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At the start of 2021 we announced our Rebuilding Britain Index (RBI), a quarterly, community-led index, in partnership with Cicero, that tracks social and economic progress across the UK. The first RBI report has now been published, and it couldn’t come at a more interesting time. The UK economy shrank by 20 per cent in 2020 as a result of the COVID-19 pandemic – the biggest annual fall in over 300 years1 – which means, to avoid a K-shaped recovery (where different regions recover at different rates), investment needs to be carefully thought out and delivered.
One of the key findings of the report is that jobs and homes are the things that are most likely to boost people’s quality of life, yet investments in these areas have fallen significantly in recent years. Another finding is that, confirming our fears, the UK is falling into a K-shaped recovery.
The report reveals that households in the North East of England, Wales and Northern Ireland require investment in jobs to level up the regions’ economic prospects. Wales, the North East of England and Northern Ireland have the lowest index scores for ‘Jobs & Economic Prosperity’, achieving 51, 53 and 54 out of 100 respectively. As part of its COVID-19 recovery plan, the Government has set out its list of funding priorities across the UK. The plan includes a new Levelling Up Fund worth £4 billion for England, and local areas can bid directly for projects. However, when compared to the Government’s investment in housing, which includes £7.1 billion for a National Housing Fund, £12.2 billion for the Affordable Housing Programme and £100 million for non-Mayoral Combined Authorities to support housing delivery,2 we remain concerned that the UK-wide regeneration required to support the provision and creation of jobs is lacking.
Despite the Government’s above-mentioned investment in housing across the UK, quality, affordable housing remains a particular problem in London and the South of England. Data from the RBI reveals that housing – affordable housing especially – is the critical type of infrastructure requiring investment, with the capital receiving the lowest Housing score, at 51 out of 100. The London Mayor has already stated that the city needs an additional 66,000 homes a year to meet demand for both current and future Londoners – and two-thirds of these need to be affordable – an area we have much experience of investing in.3
The results of the RBI have shown that any measures put in place to support a UK-wide recovery cannot be uniform, as the data makes it clear that different communities, regions and nations require levelling up in different ways. Unfortunately, the RBI also shows that regardless of region, lower-income communities are most at risk of being economically left behind as we emerge from the pandemic. In other words, avoiding a K-shaped recovery is looking less and less likely.
As the idea of a K-shaped recovery becomes a reality, and inequality widens across the UK, developing local investment strategies to meet local priorities has never been more important.
“Our new Rebuilding Britain Index shows that investment priorities differ by area,” says Legal & General CEO Nigel Wilson. “As the idea of a K-shaped recovery becomes a reality, and inequality widens across the UK, developing local investment strategies to meet local priorities has never been more important. Towns and cities should be in the driving seat of their own recovery.”
It’s up to businesses like Legal & General to support this bottom-up recovery, which is why we have already invested over £29 billion, in partnership with the public and private sector, to deliver tangible regeneration in cities including Newcastle, Bournemouth and Oxford. (Watch our video on rebuilding cities for more information.) Our investments are helping to deliver more affordable housing, create jobs and support regional growth – which is exactly what’s needed to steer away from a K-shaped recovery.