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Mind the gap: bridging the growing North South divide
Boris Johnson has wasted no time in setting to work on his election pledge to increase investment in the North of England and Midlands, in a bid to boost economic growth and prosperity within some key first-time Tory constituencies. As widely reported by the press over the Christmas break, it is understood that HM Treasury could make wholesale changes to the way in which public investment is allocated to key economic growth interventions across the country, with value for money and economic appraisal assessments (as guided by the Treasury’s ‘Green Book’ guidance for nearly half a century) recast to focus explicitly on boosting economic wellbeing in the North and Midlands. This could affect future national government investment decisions in a range of transport, infrastructure and business growth projects, shifting the focus away from national economic growth outcomes (and overall scale of economic benefit) towards reducing inequality and the ‘productivity gap’ between northern and southern England. Further detail is expected in the Spring Budget – but on the face of it, these proposals could have a significant impact upon the spatial distribution of government resources and funding available to stimulate and encourage economic growth. The economic (and political) rationale is clear. The UK’s ‘economic divide’ – the disparity between the least and most productive parts of the country – is growing according to the latest regional output data released by ONS in December. The data shows that the gap in productivity (measured in terms of economic output or GDP per person) between the UK’s richest region (London) and the poorest (North East) widened last year, and that London’s share of, or contribution to, the national economy has increased at the expense of other regions (see Figure 1). Figure 1: Share of UK GDP at current prices Source: Financial Times Online, based on data from ONS The statistics underline the scale of the productivity challenge facing the new Conservative government, which prompted publication of the UK Industrial Strategy just over two years ago. This calls for all parts of the country to boost their economic contribution to UK plc, by drawing on their distinctive economic strengths, competitive advantages and growth opportunities (as summarised in a previous Lichfields blog). UK regional inequality is amongst the worst in the developed world and is a problem that successive governments have been grappling with for many years. Stark disparities in economic performance across the country, as shown in the map below, have become a familiar trend. Figure 2: Workforce productivity by local authority in England (2018) Source: Experian 2019 / Lichfields analysis Rightly then, the issue has been attracting increasing political attention over recent months and years, reinforced by the work of independent initiatives such as the UK2027 Commission, which calls for a long-term plan to tackle regional inequality and a national renewal fund along the lines of Germany’s East-West reunification strategy. Commission Chair Lord Kerslake’s keynote address at the recent Institute of Economic Development Conference referred to the UK being at a ‘turning point’. The Commission’s First Report published last year described previous government action to tackle inequalities across the UK as underpowered ‘pea shooter’ and ‘sticking plaster’ policies – too little and too short-lived. The report argues that if we are really to shift the dial on spatial inequalities, what we require for the future will need to be, “structural, generational, interlocking and at scale”. This begs the question: can the deliberate targeting of public investment away from London and the wider South East in itself help to bring about or instigate the structural shift needed? The proposals will no doubt be welcomed by many, but arguably need to be accompanied by a more holistic policy framework that is clear about how each part of the UK can play a complementary role in driving forward productivity improvements and genuinely inclusive growth. Indeed, the latest ONS output statistics identify some concerning trends within parts of the country that have traditionally performed well, such as the South East region which recorded zero per capita growth last year (Figure 3). The South West also recorded sluggish levels of growth, while the West Midlands (an area that could benefit from this ‘rebalancing’ investment) outstripped London in terms of per capita growth. There are also significant disparities within regions that can be obscured through use of broad regional measures, for example the presence of deprived coastal communities in the South East. As ever, there are clearly some spatial nuances at play. Figure 3: Annual % change in output by region (2018) Source: Financial Times Online, based on data from ONS We can expect a lot more coverage and comment on this topic between now and the Spring Budget, where the devil may well be in the detail.

