As co-chairs of the APPG for ‘left behind’ neighbourhoods we are delighted to have the opportunity to respond to the government’s technical consultation on the design principles underpinning a Community Wealth Fund (CWF). We strongly believe that a CWF should maintain its original hyper-local, neighbourhood focus and ‘least first’ approach to investment, so that it meets the needs of England’s most ‘left behind’ neighbourhoods.
Questions in the Technical Consultation
Breadth versus depth of funding
Should a CWF focus on supporting a smaller number of communities with larger pots of funding or a greater number of communities with smaller pots of funding?
In its response to the consultation on the distribution of dormant assets in England published earlier this year, government was clear about the key objectives and core characteristics of the CWF. It stated that the CWF’s first objective is to improve social infrastructure in “neighbourhoods”, and the first of its seven core characteristics is that it is “targeted at the hyper-local: smaller than Local Authority level…[and] must target communities of less than 10,000 residents.”
We were dismayed therefore to read in the technical consultation document that government has changed its mind on what we had assumed were essential design features of the CWF, with government now intending that the CWF will target in the first instance “communities in small towns of less than 20,000 people.” This is a significant change to what a CWF was designed to do, and not only has serious implications for the breadth and depth of the new Fund, but most importantly risks undermining the CWF from the very start. Changing the focus from ‘neighbourhoods’ to ‘small towns’ and effectively doubling the size of the beneficiary community not only fundamentally alters its nature, and severs the link with what the evidence base tells us works best for area-based regeneration, but will also:
- dilute the CWF’s impact, by spreading funding across a much larger population area, and weakening the link between inputs, activities, outputs, outcomes and impact
- threaten its efficacy by making it harder to build trust and foster and maintain the local relationships and networks that are associated with improved wellbeing, resilience and the stock of local social capital across a neighbourhood, which provides a foundation for economic growth.
A hyper-local or neighbourhood focus should be a key design principle of the CWF, alongside its other intrinsic features, ie a source of long-term funding predicated on resident-led decision making with appropriate capacity building support. The latest research and practical experience of area-based programmes supports this contention. Drawing on the lessons learned and what has worked best in place-based regeneration, the 2019 University of Cambridge in-depth analysis of 40 years of regeneration initiatives found that the “evidence does suggest that a geographic focus of around 10,000 people is helpful.” This has been confirmed by more recent research, such as Onward’s 2021 review of the last 60 years of regeneration policy, which recommended that “regeneration happens at the appropriate geographic level, which for many activities will be the neighbourhood level.”
This finding is also supported by learning from practice. At its May 2023 meeting the APPG looked specifically at the design and implementation of the CWF, exploring the impact of the Big Local programme and what could be achieved at the neighbourhood level through relatively modest pots of funding. Evidence suggests that a meaningful neighbourhood that people can relate to, and where social bonds can best be nurtured and developed, is critical to the success of place-based regeneration. It also underpins the accountability and governance of the CWF, with direct accountability to neighbours and peers providing an effective fraud deterrent rooted in the prospect of reputational risk to transgressors.
Under the Big Local programme, 150 communities each received £1.15 million of long-term funding, which with an average population size of 7,394 residents represented a per capita award of £156 over the 10-15 year period, a sufficient quantum to effect meaningful resident-led change. Adjusting for inflation, this would be an award today of £1.7 million, which from a total pot of £87.5 million over the first four years would benefit just over 50 similar-sized neighbourhoods, reaching under a quarter of ‘left behind’ neighbourhoods. This would be a pragmatic and evidence-based approach to achieving depth and breadth, and is in line with government’s preferred Option B, with “a greater number of communities receive smaller pots of funding.”
We would recommend that government reverts to a hyper-local focus for the CWF, and for the CWF to effect meaningful change and be more than simply another small scale, pilot project, for it to commit to releasing at least two future tranches of similar sized funding for the years 2028-32 and 2032-36.
What do you regard as the optimum amount of funding that a community should be given in total through a CWF (over roughly a 10-year period)?
It is essential that the right amount of funding is targeted at the most appropriate spatial level if the CWF is to achieve its desired results. Evidence heard by the APPG about the Big Local programme shows the significant impact that can be achieved through long-term investment of £1.15 million (£1.7m at today’s prices) at the hyper-local level, a quantum that is sufficient to enable local residents to come together, plan and identify and begin to tackle the local issues that are most important to them and their community.
An award of this size gives communities a seat at the table with local statutory partners, forging new networks and partnerships and helping open doors that would otherwise have remained closed. The example of the Big Local programme demonstrates how it can also help communities to leverage in other sources of external funding, creating something akin to a multiplier effect and bequeathing a sustainable legacy over the long term once the initial allocation has been used.
The wider returns from an investment of this size could be considerable. Modelling presented to the APPG by Frontier Economics has also demonstrated, using robust evidence and conservative assumptions, that investing £1 million over a ten-year period in community- led social infrastructure in a ‘left behind’ neighbourhood could generate approximately £1.2 million of fiscal benefits and £2 million of social and economic benefits, including a £700,000 boost in employment, skills and training opportunities for local residents.
