The benefits of Foreign Direct Investment are not being shared with Britain’s towns

Rotherham High Street. Image: Getty.

There is a growing awareness that regional disparities are an urgent problem for the UK’s economy and society, following decades of government policy that has fostered divergence in the fortunes of different places. Research by Will Jennings and Gerry stoker for the Centre for Towns has repeatedly revealed stark differences in the economic fortunes of Britain’s towns and cities. It’s a picture of “Two Englands”, with increasingly different outlooks and experiences.

Until now, however, this debate has not considered another important driver of local jobs and growth: Foreign Direct Investment (FDI). Bridging the Gap, the new report launched this week by EY and the Centre for Towns shines a light on the gaping disparity between the UK’s largest cities and towns, which have been successful in attracting investors from overseas, and the smaller towns and rural areas which have increasingly struggled to attract investment.

FDI has increased by four-fold into the UK’s Core Cities – including London, Manchester, Birmingham and Glasgow – whilst investment elsewhere has tended to stagnate or decline. These Core Cities have attracted 51 per cent of all FDI projects in the last twenty years.

This was not always the case. The share has increased from 31 per cent of the UK’s total FDI in 1997 to a staggering 56 per cent share in 2017. Of these, London has attracted a whopping 74 per cent of projects in the bigger cities.

The good news story for Britain’s cities is in stark contrast to that for many smaller towns: former industrial towns experienced a seismic 74 per cent fall in FDI projects between 1997 and 2013. This decline shows how certain areas have been neglected by government over a long period of time – dating back to restructuring of the UK economy that began in the 1970s.

Successive governments have compounded this. In 2005 Tony Blair, said the future belongs to those, “Swift to adapt, slow to complain, open, willing and able to change”. Today’s report shows just how much those areas that were able to adapt have continued to benefit, while those who were unable to have fallen further behind.

Towns in particular have suffered from under-investment in transport, and ineffective interventions to raise local skills and qualifications in the local labour market.


By contrast, those towns whose local economies have adapted through location close to universities, such as Cambridge and Loughborough; or a revived contemporary industrial presence, such as Redcar, Rotherham and Mansfield, fared significantly better. The patterns that emerge from this report underline that decline in investment is not inevitable: it tends to occur in places where government has taken its eye off the ball, failing to rebuild or provide conditions that attract investors.

Simply, government must do far more to deliver conditions that make its towns and regions far more attractive to investors abroad. There are political as well as economic rewards for all parties in delivering an agenda with a promise of jobs, skills and infrastructure across the diverse local economies of the UK.

As Mark Gregory, EY’s chief economist notes in the report, the decisions taken by foreign investors are driven by infrastructure and skills locally. The UK government needs to pay urgent attention to improving its offer on this front, and thereby ensure a more even distribution of investment across the country. Our report identifies a clear set of priorities for attracting foreign investment that would share the benefits between Britain’s towns and cities: investment in regional transport, a more place-sensitive approach to industrial strategy, faster broadband for all areas, and incentives that lure service investors out of Core Cities.

The Brexit vote highlighted the deep divisions felt between different parts of the country and the aftermath of Brexit is going to prompt fundamental questions about the UK’s economic model – and how prosperity is to be shared by all. Yet today’s politics is characterised by division. The ex-industrial towns that have suffered from low levels of overseas investment in their local economies were more likely to vote to leave the EU – with successive governments having failed to support them in the shift to a more open global economy. Why believe in a global and open Britain, when you are left to go it alone?

The government cannot afford to ignore the growing evidence about the economic challenges faced by Britain’s towns, and the policies and investment required to make them attractive to investment that will bring jobs, business, amenities and hope to local communities. Not only would this stimulate local economies and boost to some of our most deprived regions: it would make the whole country more attractive to foreign investment, and begin to heal some of the divisions that have emerged.

Lisa Nandy is the Labour MP for Wigan. Dr Will Jennings is a senior lecturer in politics at the University of the Southampton. They are among the co-founders of the Centre for Towns.

