The Government’s challenge in levelling up
Despite the difficult backdrop, the Chancellor’s 2020 Spending Review underlined the Government’s commitment to geographic rebalancing. Most strikingly, he confirmed the previously proposed increase in capital infrastructure investment and announced a £4 billion Levelling Up Fund for England to improve the “infrastructure of everyday life.”
Although the pandemic has caused ministers to delay their detailed policy delivery plans, the launch of the National Infrastructure Strategy (NIS) provided insights into the Government’s thinking. On levelling up, transport and digital infrastructure investment and support for City Regions were clearly identified as key policy tools.
The focus on City Regions maintains the approach to rebalancing pursued for the past decade. However, with the gap between towns and cities widening, city-led growth alone will be insufficient to level up England’s economy. While boosting cities may help towns in parts of the country, a more segmented approach based around local differences is required.
COVID-19 has changed attitudes and behaviours and there’s no going back
We also need to take account of the future shape of the economy and society. Alongside the human and economic costs, the forced lockdown showed there are choices as to how we organise and balance work, education and home life. Many of the resulting shifts were positive for geographic levelling up, creating opportunities to rebalance towards a transformed economy.
For policy, these changes may outlast lockdown – and our surveys of business leaders and individuals suggest the appetite for change is widespread. EY’s Future Consumer Index found that people expect to modify their lifestyles in future, with 41% expecting to socialise differently and more than fifth to change how they work.
These changes offer the opportunity to adjust the balance between cities and towns. Increased homeworking could reduce congestion and improve circulation around larger cities without extensive investment in transport infrastructure. Even greater benefits could flow from creating ‘virtual’ jobs in places that have struggled to attract employers.
Alongside individuals, businesses also recognise the need to adapt to the emerging environment. In October 2020 we surveyed over 200 foreign investors in the UK and Europe, and 61% cited the “changing economic model of city centres” as a theme shaping their future investment decisions.