Neighbourhood Renewal Fund is “useful blueprint” to boost employment, study finds

Targeting neighbourhoods classed as areas of relative deprivation in England with funding for community safety, education, healthcare and worklessness has made a significant impact on local employment, a new study has found.

 

An analysis of the Neighbourhood Renewal Fund (NRF), a New Labour initiative in the early 2000s which targeted 88 areas of relative deprivation with funding, has found a statistical increase in employment and self-employment over a six-year period from 2002-2008.

 

The study, published in the Journal of Urban Economics, finds the NRF provided good value for money and provides a “useful blueprint” for future interventions: “Our results suggest that policy interventions to improve local labour supply can be a successful strategy for neighbourhood renewal.”

 

 

The National Strategy for Neighbourhood Renewal, introduced by the Labour Government in 2001, saw the creation of the NRF which spent nearly £3bn on community safety, education, healthcare and worklessness between 2001 and 2008.

 

Interventions included advice, guidance and training for unemployed or marginalised workers and transitional employment schemes.

 

While the independent study did not find an increase in the job count, it found a statistically significant increase in employment and a fall in out-of-work benefits claimants. The number of employed residents in areas targeted with funding increased by 2.5% while the number of self-employed residents increased by over 8%.

 

The researchers conclude that the NRF was a cost-effective place-based strategy to improve the local labour supply as part of neighbourhood renewal.

 

According to the study, “The NRF-funded worklessness interventions (eg. advice, transitional employment schemes and support for self employment) were found to be effective at facilitating access to employment, training and qualifications, while educational interventions (eg raising attainment, reducing exclusions, out of school activities, parental involvement and basic skills) were effective at improving student attainment and gaining jobs for parents.”

 

 

“The coefficients indicate the effect of a £1 per capita increase in NRF spending per locality over the treatment period. The results suggest that £1 per capita of NRF funding is associated with a 0.14% increase in employees, a 0.25% increase in self-employment, and a 0.05% decrease in average weekly earnings, although this result is not statistically significant. As the median annual disbursal was around £16 per capita from the NRF over the treatment period, these results suggest that the NRF led to an increase of around 1750 employees and 400 self-employed persons in the median treated area between 2002 and 2007, which is consistent with the previous results.

 

“The levels of interest shown in self-employment within targeted groups – our largest effect size – were an unexpected benefit of the NRF. Second, the fact that employment increased while wages decreased supports our conjecture that the Neighbourhood Renewal Fund operated through an increase in labour supply, rather than labour demand.”

 

The study adds to mounting evidence on successful results from the NRF: A separate study published in 2019 found that the NRF was also associated with major reductions in violent crime and property crime, with improvements of 10 to 25 percent in neighbourhoods targeted with funding. 

 

Find out more Read the study, The labor market effects of place-based policies Evidence from England’s Neighbourhood Renewal Fund