However, this is based on a hyper-local approach to investment, and there is no evidence that suggests what has worked at the hyper-local level will translate to a much larger population size, such as small towns of 20,000 people. It is not at all clear that a CWF targeted at this spatial level will achieve the outcomes and impact that the academic research, learning from Big Local and impact-modelling has indicated could be achievable if invested directly into those neighbourhoods identified as ‘left behind’.
Existing social infrastructure
Should there be a baseline social infrastructure requirement for small towns to be eligible for a CWF?
As co-chairs of the APPG for ‘left behind’ neighbourhoods we have long advocated for a CWF to invest specifically in those disadvantaged areas that also suffer from low levels of social infrastructure, and which as the detailed research and analysis for the APPG has shown experience worse outcomes than other, similarly deprived areas. Whilst we are in agreement with the government’s preferred option that there should not be a social infrastructure baseline requirement for areas to be eligible for the CWF, we believe that it should be focussed on those specific areas experiencing the worse deprivation and that have the lowest levels of social infrastructure in the country: the 225 wards identified by foundational research as ‘left behind’. Depending on the definition used of what is a ‘small town’, between 17 to 37 ’left behind’ wards can be found in small towns with a population of under 20,000, (7.6% and 16.4% of all ‘left behind’ neighbourhoods respectively), indicating that targeting the funds in this way will mean that they are unlikely to reach the places that most need them.
‘Left behind’ neighbourhoods are communities that are often on the periphery, disconnected to adjacent or neighbouring areas that have social infrastructure and the opportunities and connections that this brings. Poor transport connectivity is a compounding problem: 84 per cent of ‘left behind’ neighbourhoods have worse overall connectivity than the English average, and with 40 per cent of households in ‘left behind’ wards without a car compared to 26 per cent across England, the ability to travel to services and opportunities and benefit from social infrastructure is circumscribed.
As we have seen through the APPG’s research, it is at the neighbourhood level that the lack of social infrastructure is most keenly felt, and where the negative impact of its deficit is manifest. For example, it was residents in ‘left behind’ neighbourhoods that were most exposed and hardest hit by COVID, being 7 per cent more likely to die from COVID in the first year of the pandemic than people in other deprived wards, and 46 per cent more likely the English average. Through no fault of their own, the lack of available and functioning local social infrastructure meant that ‘left behind’ areas also saw a lower level of response by local voluntary and community organisations to the needs of local residents: with only 3.5 local self-help mutual aid groups per 100,000 population, half that of similarly deprived areas (7.7) and around a third of the England average (10.6).
This is in sharp contrast to those few ‘left behind’ neighbourhoods that were also home to a resident-led Big Local partnership, and which as the APPG heard in its evidence session looking at the early impact of COVID, were able to meet new and immediate needs within the local community – from helping identify and support vulnerable residents, like Newington Big Local in Kent that worked alongside Fareshare to deliver food and medicines, to Thurnscoe Big Local in South Yorkshire which established a Relief Fund with emergency hardship grants.
This demonstrates the importance of taking a hyper-local approach, not just to measuring the presence, extent and accessibility of social infrastructure in a local community, but also to investing in its provision at the neighbourhood level where it is absent, and where residents as a result are increasingly ‘left behind’. Evidence shows that people living in neighbourhoods which offer better opportunities and services, better environments, and better social infrastructure experience improved outcomes compared to those living in areas where these factors are not present. Such differences are most acute and visible when seen at the granular level, such as that of the neighbourhood or ward, and it is at this spatial level, and directed at those ‘left behind’ neighbourhoods most in need, that the CWF should be targeted.
We urge government to reconsider focussing the CWF in the first instance only at a small towns level, and to take account of the investment and social infrastructure needs of those neighbourhoods that have the least.
Should small towns be allocated funding from a CWF, or should there be a competitive bidding process to determine which small towns receive funding?
APPG research has demonstrated that a competitive bidding process for the CWF would be inappropriate. We are therefore in agreement with government’s preferred option that the Fund should be allocative, but believe that this allocation should be made at the neighbourhood level, and to those wards identified objectively as the most ‘left behind’, rather than allocated to small towns as a whole.
A key reason for this is that the CWF is intended to invest in those areas, such as neighbourhoods identified as ‘left behind’, that have to date not received their fair share of funding. The foundational research that first identified ‘left behind’ wards reported that on average “funding per head for local government services is lower than the average, not just for England but for deprived areas generally.” Research subsequently commissioned by the APPG found that despite their high levels of community need, ‘left behind’ neighbourhoods fall considerably behind not only the national average but also other, similarly deprived areas, when it comes to attracting funding and investment.
For example, in terms of the amount of grant-funding received from key charitable funders between 2004 to 2021, ‘left behind’ neighbourhoods received £7.77 per head — less than half the proportion received by other deprived areas (£19.31) and well below the English average as a whole (£12.23). During the pandemic ‘left behind’ areas received less COVID-specific charitable grant funding compared to other deprived areas, with organisations in ‘left behind’ wards receiving less than half the funding per head in COVID-related grants from UK charitable foundations (£21,182 per 100,000 population) than other deprived areas (£50,054), and approximately one third that of England as a whole (£60,312).
