Lisa Nandy MP: Britain’s towns are short-changed as cities capture an ever-greater share of foreign investment

Posted On: 
8th October 2019

Towns with creaking infrastructure and a hollowed-out skills base cannot compete for investment on a level playing field. This cannot continue, writes Lisa Nandy MP

'University towns and ex-industrial towns saw a fall of 50% in the number of manufacturing projects in 2018'
Credit: 
PA

The sizeable vote to leave the EU in towns across England and Wales came as a surprise to most of Westminster and Whitehall three years ago. It shouldn’t have. For 40 years, as industry has disappeared from our towns, successive governments have chosen to invest in cities in the hope that the benefits would trickle out to surrounding towns. As a result, while cities debate how to make growth more inclusive, the story in most towns has been one of decline.

Good jobs have been replaced with low-paid, insecure work and with those jobs has gone the working-age population and spending power that sustained thriving high streets, banks, bus networks and community pubs.

People in towns have become deeply disillusioned by a political settlement that has seen families split apart, the identity and purpose of entire areas collapse and the things that matter most to them disappear. They are now significantly more likely than people in cities to believe that “politicians don’t care” about them or their area. With small and medium towns now the key battleground for the next election, this should be a pressing priority for all political parties.

Now a stark new report by Ian Warren for Ernst & Young and the Centre for Towns exposes the depth of this divide. Over the last 20 years, foreign direct investment (FDI), vital for the livelihoods and economic health of the country, has flatlined or collapsed in towns and smaller areas while growth in cities has been striking.

Cities now capture nearly two-thirds (59%) of FDI, up from less than a third in 1997. It comes as little surprise that London has been the main beneficiary of this trend, accounting for 73% of total secured projects. Towns as a whole have lost out, but some have fared considerably worse than others – and the gulf is growing.

'Where towns are given powers to hold decisionmakers to account and formulate their own deals, change is possible'

University towns and ex-industrial towns saw a fall of 50% in the number of manufacturing projects in 2018. For ex-industrial towns like mine, this is a tragedy; towns like Wigan, that within living memory powered the world, saw huge job losses when the mines closed in the 1980s and early 1990s. The green energy revolution offered an opportunity to build on the legacy of engineering skills and reinvent the local economy for the 21st century. The fact that it has not materialised is a result of UK failure. With political vision that could see the potential, not just the problems, in our so-called “left-behind” towns, this could have been so different.

The most important factors cited by potential investors are transport, digital infrastructure and a skills base. In all of these areas, for decades, towns have lost out in favour of cities and continue to do so. Those who make decisions are overwhelmingly concentrated in a handful of cities with little understanding of the chronic underinvestment that has brought trains and buses to a halt and has left large swathes of the country cut off from good broadband.

The growing clamour for devolution will only change this if it is based on a completely different settlement from the one handed to us in recent years, where power is simply relocated from one large city to another. In towns like Wigan, Manchester can feel as remote and unaccountable as London. But where towns are given real powers to hold decisionmakers in the city-regions to account and to formulate their own town deals, change is possible.

If any lessons are to be learned from the road to Brexit, it is surely that the current settlement must change. Greater Manchester has had 507 FDI projects since 1997. Of those, 382 went to Manchester and just three went to Bury. By contrast in Scotland, while Glasgow and Edinburgh have attracted inward investment since 1997, so have many towns and smaller places too. The story of foreign direct investment across England and Wales is a story of failure. It has to change.

Lisa Nandy is Labour MP for Wigan