The levelling up agenda is held back by an “adult skills crisis” and “lack of access to business loans” in Red Wall areas – not infrastructure.

The Government made a promise to level up and bring opportunity to all four corners of the United Kingdom during the 2019 General Election – our analysis will help Government to target their interventions more effectively

A commentary for the Centre for UK Prosperity programme

Published 4 Aug 2021

In 43 areas that switched from Labour to Conservative in the 2019 General Election (so-called “Red Wall” constituencies), around a third more adults have no qualifications when compared with the rest of the country.

In addition, the SME sector around the country is able to borrow at rates of 42% more than SMEs operating in Red Wall areas, and business start-up rates are 17% higher in non-Red Wall areas.

In 43 local authority areas that contain “Red Wall” constituencies, The UK Prosperity Index 2021 found that:

  • the proportion of adults with no qualifications is 10.4% vs 7.8% nationally (a third more);
  • 31% of adults have at least level 4 qualifications compared to 39.9% for the rest of the country;
  • the value of loans provided to SMEs by major banks is £3,205 per person compared to £4,555 per person nationally (42% more);
  • business start-up rates are 46 per 10,000 compared to 54 per 10,000 people nationally (17% more); and
  • there are 13.8% more deaths between the ages of 20-64 and 31% more homicides compared with the national average.

Whilst upgrading infrastructure is often highlighted as the most important factor when it comes to levelling up, the Index shows that the Red Wall areas often do not fall behind in these areas, and in some cases lead the rest of the country.

In 43 local authority areas that contain “Red Wall” constituencies, The UK Prosperity Index 2021 found that:

  • download speeds are slightly faster, on average, than the rest of the country (74.4 Mb/s vs 72.1) and superfast broadband is available in more than 96% of properties, compared to 95% across the UK;
  • just 7% of properties are not connected to the gas network, compared to 14% across the UK;
  • there is almost 10% less urban congestion (57.5 hours/year lost to congestion compared to a UK average of 63.7 hours / year); and
  • only 2.9% of principal roads and 4.3% of non-principal roads need maintenance compared to the UK average of 3.4% and 4.9% respectively.

In a bid to help the Government deliver its “levelling up” promise and ahead of the Government’s White Paper on Levelling Up, our UK Prosperity Index uses 256 indicators to assess prosperity across 379 local authorities, making it the most comprehensive assessment of prosperity across the whole country.

These indicators go beyond the usual measurements of GDP, infrastructure, and transport, in order to assess institutional, economic and social wellbeing across the country.

New analysis from the Index reveals that, on average, Red Wall areas are less prosperous than most other areas, and 35 of the 43 Red Wall areas (81%) find themselves in the bottom half of the UK Prosperity Index rankings.

The Index also shows that the value of venture capital invested by UK venture capital firms is £83.2 per person in the Red Wall, compared to £145.6 per person nationally.  And the number of small businesses that have been successful in accessing equity finance is about half as much as the national average in Red Wall seats (18.1% vs 36.2% nationally).

The UK Prosperity Index also found that if you live in the Red Wall, worse health outcomes mean you are more likely to:

  • have diabetes (8% vs 6.9% nationally);
  • have a disability (24% vs 21.6% nationally);
  • be obese as an adult (66% vs 62.7% nationally);
  • be obese as a child (24.2% vs 22.3% nationally);
  • die from alcohol misuse (13.2 deaths per 100,000 vs 11.9 nationally);
  • die when under 1 year old (4.3 deaths per 1000 live births vs 3.8 nationally);
  • die when between the age of 1-19 (13.7 deaths per 100,000 vs 12.7 nationally);
  • die when between the age of 20-64 (266.2 deaths per 100,000 vs 233.9 nationally);
  • have a lower life expectancy at 65 (18.5 years vs 19.9 nationally);
  • suffer from depression, as recorded on GP practice disease registers (12.8% vs 11.1% nationally).

Violent crime is another rate limiting factor when it comes to building prosperity. In the Red Wall there are more homicides (14.8 per 100,000) compared to the national average (11.3).

Professor Matthew Goodwin, Director of the Legatum Institute’s Centre for UK Prosperity, commented:

“The Government made a promise to level up and bring opportunity to all four corners of the United Kingdom during the 2019 General Election, and our findings will help Government to target their interventions more effectively.

“As the Index tell us, we won’t level up by only building a strong economy or by providing better infrastructure, such as bridges and trains. If we’re serious about levelling up, we’ve got to address the adult skills crisis, ensure SMEs can access the finance they need to flourish, and invest in improving people’s physical and mental health, as well as in the safety and security of local communities.

“By understanding exactly what is holding these areas back, leaders across the country will be able to put forward targeted solutions that can actually make a real difference on the ground – including in the upcoming White Paper – so that all citizens, neighbourhoods and communities across the UK, no matter where they live, can reach their full potential.”

CEO of the Legatum Institute, Baroness Philippa Stroud, said:

“We have launched the UK Prosperity Index at a unique moment in our country’s history. The UK stands at a reset moment, charting a new course towards ‘Global Britain’ and finding a way out of the COVID-19 pandemic as a global leader in the design, development, and distribution of effective vaccines.

“To make the most of this moment, the country will need to unlock prosperity across all of its regions and communities.  To do that, it’s vital we know exactly what is working and what needs further attention as we seek to level up and bring opportunity to the whole country.  The lack of access to business loans and adult qualifications in Red Wall areas are clearly some of the key places to start as the Government puts the finishing touches on its Levelling Up White Paper.

“The decisions the country makes now will have a profound impact on its future development for generations to come. We hope our Index will help national and local leaders in all sectors set their agendas and implement strategies that will unlock real prosperity across the whole of the UK.”