Guidance

Levelling Up Fund Round 2: index update note

Published 23 March 2022

1. Overview

This note sets out the updates and changes made to the Levelling Up Fund Index of Priority Places for the second round of the Levelling Up Fund.

This note covers only those aspects of the Index that have changed since the first round; for a more comprehensive overview of how the Index was originally constructed and its underlying rationale, see original methodology note.

2. What has not changed from the first round

The core function of the Index – measuring places’ need for investment within the scope of the Fund’s investment priorities – remains unchanged for the second round. Once again, the Index considers places’:

• need for economic recovery and growth (considering productivity, skills, and unemployment);
• need for improved transport connectivity (England only, considering journey times to employment centres); and
• need for regeneration (considering commercial (England and Wales only) and dwellings vacancy rates).

For all the above metrics, their relative weightings compared to each other, and the two-step process used to create a single UK-wide index remain unchanged from the first round.

As with the original LUF index, transport connectivity is not considered within the national index for Scotland or Wales because no publicly available data on journey times to employment centres in Scotland or Wales was available at the time of calculation. For the same reason, no commercial vacancy rate metric is included in the regeneration indicator of the Scotland national index. Further detail on these aspects of the Index can be found in the original methodology note.

The data sources for each metric also remain unchanged^{[footnote 1]}. Further detail can be found in the Index itself.

The spatial scale of the index (district councils, unitary authorities, and metropolitan and London boroughs) remains unchanged.

3. What has changed from the first round

3.1 Updated datasets

The original LUF index used, for all metrics, the latest data available at the time. New data has since become available and has been incorporated into the updated version.

The table in Annex A provides further detail on the ‘as at’ dates of the data sources used for the updated Index, in comparison to those used in the original version.

3.2 Switch to two-year averages

The original Index used, for all metrics, the latest year or point-in-time estimates of places’ characteristics, which provided a ‘snapshot’ of their level of need. Since the original Index was developed, more recent data has been published covering the period since the beginning of the COVID-19 pandemic (for every metric other than productivity and journey times).

The sudden and significant economic impacts of COVID-19 may have caused temporary fluctuations in the Index’s underlying data for some places that may not be fully representative of the places’ longer-term levels of need, which is what the Index is intended to measure.

In mitigation, as part of this update, we have moved to using two-year averages for all metrics where the updated datasets cover the post-2019 period. Using two-year averages instead of the latest year or point-in-time data available provides a less volatile picture of places’ level of need while still capturing COVID-19 impacts where they remain meaningful.

For the productivity and transport connectivity metrics, post-2019 data was not available at the time of the update, so these metrics continue to use the latest annual figures.

For the unemployment, skills, and dwelling vacancy rates metrics, two-year means were used.

For the commercial vacancy rates metric, two-year medians were used (where the data existed), due to greater levels of volatility in the underlying data.

Annex A provides more detail on the specific timeframes data was averaged over for each dataset.

3.3 Accounting for local authority restructures

Since the publication of the original index, local government restructuring in Northamptonshire resulted in seven district councils (included in the original index) merging into two larger unitary authorities as follows:

• West Northamptonshire, comprised of the former districts of:
  • Daventry
  • Northampton
  • South Northamptonshire
• North Northamptonshire, comprised of the former districts of:
  • Corby
  • East Northamptonshire
  • Kettering
  • Wellingborough

These new unitary authorities have been assigned index categories for the second round and have replaced their now-abolished constituent districts in the Index.

3.4 Accounting for COVID-19 impacts

As a result of the updates to the Index set out above, places’ scores relative to the first round have changed, and some have moved category. Given the exceptional circumstances of the last two years, no local authority has been allowed to move down to a lower category. This is to make sure that the Index captures local areas impacted by transitory shocks, such as COVID-19, without disadvantaging those areas in longer-term need of the kind of investment the Fund provides who were placed in category 1 for the fund’s first round. As a result, the size of category 1 (previously fixed at one-third of the total number of places in the Index) has increased. This is an exceptional approach taken for this round of the Fund only.

This approach creates a safety net for the second round, whereby places can move up to a higher priority category (3 to 2, or 2 to 1) in the updated index compared to round 1, or remain in their existing one, but will not move down to a lower priority category ^{[footnote 2]}.

Due to this expansion of category 1, as well as the Northamptonshire mergers, the total number of places in each category has changed compared to the first round, as follows:

Number of local authorities in each category

Category	England	Scotland	Wales	Total
1	107	13	19	139
2	103	12	2	117
3	99	7	1	107

3.5 Additional information on the second round Index

See LUF second round documentation.

The updated model incorporating the changes set out in this note and the resultant list of priority places for the second round are available on the index of priority places.

4. Annex A: comparison of original and updated Index datasets

The following table sets out the differences in the Index’s underlying datasets between its original and updated forms, considering:

• the time periods covered by each dataset; and
• whether the data represents a single year snapshot, or an average over two years.

Bolded text in the below table represents aspects of the Index that have changed due to the update.

Indicator 1: Need for economic recovery and growth

Metric	Round 1 Index	Updated Index
Productivity GVA per hour	Single year estimate - 2018	Single year estimate - 2019
Unemployment The unemployment rate for those aged 16+	Single year estimate - October 2019 - Sep 2020	Two-year mean - October 2019 - Sep 2020 and October 2020 - Sep 2021
Skills the percentage of people aged 16-64 without at least an NVQ level qualification, or higher	Single year estimate January 2019 - December 2019	Two-year mean - January 2019 - December 2019 and January 2020 - December 2020

Indicator 2: Need for improved transport connectivity (England only)

Metric	Round 1 Index	Updated Index
Average journey times to the nearest employment centre of at least 5,000 jobs by car, public transport, bicycle	Single year estimate - 2017	Single year estimate - 2019

Indicator 3: Need for regeneration

Metric	Round 1 Index	Updated Index
Dwelling Vacancy Rates	- Single-point in time/year estimate - For England, as at September 2020 - For Scotland, as at September 2020 - For Wales, projections for FY 2021-22	- Two-year mean - For England, as at September 2020 and September 2021 - For Scotland, as at September 2020 and as at September 2021 - For Wales, LA projections for FY 2021-22 and 2022-23
Commercial Vacancy Rates (England and Wales only)	- Single point in time estimate - As of 1 July 2020	- Two-year median, taken between 01/10/2019 and 01/07/2021 (i.e. covering all 8 quarterly data points) - Where quarterly data points were missing for a given local authority, a median was taken of those that were available

1. To construct indicator 2, DfT journey time stats were weighted according to transport modal data split at nation level. As a result of the updates the weightings of average journey times by car, public transport or cycle are now 75.3%, 21.3% and 3.4% respectively. ↩

2. For the new Northamptonshire unitary authorities, this safety net was accounted for by using a population-weighted average of their constituent districts’ round 1 scores to retrospectively ascertain their notional round 1 categories, based on which the safety net was then applied. ↩