Budget 2020: How can we level-up investment?

The 2020 Budget will be closely watched by construction. Not only is Chancellor Sajid Javid pledging to splash the cash by kicking off his £100bn investment programme, but it is widely expected that the Budget will be accompanied by both the government’s construction strategy and the national infrastructure strategy. Yet is it really possible to combine an industry transformation with a promise to “level-up opportunity in left-behind parts of the country?”

Budget 2020

It is an intriguing puzzle, balancing the desire for early and highly visible deliverables with the need to use investment as carefully and as effectively as possible to increase national productivity, progress towards net-zero and improve quality of life. 

This is a far from straightforward challenge. Investment is needed across the UK – from the prosperous South-east, which struggles with expensive housing and high levels of congestion in towns and cities, to the Midlands and the North, which need better skills and connectivity to attract high-quality jobs. 

Arcadis research on opportunities to invest in Britain has highlighted not only the huge gap in capacity and resources in the UK’s secondary and tertiary cities, but also served as a reminder that the UK’s best performing cities, such as Edinburgh, suffer from the price of success. 

Budget Countdown

There are three key issues that Javid needs to address between now and the Budget: 

  • Achieve a balance between local and regional spending priorities
  • Support future places, as well as those that have been forgotten
  • Treat the £100bn as a down payment rather than the totality of the programme.

Achieving the balance between fast, locally focused spending and long-term regional transformation is an intriguing twist to the rebalancing narrative. Before the general election, it would have been reasonable to assume that the combined authorities would be the main beneficiaries of new borrow-to-invest polices. 

However, support for the Conservative government must be rewarded. While local-scale investment will improve quality of life in towns and cities, there is a risk that the dissipation of spending will mean that big opportunities to improve regional productivity might not get the priority they deserve. 

The early years of the administration provide an opportunity to pump fast money into quick turnaround regeneration projects, but much of the £100bn will need to be ploughed into long-term programmes associated with transport, health and the crumbling education estate. 

Prioritising Places

Choosing to prioritise “to-be” places alongside “forgotten” places could also prove to be fiendishly difficult. With the UK’s population forecast to grow by 4.5% over the next 10 years, the government will need to look to the future as well as the present. Imagine the difficulty of assessing the competitive merits of investment into the Oxford-Cambridge corridor once investment rules are tweaked to take account of benefits at a regional rather than national scale. 

Whatever the outcome of such an assessment, it is evident that there needs to be a big focus on sustainable placemaking, so there is no risk that “to-be” places could become the forgotten places of tomorrow. 

Fundamentals of Place

In research to be published later this month, Arcadis highlights five fundamentals of placemaking: community; funding and delivery; design and public realm; collaboration and sustainability. All of our findings are highly relevant to the planned investment programme, but I pick out three that are particularly pertinent. 

1. Investments will need to put people first – the delegation of spend to regions and towns will be particularly important. 

2. Capacity needs to be built to deliver these places, not just in terms of skills, but also in terms of the way that planning and funding work. 

3. Places need to be built to last, perhaps taking the lessons from the forgotten places to ensure the long-term adaptability and social and economic viability of the new places that we build. 

Without careful consideration, the use of investment to firefight in response to growth could store up problems for the future, even as we solve the immediate problems of the present day. 

The final consideration is scale. On the one hand, does industry have the capacity to deliver a rapid expansion in the investment programme, and on the other, whether £100bn will actually make a noticeable difference. After many years close to the bottom of the OECD investment league, it is going to take more than a five-year investment programme to close the UK’s regional gap. 

Bold Decisions

I hope that the Budget will create a framework for long-term investment in the UK. It should make some bold decisions on long-term schemes such as Northern Powerhouse Rail, while focusing fast money into regional towns and cities to drive momentum. Above all, delivery should be organised as regional programmes exemplified by the planned northern construction corridor, so that delivery benefits from scale too. 

So, where does this leave the promise and practice of levelling up? Despite the Treasury’s plans to tweak the investment rules, government will always have a duty to maximise the benefit and productivity-enhancing potential of its investment. So, while there is a pressing need to get spades in the ground, before we unleash the £100bn, let’s take the time to get the projects, programmes and places right.

A version of this viewpoint was published in Building on 15 January 2020. 

Simon Rawlinson

Partner - Head of Strategic Research and Insight +44 (0)20 7812 2319 Ask me a question
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