged a little over half a million. Incredibly, 775 projects were unsuccessful. It isn’t a leap of accounting to image the total cost of applying for, awarding, delivering, monitoring and reporting runs higher than the total funding pot of £125.6m.

As my former Department of Public Health warned me, all too often it appears as though policymakers have failed to build on the legacy of past initiatives and ideas. How can we ensure we learn the lessons of the past? For history teaches us some things we can be sure of.

The cost of administering area-based funding programmes will almost always outweigh the actual funding secured, even before opportunity cost is accounted for. A recent editorial in Local Government Chronicle laments “the waste of time and resources such contests and small funding pots leads to.”

That is before the realisation that the cards are stacked in favour of some places over others in what is “widely regarded as a centrally driven beauty contest.” These ideologically driven competitions pit places against places in a zero-sum game - hardly the stuff of needs -based analysis, fair investment and effective governance.

Finally, with little end in sight to the underfunding of local public services, especially in the light of Covid-19, local authorities will be left with no option but to pitch for tiny funding pots in order to supplement their core resources and to try and offer something extra to their citizens. In this respect, the infantilisation of local government, forced to scrap over meagre resources, reminds me of Oliver, left with little choice but to ask for more…

None of which is particularly helpful if we are to stand a real chance of improving local quality of life and community resilience. The worst-case scenario is that area-based funding is simply a short-term sticking plaster over the wounds arising from deep structural and systemic fault-lines. The best-case scenario is that the root causes of these wounds are acknowledged, understood and addressed in the long-term.

Social and economic outcomes arise in our individual lives and communities, in the estates, schools, businesses and high streets that form the places we live. We can only improve them by - among other things - “empowering areas to develop locally-led solutions” and taking a “place-based approach”, as the Partnerships for People and Place fund intends. The current debate, as is so often the case, is less about ends and more about the means of getting there. This policy idea or that initiative, this funding stream or that mandate. All too often we focus on these how’s rather than the why. But if we are to truly address the factors that generate place-based inequality and leave some communities more vulnerable than others to the kinds of shock precipitated by Covid-19, we need to shift our focus.

Let’s instead reflect on the crucial question of the values and beliefs that have created the very systems and structures that we need to change. What might a new set of values mean for the relationships between national and local, people and state, community and the individual, and place with place? What are the systems and structures that will support such a new set of relationships? As the last few weeks of climate activism and debate have brought into focus, this is the task of our time across so many interrelated domains.

These are questions that the RSA is exploring through its place-based work in areas such as regenerative futures, learning, work and health as well as in our wider approach to social change. We’d love to hear your examples of where different values and beliefs are illustrating what better might look like.