Breaking the cycle of deprivation: What the spending review could do

Local Trust’s head of external affairs, Madeleine Jennings, outlines our submission to the government spending review – including a proposed new intervention that could provide the missing link to regeneration in the country’s doubly disadvantaged neighbourhoods.

The government’s multi-year spending review – the outcome of which is due in June – will set out day–to–day spending for the next three years, as well as setting capital budgets for the next five years.  

It is the first spending review of the Labour government and, whilst the budget in autumn 2024 brought in some major changes, it’s the one that will really prove whether or not the government is serious about doing things differently, committing to mission-led government and ending the ‘sticking-plaster’ approach to politics.  

The latter point is crucial. Based on our experience of delivering the Big Local programme, Local Trust has consistently argued for long-term, non-prescriptive funding to develop the capacity of a given community, especially where capacity – which is heavily dependent on social infrastructure – is low.  

Investment in capacity is the antithesis of sticking-plaster politics.

Targeting funding at doubly disadvantaged neighbourhoods 

Aside from ensuring business as usual can proceed, the chancellor will be prioritising spending that helps the government succeed in its five missions: growing the economy, an NHS fit for the future, safer streets, opportunity for all, and making Britain a clean energy superpower. 

As well as looking to make cuts to spending that does not contribute to growth, Rachel Reeves has stated that she will look to prioritise spending that supports the delivery of the key mission-linked milestones:  

• Raising living standards in every part of the United Kingdom 

• Building 1.5m homes in England and fast-tracking planning decisions on at least 150 major economic infrastructure projects  

• Ending hospital backlogs to meet the NHS standard of ninety-two per cent of patients in England waiting no longer than 18 weeks for elective treatment 

• A named police officer for every neighbourhood, and 13,000 additional officers, PCSOs and special constables in neighbourhood roles in England and Wales 

• Seventy-five per cent of five-year-olds in England ready to learn when they start school 
• Ninety-five per cent clean power by 2030, while accelerating the UK to net zero

Through our policy papers, Making the government’s missions work in neighbourhoods, Local Trust has already demonstrated that to achieve its missions, Labour has to make them work for England’s doubly disadvantaged neighbourhoods (DDNs).  

This is in recognition that outcomes for people living in areas that lack crucial social infrastructure are worse across all measures, including economic deprivation, poor housing, poor access to healthcare, higher crime, lower educational attainment and unmanageable energy bills. 

As a founding member and secretariat to the Community Wealth Fund Alliance, Local Trust has, alongside other members, made the case for targeting funding at these DDNs. Now, the proposals we have developed with Frontier Economics, drawing on our evidence base, go even further. 

What does Local Trust want the chancellor to consider?  

Written in partnership with Frontier Economics, our submission to the spending review seeks to:  

1. Show how capacity building in doubly disadvantaged neighbourhoods can be funded  
2. Marshal the evidence for why social infrastructure is a worthwhile investment for a government that has little to spend  
3. Exemplify how well-designed, neighbourhood-based programmes can break the cycle of deprivation and low economic growth in doubly disadvantaged neighbourhoods and support economic growth across the country
4. Bring all of this together in support for a proposed new intervention, the All Neighbourhoods Thriving (ANT) fund   

It has also been important to interrogate why previous regeneration initiatives have fallen short of their ambitions to reduce inequality or ‘level-up’. In our view the key reasons for this are:  

• They didn’t deliver funding to the most deprived areas 

• They were short-termist and fragmented 

• They failed to recognise neighbourhood priorities and needs 

• They tried to move straight to economic growth without building the foundations first 

The ANT fund is the missing link in the regeneration pipeline for England’s most disadvantaged areas. It draws on national and international evidence of best practice to support the delivery of each of the missions, including growth and in particular improving living standards in every part of the United Kingdom.

Indeed, the evidence shows that on average, every £1 invested in social infrastructure generates £3.20 in benefits, including improved employment and health outcomes and fiscal benefits (through reduced spending on employment benefits, crime, and healthcare).

What next for social infrastructure?

Alongside the result of the spending review, the government will also publish its ten–year infrastructure strategy.  

A working paper circulated in January seemed to define social infrastructure very narrowly as major capital projects that serve a specific social purpose, namely prisons, schools and hospitals.  

Although it is undoubtedly necessary to invest in these, it would be a missed opportunity to not include neighbourhood-level social infrastructure, such as community centres, green spaces and other shared assets, that our research shows support healthier, happier, safer, more productive communities – the very aims enshrined in the missions.  

There is no doubt that this spending review is being conducted under intense pressure on the chancellor to stick to her fiscal rules as well as meet the ambitions of her party’s manifesto.  

Investing what little there is to spare in social infrastructure is to invest in fixing the foundations of the country and to prioritise support to those areas that need it most and have historically received the least.