The Week, 22 July 2022

22 July 2022
By India Woodward

As the final two go head-to-head for Number 10, the Government’s key levelling up agenda appears to have gone M.I.A. This has not gone unnoticed, with a plethora of reports and articles out this week rehashing the importance of levelling up. Prospective PM’s take note. After all, the 2019 Conservative Manifesto, to which the next PM must remain committed, had levelling up front and centre.

These reports seem mostly to serve as helpful reminders to the Conservative Party that levelling up is more important than ever with the UK experiencing a skilled workers shortage, rising inflation, and a stubborn productivity gap. Demos’ paper is perhaps the most novel this week, arguing that policy should focus on empowering the ‘Stayers’ rather than trying to cling on to the ‘Goers’ – or in other words, stop wasting your time trying to convince those destined to leave to stay, when instead you could deliver for proud locals and encourage bespoke growth. This runs counter to conventional solutions that seek to deliver Michael Gove’s “stay local and go far” vision.

We at Reform think it’s a valuable take, but if a big part of levelling up is delivering economic growth, and ‘Goers’ are more likely to be highly educated and highly skilled residents, surely this brain drain does matter. Just focusing on ‘Stayers’ seems unlikely to create the labour markets needed to drive local growth.

In fact, Rishi Sunak and Liz Truss may want to pay most attention this week to items not dubbed ‘levelling up’, but which address issues that most definitely would help deliver the Government’s flagship aim.

First up, delivering effective and sustainable public services. The House of Lords Public Services Committee released a report this week highlighting the lethal combination of an ageing population and a public sector workforce unable to keep pace with the inevitable increases in demand. They see the challenge as both one of demand reduction and of public sector workforce recruitment and retention.

“Solutions will need to look at how demand can be kept at manageable levels by intervening earlier; and rethinking who (or what) delivers services, and when. At present, little action is being taken towards the transformative changes that are needed: rethinking staff deployment; making the most of the highly skilled people within the workforce; and ensuring that they want to enter—and stay in—public service work.”

As usual, short-termism is the enemy. The Committee urges the new PM to consider flexible, effective training schemes and the strategic use of data and technology to better deploy the workforce we have. A pay rise for some public sector workers announced this week is a welcome step for retention… though it remains unclear how tax cuts are compatible with the investment needed to sustain our services.

Second up is a paper from our friends over at the SMF, focused on the extortionate cost of childcare. The UK is one of the most expensive countries in the world for childcare, with lower-income households being particularly affected as the cost eats up a higher proportion of their household income. According to the SMF, a third of workless mothers with young children cite childcare costs as the chief reason they are not in employment. In addition, women forced to exit the workforce due to the unaffordability of childcare incur a ‘motherhood penalty’ on future earnings. If work is the route out of poverty, and, in particular progression in work, then this seems a fundamental problem to solve.

And finally, the House of Commons published a report on the regulation of social housing, highlighting that poor standards cause and aggravate physical and mental health problems. As vulnerable groups are more likely to reside in social housing, it is all the more vital that their homes don’t exacerbate any difficulties they face. The report also raises concerns that the suggested extension of the Right to Buy scheme would further drain the already limited stock of social housing.

If all that isn’t enough reading, here’s a couple more recommended reads…

Firstly, this FT article looks at the reasons why the UK labour force is so much smaller than it was in 2019 — and why, crucially, we’re the only OECD country that has seen an increase in economic inactivity post-pandemic. The article rightly points out that one of the main reasons for this (which distinguishes us from other OECD countries) is the number of people who cannot work due to long-term illness. Helping this group back into work has, even before the pandemic, been a key ambition of successive governments. What’s less clear is the article’s suggestion that because there are 309,000 additional Britons belonging to this group since the pandemic, and 332,000 people waiting more than a year for hospital treatment, the rate of economic inactivity in the UK is caused by people’s inability to access elective care (and “difficulties in accessing primary care”).

For one, the most common reason for claiming incapacity-related benefits is poor mental health (although a musculoskeletal condition is the second biggest reason). Second, there are likely many thousands of people waiting for elective care — e.g. for orthopaedic or dermatological procedures — who nonetheless continue to work. Finally, of course, only those aged 16-64 and out-of-work can be considered economically inactive: yet a huge number of people on NHS waiting lists are over 65. Perhaps a good example of where correlation is not necessarily causation.

Speaking of mental health, this fascinating piece in The Conversation challenges a widely held theory in medical science — that depression is caused by a “chemical imbalance” of serotonin in the brain. A new review suggests that this accepted wisdom may be false. That has major implications for the use of antidepressant medications, most of which act on the serotonin system. The number of antidepressant prescriptions in England doubled between 2008 and 2018 and one in six 18-65 year olds now use antidepressants. If the pharmacological basis on which antidepressants rest is questionable, we’ll have to have a major rethink of how we deal with mental ill health.