The data suggests that disadvantaged areas with low levels of social infrastructure and social capital lack the community capacity needed to secure sources of external funding – including when compared to other equally disadvantaged areas, but which are better connected, and have stronger local networks, and resources and community organisations needed to plan and organise grant applications. The skills profile of ‘left behind’ neighbourhoods also puts them at a disadvantage in accessing competitive funding compared to other areas, with less local access to the sort of financial, legal, and technical skills and experience needed to prepare and submit bids.
In addition to being at such a structural disadvantage, there are also concerns about the bureaucratic and administrative costs associated with competitive bidding processes per se, and the opportunity costs of unsuccessful applications, which are likely to be higher for areas with lower levels of community capacity to start with. To prevent ‘left behind’ neighbourhoods once again missing out on investment that is so urgently needed, and to fulfil the original remit of the CWF, we believe that funding should be distributed on a non-competitive basis, and allocated according to levels of disadvantage and community need identified and measured objectively at the hyper-local, neighbourhood level.
How beneficiaries are selected
How should beneficiaries be selected to receive funding from a CWF?
We have always argued that alongside a strategic, long-term focus on neighbourhoods, and a bottom-up process that invests power and resources with local people, a ‘least first’ approach is needed to levelling up, with investment targeted first at those areas that have the least, and which need it the most. This is particularly important given both the urgency of the situation facing ‘left behind’ areas, and that community capacity building and neighbourhood regeneration is a long-term proposition. The CWF is a crucial component of the policy change that is needed to help achieve our shared positive vision for transforming ‘left behind’ neighbourhoods, and is a once-in-a- generation opportunity for transformational change, provided it is targeted accordingly, which the government’s current approach will not achieve.
Built into the model of a CWF that we have long advocated for is the prioritisation of beneficiaries using quantitative data. Given that areas with the highest levels of deprivation and community need are often overlooked or masked when the data is aggregated together with other more affluent and better connected neighbourhoods nearby, it makes sense when identifying and prioritising beneficiaries to use datasets that are available with the required level of granularity. The Community Needs Index (CNI) is a particularly suitable way of identifying eligible communities for the CWF, particularly when combined with the Index of Multiple Deprivation (IMD), which together have been used to identify England’s 225 most ‘left behind’ neighbourhoods, which can be found across the country, particularly across the north and midlands, and the south east coast.
The CNI was developed by Oxford Consultants for Social Inclusion (OCSI), a longstanding research partner of the APPG, to provide a quantitative definition of ‘left behind’ areas, identified as being those wards that are ranked in the ten per cent most deprived across both the IMD and the CNI. As an evidence-based measure to map areas with low levels of social infrastructure, the CNI brings together more than 15 indicators at the hyper-local level across three domains: civic assets (community spaces and places), connectedness (digital, physical and social connectivity), and an active and engaged community (participation in civic life and the strength of the civil society sector). Referenced in the Levelling Up White Paper as an objective way of measuring social capital, the CNI is also used by government to identify priority areas based on the strength of civil society and other community factors, such as by the Department for Culture, Media and Sport (DCMS) ‘Know Your Neighbourhood Fund,’ and by local authorities in relation to targeting the UK Shared Prosperity Fund.
Enabling the mapping of the different and diverse needs of communities, from rural and urban, to peri-urban and coastal communities, the CNI provides the flexibility and scope to report at different levels of geography, including at ward and Lower Layer Super Output Area (LSOA) level. When combined with the IMD, it is uniquely well- placed to accurately target the CWF at those hyper-local ‘left behind’ wards that are most in need of long-term investment, but which can often be overlooked when using data at the local authority level.
Through the APPG’s work and our recent inquiry into levelling up we have heard at first hand the complex and multiple challenges local residents of areas identified as ‘left behind’ often face in their daily lives, and the inequalities that limit their opportunities and potential compared to other places:
- ‘left behind’ neighbourhoods have worse outcomes than the English average – and also than other deprived areas – across all key socio-economic indicators
- ‘left behind’ neighbourhoods have lower levels of social capital, trust and civic participation
- ‘left behind’ neighbourhoods have been hit particularly hard by the COVID-19 pandemic and its economic and social consequences
- a combination of high levels of indebtedness, financial insecurity and fuel poverty means ‘left behind’ neighbourhoods are particularly vulnerable to the current cost of living crisis.
With the government’s objective that the CWF “delivers targeted, local investment to those places experiencing high levels of deprivation and/or low social capital”, we believe that ‘left behind’ neighbourhoods as identified through the IMD and CNI should be the logical starting place as beneficiary communities for the CWF.
For the CWF to fulfil its original purpose and potential, and have the greatest chance of achieving the biggest impact in the ‘left behind’ communities that need it most, beneficiaries should be selected objectively and prioritised according to levels of disadvantage and need, as measured using the most robust, appropriate and insightful data at a granular, hyper-local level.