CBI @10am: How can the UK accelerate regional investment?

Speakers:

• Matthew Fell, Chief Policy Director, CBI
• Chris Sood-Nicholls, Managing Director, Regional Development Sustainability & ESG Finance, Commercial Banking
• Hayley Holness, Head of New Business, Lendlease
• John Godfrey, Corporate Affairs Director, Legal & General
• Liz Moseley, Editor and Partner, Tortoise Media (Chair)

In this session:

Matthew Fell

• Cost-of-living crisis: key to addressing is to get investment going which will enable growth. Current climate makes challenge of levelling up much higher.
• CBI has been doing a lot about the role economic clusters can play in economic growth. Important to create an authentic narrative about what you're trying to do and your competitive advantage is in the UK and the world to really put yourself on the map.
• Important if you're trying to attract investment and political attention – alongside people and talent.
• This is especially important for those parts of the country who don't have a regional mayor.
• Hosting national events like sporting events or the commonwealth games or being awarded the city of culture – are really valuable to place-making. These events are something people can rally behind.
• When international businesses are looking at where to invest, they are clear eyed and dispassionate about locations but look for 3 key things:

1) Skills - you want a highly skilled population in a place

2) infrastructure (digital / road / rail / airport access)

3) Attractive places for people to live e.g., housing.

• Using this as a Scorecard is a good way of focusing in on how to think about attracting investment to your region.
• Looking at what the government are doing – we’re on the right track to make inroads on levelling up. There's a high-quality diagnostic of regional inequalities and what lies behind them, the strategy in the balance is pretty comprehensive with lots of missions enshrined in law which cover all the right areas.
• Bit that this urgently needing now is a relentless focus on delivery. We need to be seeing live dynamic business plans - milestones/KPIs/who's on the hook for what in government?
• Trick for government is to be highly agile and responsive and to think about regulatory agility and providing more finance if needed.
• CBI are currently running a regional roadshow of Think Ins with Tortoise Media to explore the role of clusters in levelling up. This will lead to us publishing a ‘Playbook’ of best practice. You can register for the next one here: https://www.cbi.org.uk/events/clusters-think-in-98353/

Hayley Holness

• Lendlease as a business investment and management business and globally we manage 20bn.
• We also invest in regions and have a keen interest in levelling up agenda - we think for the UK to tap into full growth potential we can't cluster all in one area.
• Barriers for businesses: underlying infrastructure - if companies see an area they want to invest in because, for example, there’s a highly skilled population, there needs to be underlying infrastructure for them to invest and grow in that area e.g., an office, housing for their staff.
• In addition, the challenge is creating a skilled workforce in that location - biggest driver of where people invest.
• It also helps when there is a supportive cluster of local businesses - no successful business stands on their own.
• What can happen reasonably quickly - government can support new industries.
• Big question if how you achieve genuine levelling-up – not just spreading skilled people around – need to “raise the ceiling but also lift the floor”.
• What’s powerful in an area is where all businesses speak with one voice, but from multiple perspectives and all act as ambassadors for regional investment and regional growth - no one business can make a region work - need collaboration across sectors.

John Godfrey

• L&G are announcing today our first partnership deal with West Midlands combined authority - investing £4bn over 4 years in collaboration with Metro Mayor Andy Street – very exciting.
• At Legal & General - about a decade ago we realised that if the UK was going to be more productive - we had to focus on those areas which had been left behind. Have invested £30bn in cities outside London - Cardiff, Edinburgh, Bristol, Newcastle, and many more since then.
• Overall L&G manages c.£1.4trn and its nice to have a slice of that invested in the UK economy and helping to drive levelling up.
• Barriers to regional access to finance: as a rule it's easier doing in a big city rather than somewhere smaller. What works well is working with university partners and local government. HE can be a great economic anchor.
• Another barrier is the empowerment of local government - you're quite reliant on them - they have to have the vision and ability to implement it.
• Excited by trailblazer devo deal in W Midlands and Greater Manchester.
• When we talk about government as market makers and ‘growth HQ’: not just central government - also need empowered local government. Allow cities and regions to develop their own economic vision.
• Example - Gloucestershire / Herefordshire - ideal way forward for these areas would be an arc specialising in cyber security because of GCHQ already based there. Need to have regional diversity to be able to thrive.
• Levelling up ambitions have been enshrined into law by 2030 - a lot can be achieved by 2030 but this is a job that will never be finished. Law is important because it will be measured and reported on and hold everyone to account.
• How do you work with people around different sectors? Where it's worked well in the past is us talking to universities and small companies in the ecosystem. For example, former AstraZeneca site at Alderley park is now home to Life Sciences in SME sectors.

Chris Sood-Nicholls

• As one of the UK's largest Financial Institutions we recognise that huge effort has been made around levelling up.
• Our goal is to channel capital into towns and cities by lending to SMEs / infrastructure projects to help drive regeneration.
• Can help the UK - join forces with likeminded speakers who together can deliver cataclysmic investment.
• Elephant in the room is the lack of new money in current fiscal climate – it takes years of sustained investment, but this is considerable task and trying to do it with considerable national debt burden and record inflation. It's a marathon not a sprint.
• Big problem is also bureaucracy, money from pots like the shared prosperity fund, etc is there but tricky to navigate which drains time and resources.
• We also recognise there is a community of small businesses who may not have applied for loans - these area barriers which FS need to explore and breakdown.
• One thing the government can do it commit a much greater focus on blended finance to play a role in driving levelling up. This means mixing public funds with commercial funds. Works well for Contracts for Difference models etc.
• To achieve the scale of finance - has to come from blended sources.
• In response to the question of: 'Is there a wall of private sector money just waiting to be unleashed if government gets out the way'? Chris reiterated it has to be a partnership, and Gov can be more assertive in channelling public capital which private can blend into - government shouldn't get out the way but instead they're a critical partner.
• On the 2030 target – Chis highlighted that there will be political change over the next decade - and so it's good that we have targets enshrined in law.