The cycle of underinvestment and deprivation must stop
Last week, the new Prime Minister, Boris Johnson gave his first speech from the rose garden of No.10. Cash giveaways are of course a feature of any new administration, with the usual suspects, the Police and NHS receiving additional funds. However, later on in his speech, Mr Johnson spoke of the country’s ‘left behind towns’ and redressing imbalances in infrastructure, productivity and business support in regions outside of London. Notable too is his decision for his first appearance as Prime Minister to be held in Manchester, and the announcement of a much needed trans-Pennine high speed link between Leeds and Manchester. The devolved administrations also look set to receive a cash injection from the new Johnson administration, with £300 million for boosting growth and economic development. Could this new regional focus provide the shot in the arm that the UK’s regions and nations need to grow and thrive? Will this Government herald in a new Britain of productive and heaving metropolises?
Over the last few weeks, ICAEW has been consulting with its members across the UK’s regions and nations to inform its response to the Treasury Select Committee’s Inquiry into regional imbalances in the UK economy. It is fair to say that whilst the shift towards regional economic development through the Local Enterprise Partnerships has been a step in the right direction, the members we spoke to felt that there was a long way to go to bring regional economies in line with that of London.
The consultation participants we spoke with highlighted lack of infrastructure, less than vibrant business ecosystems and most crushingly, a dearth of opportunities for young workers as key factors preventing economic development and improved social outcomes in areas outside London. They also noted lower per head spending on things like transport and education as obstacles to attracting inward investment, with large businesses being deterred by a lack of road and rail connections and a skilled local workforce.
In short, what we saw in our consultation was a true chicken and egg scenario. Treasury Green Book rules which state that the national interest is of importance when evaluating local transport infrastructure projects, are actually starving the regions outside of London of capital because they require there to be existing demand for spending in a region. This lack of infrastructure, however, means that businesses are simply not investing in these areas because of poor transport connectivity.
Even worse is the effect that this lack of investment and confidence in the regions is having on their current and future workforces, with young, ambitious people leaving for the bright lights of the big cities, or simply resolving not to go for that high-lying career at all to stay in their home region. ICAEW is clear that this cycle of underinvestment and deprivation must stop and that Government should prioritise the creation of thriving and varied business environments to spread success and opportunity across the country.
Whilst the impact of the new Government’s regional funding giveaway remains to be seen, it is obvious that there is an urgent need to act on regional imbalances. ICAEW knows that its network of Chartered Accountants have an important role to play in creating a prosperous and strong UK economy. We will continue to work with local business policymakers and Government centrally to ensure that our members are able to feed in their considerable expertise to help businesses and opportunity grow in the regions, and please do get in touch with me (Rosalia.firstname.lastname@example.org) to ask about the opportunities to contribute in your area.