Levelling up: Capital Infrastructure

Reported by Paul Michael Brett, CSaP Policy Intern

What is the importance of ‘levelling up’ in addressing differences in regional productivity? Should capital infrastructure investment be equal across the country? Or target areas with lower productivity?

In the second of the ‘Levelling up’ seminar series organised in conjunction with The Bennett Institute, Dr Rehema Msulwa (Research Associate, Bennett Institute) opened the conversation on the role of infrastructure in relation to levelling up. Policy Fellow Zoë Billingham (Head of Policy, Centre for Progressive Policy) and Stephen Aldridge (Director for Analysis and Data at Ministry of Housing, Communities and Local Government) were first to respond and further the discussion.

The case for addressing spatial inequality.

Dr Msulwa began the conversation by highlighting the existing spatial inequalities in regional productivity within the UK. Dr Msulwa suggested that highly productive places such as the South East of England attract more employment and thus more investment, such that inequalities are entrenched and widened because of differences in capital infrastructure, and that developing infrastructure elsewhere can address spatial inequality. In contrast, it was argued by Stephen Aldridge that variation in economic performance within London was greater than between regions across the UK and that by focussing on infrastructure elsewhere you would miss pockets of deprivation, and that perhaps investment in social infrastructure rather than capital infrastructure was necessary.

Dr Msulwa continued by adding that the UK has under invested in capital infrastructure compared to competitor countries but highlighted the government’s ‘New Deal for Britain’ as potentially addressing those concerns and rebuilding the economy through the short term by job creation and longer term by increasing the productivity of regions through improvements in business operations, although she stated that these long-term benefits are not guaranteed.

Concern of focus on capital infrastructure was expressed in the wider discussion, Zoë Billingham gave an example of the establishment of Nightingale hospitals in response to the covid pandemic, without being able to fill them with workers. “We don't have enough people with the right medical skills, this is an example of our desire to build things without thinking then about the social infrastructure, the skills that then make those really work” she added.

Space blind or place based?

Throughout the seminar, participants questioned whether future policy decisions should be a top down ‘space blind’ approach where investment occurs across the board and allows people to move to more productive places or a ‘place based’ approach where targeted invested enables places to themselves become productive. Place based approaches might be about transforming certain cities, but how do a combination of local policies work together? Here, Dr Msulwa has argued that three things are necessary: long term strategic planning, improvements in appraisal and project selection processes, and finally co-ordination and cooperation, particularly cross-party, to create a stable investment environment.

Zoë Billingham used the example of the governments ‘levelling up fund’ to echo Dr Msulwa’s earlier point about the need for cooperation, asking “these £20 million pots to bid for, it’s about scale, are they going to be able to do much by themselves, or do they need to be joined up?”

“England is alone in the UK in that it does not have a spatial policy framework” added Dr Msulwa, suggesting that this contributes to the lack of joined up thinking. She continued by stating that current project appraisal methods are underpinned by cost benefit analysis, although this tends to have a bias towards the North. “Determining which projects go ahead and which do not will produce winners and losers, and if we are addressing inequality, we need to account for who the winners and losers are” she added.

Throughout the event, discussion participants emphasised that we need a clearer understanding of the intentions and objectives of ‘levelling up’. They questioned whether the intention of the levelling up agenda is to improve the livelihoods of people across the UK so that they can travel to more productive places, or whether is the idea to improve the livelihoods within the places that people already live in. Dr Msulwa concluded that “the answer is found where these two approaches can be reconciled”.

The 2021 CSaP ‘Levelling up’ Seminar Series aims to bring Policy Fellows from different departments together to discuss the challenges of addressing unequal economic performance within regions of the UK. This year's series is hosted in partnership with the Bennett Institute for Public Policy. This series will help to stimulate the policy debate around levelling up by exploring key areas such as the role of infrastructure, the importance of data and measurement, the relationship between trust, social capital and levelling up, and the impact of a transition to a net zero carbon economy on left-behind places. It will also look outside of the UK for examples of how other countries have managed regional inequalities. You can follow the Bennett Institutes blog series here.