Investing in the UK's nations and regions
Last week, the day before the UK Nations and Regions Summit, I put out an article summarising the report that myself, Mike Spicer and Professor Pete Tyler authored on how to fix government funding for local economic development and growth. Worth a read .
Following up this week, there is nothing big and insightful to report from the actual Nations and Regions Summit - apart from that, sensible words of future collaboration and joint working were said:
At the UK Investment summit on Monday (14th October 2024), Keir Starmer vowed to rip up bureaucracy to unleash ‘shock and awe’ of investment
Keir Starmer Monday called on global investors to unleash the “shock and awe of investment” yesteday, as he vowed to “rip up” Britain’s bureaucracy and tell regulators to prioritise growth.
the UK Prime Minister insisted that the UK was open for business after the political “circus” that followed Brexit and declared that “You have to grow your business, I have to grow my country.”
Taking a pro-growth, pro-business investment approach to government is good news. As we commented in our report , the the past 14 years of UK government have been characterised by:
There is certainly an imperative to increase private investment in the UK. If we look at the chart below (from Coyle, D and Alayande, A (2023) Investment in the UK: Longer term trends , Bennett Institute for Public Policy: University of Cambridge, from OECD data) - levels of private sector investment in the UK have been one of the worse in the G7 for 30 years.
Chart: Private sector investment as a share of GDP (current prices)
There is also likely to be a lack of investable propositions outside of London and the Greater South East. A recent report by the Productivity Institute provided a capital analysis of real estate investment returns - and showed that all areas outside of London in the UK have “junk bond” status.
At the end of the one-day summit, the government will most likely unveil commitments from the private sector to invest more than £50bn into the economy — across artificial intelligence, life sciences and infrastructure. The pledges expected to be made include £24bn of green investment unveiled last week, which included some projects that had already been announced. The sum also includes a £20bn investment from Australia’s Macquarie group that will include an electric car-charging network and offshore wind projects.
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As mentioned last week - government funding mechanisms for local and regional economic development growth need to be designed to encourage, attract and incentivise private sector investment, and that this has been absent from the past decade of UK government funding structure's and grants for this.
The challenge is delivery
As Google Chief Executive, Eric Schmidt warned in a panel at the Investment Summit - the challenge facing Starmer was to move officials from nodding and listening to businesses to implementing the changes needed.?
My own view is that private sector leaders must be fed up with hearing the promises of change from the previous UK government, but with little action. As I have mentioned before - White Papers and strategies with no resources committed and no implementation or delivery plan behind them are just nice words, no matter how well considered.
But I do think the UK government is sincere in its ambitions and knows this, so we can expect to see some progress very soon.
However - what concerns me is that there is a focus on the projects big capital projects without investing in the 'system' for local and regional economic development and growth. Good, investable projects that attract the private sector will only come about if we resource and fund the system for economic development - that involves the machinery of government, staff expertise and organisational capability needed. We outlined this in our system diagram below:
UK Industrial Policy
I'll discuss this in more depth in another article, but I am glad to see a Green Paper out so quickly. Rather than conduct endless reviews, a Green Paper is a big statement of intent.
I'm a firm believer in setting good objectives and identifying resources and priorities for delivery, then the detail will follow. Particularly if it's a new policy area. It's folly to try to forensically detail every bit of policy and delivery and as we've seen, 3 years later the policies get buried as they are going nowhere.
About the author
Glenn Athey is a leading economic development and regeneration professional and senior executive with a 30-year track record of successful leadership, delivery, networks, and practical knowledge acquired working in senior roles in government agencies, partnership organisations and UK think tanks. Glenn helps local leaders translate their economic ambitions into winning advocacy and solutions that get funded. Get in touch via LinkedIn messaging or call 07799880137. Full contact details here .