Levelling Up News: 13 November
This is the fifth newsletter from the Levelling Up Taskforce. If it’s been forwarded on to you, you can subscribe using the link below. If you don’t want to get this, just click the link at the bottom to unsubscribe.
NEWS OF THE WEEK
On Thursday, Onward hosted a virtual panel on Building connectivity: How best to harness digital infrastructure to level up the country? with Matt Warman MP, Jo Gideon MP, Alan Mak MP and Vodafone UK’s Nick Jeffery.
The Minister, Matt Warman, said that levelling up digital infrastructure “is as much about business and job creation spread more fairly across the country as it is about traditional consumer connectivity.”
With the £5 billion investment in gigabit-capable broadband, the government has “a chance to demonstrate that we are putting our money where our mouth is,” the Minister added.
Jo Gideon said: “Digital infrastructure sits at the core of our levelling up agenda. It’s about empowering our communities with the right tools and opportunities that they need to harness the possibilities that the technology affords them.”
On Wednesday 11th, Imran Ahmad Khan MP cited Onward’s research on the growing divide between London and the rest of the country, at a Westminster Hall debate on levelling up (here).
The Bank of England’s Andy Haldane warns that the COVID-19 pandemic will amplify inter-regional inequality and says that levelling up is “an absolute necessity.” (Helia Ebrahimi, Channel 4)
The Government has established the Office for Investment to boost R&D and foreign direct investment, and fund new infrastructure projects. Last year, around 40,000 jobs were created as a result of FDI projects. (gov.uk)
VIEW OF THE WEEK
Gareth Davies MP
This week the Chancellor announced that the U.K. will be issuing its first ever Green Gilts. As well as being a great policy for the country and an essential pillar of levelling up, this marks the end of a three-year campaign for me personally, both from within the finance industry and then in Parliament since my election in December 2019.
A conventional “gilt” or bond is simply a loan made to the government. Green bonds are different in that they ring-fence funding specifically for green projects. Issuing green bonds will help us to not only fight climate change, but also to raise the private capital needed to invest in infrastructure, jobs and our economy necessary to deliver levelling up. It might also lower the cost of our debt.
We have seen from previous sovereign green bonds in the Netherlands, France, Poland, Ireland, Sweden, Belgium and Germany, that U.K. investors have a strong appetite for green debt with much of the demand coming from U.K. savers and investors. Today there are over $1 trillion green bonds in circulation and high demand has meant that they have lower interest rates than their conventional counterparts.
Our country has already led the way on climate change as the first major country to legislate for net zero by 2050. Green Gilts will help finance that transition while at the same time contribute to our ‘levelling up’ agenda and put a renewed focus on economic growth. But the Government could do one better.
As I've written for Onward in the past, the UK is unusual among developed economies in not having a national development bank. These institutions use government guarantees to leverage private capital for riskier projects, like regional infrastructure or SME lending, where the market refuses to invest alone. A British Development Bank could be a key weapon in our levelling up arsenal, boosting the money available for investing in our regions, just as KfW has reduced the gap between East and West Germany since reunification.
As we lead up to COP 26 and emerge from the pandemic, the U.K. is yet again showing that we are prepared to innovate and act to bring about a cleaner, greener and more balanced economy, for future generations to come. I warmly welcome the Chancellor’s announcement and hope that in the coming months we can go further to drive the Levelling Up agenda
MAP OF THE WEEK
This week’s map shows the proportion of premises unable to receive decent broadband (10 Mbps download speed or 1 Mbps upload speed).
STATS OF THE WEEK
A new Swedish study finds that earnings payoffs for studying engineering, natural science, and business at secondary school are generally positive, while the returns to social science and humanities are mostly negative. At age 16, Swedish students rank subjects by order of preference and are sorted into oversubscribed courses according to their grades.
Returns to engineering range between 0.7% and 7%, depending on the student’s second-best choice. This means that, for students who want to study engineering at school, those who get a place on the course will have higher earnings than those who just miss out.
For humanities, when the next-best option was a vocational course, students incur an earnings loss of 11%.
The earnings penalties for completing a social science or humanities course are generally larger for men compared to women.
Returns depend on next-best choices. There is a 9.3% return to Business relative to a second-best choice of Natural Science, but only a 0.4% return to Business for those who ranked Humanities as their second choice.
ABOUT US
The Taskforce is made up of more than 60 (and growing!) Conservative MPs from constituencies right across the country.
Thanks for reading. If you have found this newsletter interesting, please do send it on to a friend.