Levelling Up News: 2 October
This is the second newsletter from the Levelling Up Taskforce. If it’s been forwarded on to you, you can subscribe using the link at the bottom. If you don’t want to get this, just click the link at the bottom to unsubscribe.
RESEARCH UPDATE
A new Onward report for the Levelling Up Taskforce argues that HM Treasury should create a British Development Bank to level up the post-Brexit economy.
Britain’s lagging regions suffer a wide financing gap for SMEs and infrastructure, with London receiving a quarter of loans to Small and Medium-Sized Enterprises (SMEs) and three times the per-capita transport funding of other regions.
The paper calls for the establishment of a British Development Bank to “level up” access to capital financing across the UK and bring economic opportunity to left behind places, raising £4 of private capital for every £1 in public funding.
Gareth Davies MP, who authored the report, said: “The UK is unusual among developed countries in not having a national development bank to catalyse private sector activity where the market will not invest alone. If we are serious about levelling up, we need a British Development Bank.”
The report finds that, despite London’s deep and mature financial markets, the UK suffers competitive weaknesses linked to investment in businesses and infrastructure, including:
A large SME financing gap, equivalent to £22 billion in foregone funding for growth and jobs. Between 2015 and the end of 2018, gross flows of bank lending to SMEs fell as a share of total lending to private sector non-financial services firms from 28% to 21%. Meanwhile, bank lending to large businesses rose from 70% to 80%.
These problems are much worse in Britain’s lagging regions: since 2007, infrastructure spending per capita in London has been over triple the rate in the East Midlands and Yorkshire and the Humber. According to Bank of England data, 25% of all SME loans are lent in London versus just 2.8% in the North East and 3.5% in Wales.
NEWS OF THE WEEK
UK National Hydrogen Transport Centre to be established in Teeside. The new facility will create hundreds of clean energy jobs and be a hub of R&D for new hydrogen technologies. (Insider media)
First £80 million of Towns Fund grants allocated to boost regeneration. The accelerated funding will be used to support projects that will make a difference to the area, such as new green spaces, the creation of pop-up businesses spaces, pedestrianising streets to encourage walking or cycling and creating of new community hubs to support those living alone. (Gov.uk)
Footfall is rising faster in smaller towns. The Centre for Cities’ high street recovery tracker shows that smaller places are seeing a faster return to pre-pandemic levels of activity, while big cities continue to see lower levels of footfall. (Centre for Cities)
Free further education for adults of all ages. The Department for Education announced new measures to promote lifelong learning for those without a university degree, including scrapping the age limit for access to a free level 3 vocational or academic qualification. (Gov.uk)
VIEW OF THE WEEK
Selaine Saxby MP
North Devon is best known for its beautiful beaches, stunning countryside and dramatic moors. Our economy, however, is not quite as buoyant as our beachside inflatables.
We are sparsely populated. Like similar places, we have high employment, but wages are too low. Earnings are a sixth lower than the national average. Productivity has been falling further behind the national average over the last twenty years. Three problems we need to fix.
First, as a former teacher, I believe education is key to levelling up. Young people I worked with sometimes had far too low a level of ambition. Our distance from major conurbations makes the benefits of a great job less visible. Employers often struggle to find the right staff, with a mismatch between the skills of those seeking work and those recruiting. Well paid, skilled jobs frequently go unfilled, with employers having to train their own staff. But that is not easy either. Our nearest university is over 50 miles away, making it nigh on impossible for local employers to offer degree level apprenticeships. We need to close that gap.
Infrastructure too is seen as vital to levelling up. It is less about roads and railways here, but superfast broadband, would make a huge difference. We are five years behind most of the UK in the rollout of broadband: partly because we are rural, partly due to poor management of the roll-out. The pandemic highlights how vital broadband is. We need to pick up the pace.
The hardest problem of all to resolve is securing inward investment for town centres and businesses in coastal areas. Our small, market and coastal towns are unable to effectively bid for the funding and investment they so desperately need. We need to find a new way to target small communities which have high deprivation: places like Ilfracombe, in the bottom 5% most deprived areas in England, but with no viable economic development plan, and no means of securing external investment. Building on the Towns Fund initiative to incorporate smaller places would really help. And ideally these funds would be allocated, rather than bid on, as our small, over-stretched councils are ill-placed to compete.
Coastal communities like mine are fantastic places to live, work, and go on holiday. With better access to skills and tech they have great potential to attract entrepreneurs who want a great lifestyle. There is so much potential – it is time to unlock it.
MAP OF THE WEEK
Estimated housing costs as a proportion of household income*
*see the ONS statistical bulletin for more information on the data and methodology
STATS OF THE WEEK
A new policy briefing from the Royal Society details what successful research and innovation clusters can tell us about how to invest in R&D. It discusses several case studies, including:
San Diego communications cluster, which emerged out of government defence spending and procurement. San Diego’s innovation economy now employs 11% of the total workforce and average wages in this sector are $110,700, twice as high as the rest of San Diego.
Sheffield advanced manufacturing cluster, trained over 1,000 apprentices since 2013. Employment in manufacturing in Sheffield rose from 79,000 in 2016 to 92,000 in 2018.
Taiwan’s technology cluster in Hsinchu, focusing on semiconducter technologies. Today, turnover of all firms in the Hsinchu Science Park stands at US$35 billion, equal to 6% of GDP.
ABOUT US
The Taskforce is made up of more than 60 (and growing!) Conservative MPs from constituencies right across the country.
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