Take London out of the wealth equation, and the UK is poorer than Mississippi on a per capita basis. Why is the UK so economically imbalanced, and what can be done about it? At Arup we believe that rather than continuing to compete with the capital, regions must attract inward investment based on local vision, ambitious placemaking and strong private sector collaboration with local institutions. Kickstarting a regional growth agenda should be a top political priority across the UK. All political actors stand to gain by embracing it.
Beyond the next general election, we all want to see good quality jobs, productivity growth, increased prosperity and opportunity across all parts of the UK. It’s a vital undertaking; and likely to be an expensive one. Given the current economic climate – and the tight fiscal context locally and nationally – where is the investment going to come from to deliver such growth?
If levelling up is to be delivered, we must find new mechanisms and strategies to get the public and private sector working in lockstep in each of our regions. Policymakers must find new ways to stimulate private sector investment, not only for building new homes but also in new schools, hospitals, transport networks and the transition to net zero. With Local Enterprise Partnerships winding down, the timing could not be better for re-engaging local and national businesses in meaningful conversation about what the next ten years of regional economic policy should look like.
There is no shortage of capital to invest, but there is a hesitancy stemming from uncertainty about the future. Businesses need to be confident that there will be a return on their investment before they will commit to investing in a particular area. Understanding and sharing the risk of investments against a backdrop of complexity or lack of coordination between different levels of government adds to the challenge, even if there are opportunities for them to do so. Some quarters of public opinion may be cautious about the benefit of deeper collaboration with business. And finally, why, some business leaders might wonder, should they get involved?
Partnership between the public and private sectors, along with workable local governance, delivers the certainty required for local private sector investment to flourish, and thus the regional economic growth that will genuinely help the UK level up. The Biden administration in the US has passed a suite of policies designed to facilitate and encourage private sector investment in infrastructure, semiconductors and clean energy, contributing to announcements of over $500bn in investment since he took office. So what UK policies, and policy frameworks, could increase private sector appetite to invest in social infrastructure fit to meet modern demands and how can this be done in a way that avoids replicating past mistakes?
In our experience at Arup, effective private sector investment in social infrastructure projects necessitates a decentralised, place-based approach – one that appeals to investors based on commercial outcomes as well economic ones. Although it’s vital to recognise that each place is unique, we have identified common themes that contribute to making partnerships a success at city or regional level.
Possibly the single most important factor is for the place – town, city or region – to have a clear plan. A strong common vision – backed by an evidence-based theory of change, with buy-in from all relevant stakeholders (not just public and private sectors, but often also academia as well as the third sector), from which flows a shared, clear strategy – sends clear and consistent messages to the market, and provides a clarity of focus over time.
Identifying and quantifying the project’s potential impacts should be a focus – economic, environmental and social – as well as risks, along with the various stakeholders’ objectives and where they may conflict. And, where possible, successful schemes should be designed to harness the economic opportunities and benefits they deliver, to generate funding, either immediately or over time, which will support the initial infrastructure investment.
Arup has worked with many cities and regions which are leveraging not only private sector investment, but also the leadership and commitment of business leaders to deliver a wider, place-based public good. In the Humber, for example, we recently helped shape the proposals for Opportunity Humber, a private sector-led group to champion the area and realise its growth potential. The Humber and its surrounding regions are a stellar example of how private firms and investors are already helping national and local government realise regional potential for economic growth and regeneration.
How can we as a country encourage and facilitate more of these kinds of engagement with investors, but on a much larger scale, and at pace? Here are some steps national government could take that would quickly enable regions to attract inward investment.
• Quickly and practically move to a model of full fiscal devolution, starting with combined authorities where there is institutional capacity to deliver this.
• Create locally run, well-resourced regional investment boards, led by private sector and public sector leaders, tasked with creating investable propositions based on the strengths of a locality. Link this to a clearly defined industrial strategy that is not afraid to support sectors and regional clusters.
• Ensure that funding programmes for infrastructure development are closely linked to national planning policy statements. The UK government should implement a time target for the planning and approval of major infrastructure projects. This would create a more efficient and predictable planning process, accelerating the development of crucial infrastructure and enhancing the UK’s competitiveness.
We look forward to discussing all of this and more at the Labour Party conference in Liverpool this October. The goal of fulfilling jobs, meaningful prosperity and increased productivity for every part of the country can only be achieved with the resources and expertise of every sector. Developing a roadmap for spurring regional economic growth is essential for the UK to achieve its full potential.