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High Streets / Town Centres Funding Shortlists: Seizing the opportunity
The 2018 Budget saw the then Chancellor of the Exchequer, Philip Hammond, introduce Our Plan for the High Street, part of a wider package of Government measures designed to help struggling high streets and town centres. In previous blogs we have covered the planning reform aspects of the measures, including the consultation for new permitted development rights (PDRs) aimed at supporting high streets; and commentary on those brought into force in May 2019.  Over a year on, we look more closely at the measures associated with high street funding and progress made with these in 2019, as well as additional towns funding announced this year. Future High Street Fund The £675 million Future High Streets Fund was announced in the 2018 Budget to support the development of high streets in a way that drives growth, improves customer experience and ensures future sustainability. It will do this by providing co-funding to successful applicants to support transformative and structural changes to overcome challenges in their area. An additional £325 million for the Future High Streets Fund was announced in July 2019, taking the overall fund value to £1 billion. The Fund will assist local areas to produce long-term strategies for their high streets, and will fund a new High Streets Task Force that will provide expertise and practical support to the successful bids. The Fund will be used to co-fund improvements to town centre infrastructure, including: investment in physical infrastructure, including improving public and other transport access, improving flow and circulation within a town / city centre, congestion-relieving infrastructure, other investment in physical infrastructure needed to support new housing and workspace development and existing local communities, and the regeneration of heritage high streets; and investment in land assembly, including to support the densification of residential and workspace around high streets in place of under-used retail units. Towns can secure up to £25 million of funding for their plans, but most projects are expected to be in the region of £5m-£10m. Successful bids will have to demonstrate that they have secured shared funding and support from the relevant local authority, local businesses or other organisations.As of September 2019, 100 town centres in England have been shortlisted. These towns will receive up to £150,000 to develop detailed proposals, assisted by the High Streets Taskforce. Shortlisted places are now invited to develop their strategic vision and business cases for specific projects for submission in Spring 2020. High Streets Heritage Action Zones Part of the Future High Streets Fund has been reserved to support the regeneration of heritage high streets. The High Streets Heritage Action Zones Fund is open to applications from high streets within conservations zones and is administered by Historic England. Successful applicants have to demonstrate that the funds will be used to: regenerate historic buildings and the associated public realm, on or around high streets, using it as a catalyst for improving wider social, cultural, environmental and economic outcomes; and An associated cultural programme focussed on working with communities and local cultural organisations in developing site-specific events designed to encourage local people to engage with the heritage on their high street. 69 high streets across England have now been selected to receive a share of the £95 million fund.  Those shortlisted will now progress to the next stage of development and will work with Historic England to develop plans to revive their high streets. Funded schemes will begin in April 2020. Towns Fund The 100 places invited to develop proposals for a Town Deal as part of a new £3.6 billion Towns Fund were announced in September 2019.    The eligible towns were noted as having, “proud industrial and economic heritage but have not always benefitted from economic growth in the same way as more prosperous areas.”  Of the 100 shortlisted this includes total of 45 places across the Northern Powerhouse and 30 places in the Midlands Engine. The Towns Fund prospectus published in November 2019 details that bids should set out how targeted investment in connectivity, land use, economic assets, skills and enterprise, will stimulate long term economic growth and productivity. Each place will have the opportunity to bid for funding of up to £25 million. Lead Councils will need to put together Town Deal Boards, responsible for coordinating a local vision and strategy by the end of January 2020. Where appropriate these should be chaired by a member from the private sector. Town Investment Plans will then need to be produced no later than Summer 2020. Where towns are both preparing to agree a Town Deal and are already involved in the Future High Streets Fund, these are expected to be aligned, whilst still meeting the separate objectives of the funds.Seizing the opportunity So what next for those on the funding shortlists? For High Street Heritage Action Zones, delivery Plans are being prepared. For others, the real hard work to get hold of the money is only just beginning. Detailed submissions for the Future High Streets Fund and Towns Fund will follow later in 2020. In order to be successful, local authorities, and others involved with supporting the bidding process, need to be able to clearly define proposals and put together substantiated and evidenced business cases for them – within very tight timescales. Assembling the right team and articulating a clear offer and set of solutions will be key. Asset managers and land owners should check whether they have interests within areas that are shortlisted. If so, as a local stakeholder, it will be important to actively engage with those preparing proposals and developing business cases, and potentially providing input to help demonstrate deliverability and local benefits. So many of the headlines about our town centres in recent times have been negative. But these recent announcements have brought possibly the largest injection of central government funding focused on high streets for more than a decade. With innovative and deliverable proposals, and the evidence in place to support them, there is now a real opportunity to bring forward measures that can help turn around and reposition our town centres. Let’s see what 2020 brings…

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