This past week,
Chancellor of the Exchequer Rishi Sunak released the government’s 2021 budget.
Included in the package was an announcement of a £1 billion Towns Fund and notification
of the 45 communities in
England to receive support for infrastructure improvements. This is part of
the Government’s Levelling Up promise made in the 2019 Conservative Party
manifesto, which would shift money to the left behind, post-industrial
communities of Britain that have suffered job and population losses over the
past four decades.
Soon after the announcement, the Chancellor came under withering assault from the Labour Party, which accused the government of allocating money generously to areas represented by Tory MPs at the expense of communities more deserving of assistance. Labour MP Steve Reed charged “the government of using taxpayers’ money to ‘shore up’ Tory votes with ‘cosmetic’ projects in hand-picked constituencies” in The Guardian. Labour Leader Keir Starmer said it "looks fishy". The Guardian’s own analysis showed that 39 out of 45 areas receiving funds have Tory MPs.
Did Boris Johnson’s government
dole out cash to communities for political purposes rather than sending aid to
communities with the most need? It has long been suggested that distributive
politics—derisively called pork barrel spending—is largely absent from the
British political system. The Guardian
and Labour’s claims, however, suggests otherwise.
The problem with these
allegations is that alternative hypotheses are not examined. What if, for
example, the communities in the most need just happen to be represented by Tory
MPs? To unpack what’s going on requires a multivariate analysis controlling for
both political and social need variables in the dispensation of aid from the
Towns Fund.
To test the claim that
politics—rather than community need—drove the decisions to give certain communities
Levelling Up funds, I collected data on all 533 English constituencies. First,
I simply noted which constituencies were represented by Tory MPs (indicated by
a 1, 0 otherwise). Next, I downloaded information pertaining to community need.
The
English government produces several measures on the deprivation of
communities, including data on health, education, and employment. Parliamentary
constituencies are then ranked from the most deprived (“1”) to the least
deprived (“533”) based upon an aggregation of these several measures of
deprivation. Finally, I pulled together information on the marginality
of each constituency in the 2019 general election, which is simply the
percentage point difference between the first and second place finisher.
Smaller values indicate more electorally competitive constituencies.
The dependent variable
for the analysis is whether the constituency received funds from the Towns Fund
in the budget announced last week—1 if yes, 0 otherwise. I then ran a logistic
regression with the aforementioned independent variables: Tory MP, Deprivation
Rank, and Marginality. The results appear below.
Labour’s claims have merit: constituencies with Tory MPs are significantly more likely to have received funds from the Towns fund as compared to constituencies represented by the opposition parties. And, the more marginal the constituency, the greater the chance of getting money from the fund as denoted by the negative sign on the marginality variable and its significance (p <.049).
However, there is also
evidence that deprivation matters—so the decision to dispense cash is not only about
propping up Conservative party electoral fortunes. The deprivation variable is
negative and significant, meaning that better off communities are less likely
to receive Levelling Up funds. Money is flowing to communities in need, but
poorer communities have an even better shot if they elected a Tory MP in 2019
and did so in a tight election. For those of you interested in how well this
simple model operated, 92 percent of cases were correctly predicted.
Now that we know that
politics and need matter, how much do they affect the process and which factors
are most important? Looking at the marginal effects of the variables, it would
seem that marginality and having a Tory MP dwarf deprivation in the decision to
give communities infrastructure assistance. Having a Tory MP alone increases a
constituency’s chance of getting money from the Towns Fund by twelve percentage
points while shifting from a completely uncompetitive seat to one that was
essentially even electorally accounts for an increase of 14 percentage points
in the chances of getting money from the Fund. Similarly, moving from the least
deprived constituency to the most deprived constituency increases a
constituency’s chances by 21 percentage points. In other words, having a Tory
MP has the single largest effect on whether a community received a Towns Fund
grant.
To illustrate how these
factors work in tandem on the probability of a constituency receiving financial
assistance from the Towns Fund, I’ve created a few scenarios.
Let’s assume, first, a
constituency where the winning party won by only 5 percentage points that is
ranked 100th in deprivation. This constituency is represented by a
Labour MP. The probability that constituency receives a grant is only 7 percent,
which I calculated using Stata’s margins command based upon the logit results
reported above.
If we simply drop a
Conservative MP into that constituency, the probability of getting a grant
increases to 33 percent (with the point estimates outside the confidence
intervals).
If we take the same
scenario above but make the constituency more deprived—moving from 100th
in deprivation to 50th—there is scant change in the probabilities:
10 percent if a Labour MP represents the constituency, and 40 percent if a
Conservative MP does (again, the confidence intervals do not overlap).
Finally, marginality has
important effects as well. Again, looking at a Labour represented constituency
that’s 100th in deprivation where the MP won by 15 percentage
points, the probability of receiving a grant is only 6 percent. With a Tory MP,
that increases to 28 percent. Compare
that to the first set of probabilities. The probability of receiving a grant
hardly moves at all for the Labour represented constituency. It declines for
the Conservative represented constituency by 5 percentage points, however.
Taking all of this
together and the patterns are clear: The Department of Treasury seems to have made
its grant allocation decisions based primarily on political factors and not on the
clear social needs of communities. Tory MPs in marginal constituencies were far
more likely to benefit from the Towns Fund scheme than Labour MPs representing
areas with higher levels of deprivation.
