Invest in infrastructure to unleash the potential of UK regions

Steve Wooler
24 August 2016

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Steve Wooler, chief executive of BWB Consulting, looks at the continued importance of investing in UK infrastructure to unleash the economic potential of regions and also the UK.

A few weeks ago I saw headlines suggesting that George Osborne’s pet project, the Northern Powerhouse, was dead. It hadn’t been mentioned in parliament since the Referendum and Westminster journalists – ironically, without talking to anyone in the north – decided that a project which core cities like Manchester, Leeds and Newcastle have invested in was therefore history.

Perhaps they should first have spoken to Theresa May.

Remember that her first speech as prime minister was delivered not in London but in Birmingham, the beacon for a similar initiative known as the Midlands Engine. Just a few days after Westminster sounded the death knell for the Northern Powerhouse, Mrs May made very clear that it, the Midlands Engine and HS2 were very much alive as far as she was concerned.

Against the background of the uncertainty caused by the Brexit vote, this is extremely significant.

As we all know, investors trade in confidence. The political and economic turmoil we’ve experienced since the Brexit decision risks seriously undermining that confidence and creating long-term uncertainty about the future of UK plc. Whilst investors are unlikely to turn their backs on UK opportunities in the short term, if political stability and economic confidence is not quickly restored there is real risk they will look elsewhere.

Inward investment, whether from private companies, sovereign wealth funds or the EU itself in the form of ERDF funding, relies heavily on clarity of vision and political will to create return on investment. Global trading and cross-border investment knows no loyalty and can be mercenary. If the investment market decides the conditions aren’t favourable in the UK then our economy will be in trouble. So we have to come up with some answers – and fast.

In my opinion, the best response to the questions hanging over alternatives to funding streams like ERDF or the appetite for inward investment is an unambiguous commitment by Theresa May’s government to investing in the UK’s creaking infrastructure – and investing more heavily and efficiently than we have to date.

I also do not think it is a simple matter of putting a British badge on what we currently know as the ERDF. It is about recognising that the best-informed investment decisions are those informed by local ‘grass roots’ knowledge and insight. So devolving power to city-regions must continue (and not as a ‘gift’ granted on Whitehall’s terms – deals need to be right for each region and they must involve business)

Neither is it a matter of just letting local councils do Whitehall’s job. The current structure of local government dates back to the 1970s and is clearly no longer fit for purpose. The delayed decision making surrounding Hinkley Point, Heathrow and High Speed Rail is hardly a testament to dynamic decision-making in a rapidly changing and increasingly competitive world.

For me this isn’t just about where the money for infrastructure investment comes from – it’s also about how and where it’s spent. Devolved decisions, informed by regional advisors with local knowledge, should be accompanied by smarter procurement that harnesses regional engineering expertise. We know it’s there – ambitious, UK-wide regeneration projects are BWB’s stock in trade – and we’re obviously not alone in being able to bring local expertise to local projects.

In short, the UK has just got to do better with its infrastructure. Look at HS2. It should have launched an inspiring and visionary debate about the opportunities to open up and inter-connect regional economies by creating a modern, reliable, efficient and fast transport network. Instead, it turned into a myopic, Westminster-centric squabble about a project of national significance costing just three times the investment readily made in Crossrail’s first phase. 

Our European neighbours must, quite frankly, be baffled by this kind of spectacle, because they empower their regions to plan and invest in the social and economic infrastructure needed to stimulate and sustain their future.

The UK regions beyond London and the south east have massive economic potential. Let’s use targeted investment in infrastructure as a means to unleash it.