 
 
 
 

In South Africa's cities, evictions are happening despite a national ban

An aerial view shows a destroyed house in Lawley, south of Johannesburg, on April 20, 2020. The city has been demolishing informal structures on vacant land despite a moratorium on evictions. (Marco Longari/AFP via Getty Images)

On the morning of 15 July, a South African High Court judge ruled that the city of Cape Town’s Anti-Land Invasion Unit had illegally evicted a man when it destroyed the shack where he was living.

That afternoon, the Anti-Land Invasion Unit was out again, removing shacks in another informal settlement.

Evictions were banned in South Africa for nine weeks, after the national government placed the country under a strict Covid-19 lockdown in late March. At present, eviction orders are automatically suspended until the country moves to a lower “alert level” and can only be carried out with a special order from a judge.

Yet major cities including Cape Town, Johannesburg and eThekwini (created through the merger of Durban with several surrounding communities), have continued to use municipal law enforcement agencies and private security companies to remove people from informal housing. In many cases those operations have been conducted without a court order – something required under regular South African law.

Around 900 people were evicted from three informal settlements in eThekwini during the eviction ban, according to the Church Land Programme, a local NGO. Its director, Graham Philpott, says it’s also aware of evictions in other informal settlements.

While evictions aren’t a “new experience” in these communities, the NGO released a report on lockdown evictions because they were “so explicitly illegal”. “There was a moratorium in place,” Philpott says, “and the local municipality acted quite flagrantly against it. There’s no confusion, there’s no doubt whatsoever, it is illegal. But it is part of a trend where the eThekwini municipality has acted illegally in evicting the poor from informal settlements.”

Evictions also took place in Cape Town and Johannesburg during so-called “hard lockdown” according to local activists. In eThekwini and other municipalities, the evictions have continued despite restrictions. In Cape Town, authorities pulled a naked man, Bulelani Qholani, from his shack. That incident, which was captured on video, drew condemnation from the national government and four members of the Anti-Land Invasion unit were suspended. 


The cities say they’re fighting “land invasions” – illegal occupations without permission from the land owner.

“Land invasions derail housing and service projects, lead to the pollution of waterways, severely prejudice deserving housing beneficiaries and cause property owners to lose their investments over night,” Cape Town’s executive mayor, Dan Plato said in a statement. (Plato has also claimed that Qholani did not live in the shack he was pulled from and that he disrobed when municipal authorities arrived.)

South African municipalities often claim that the shacks they destroy are unoccupied. 

If they were occupied, says Msawakhe Mayisela, a spokesman for the eThekwini municipality, the city would get a court order before conducting an eviction. “Everything we’re doing is within the ambit of the law,” Mayisela says. But “rogue elements” are taking advantage of Covid-19, he added.

“We fully understand that people are desperately in need of land, but the number of people that are flocking to the cities is too much, the city won’t be able to provide housing or accommodation for everyone overnight,” he says. 

While eThekwini claims to be a caring city, local activists say the evictions show otherwise.

In one case, 29 women were evicted from shacks during the hard lockdown. With nowhere to go, they slept in an open field and were arrested by the South African Police Service for violating the lockdown, Philpott says.

“These evictions are dehumanizing people whose dignity is already compromised in many ways,” says S’bu Zikode, the president of Abahlali baseMjondolo, a community organization whose Zulu name translates to “the people of the shacks”. 

“It has reminded us that we are the people that do not count in our society.”

Municipal law enforcement and private security contractors hired by cities regularly fire rubber bullets, or even live ammunition, at residents during evictions. Some 18 Abahlali baseMjondolo activists have been killed since the organization was founded in 2005, Zikode says, most by the eThekwini Land Invasion Unit and Metro Police.

(Mayisela says that if city employees have broken the law, Abahlali baseMjondolo can file a complaint with the police. “There is no conclusive evidence to the effect that our members have killed them,”  he says.)

Other Abahlali baseMjondolo activists have been killed by what Zikode calls “izinkabi,” hitmen hired by politicians. Two eThekwini city councillors were sentenced to life in prison 2016 after they organized the killing of Thuli Ndlovu, an Abahlali baseMjondolo organizer. A member of the Land Invasion Unit who is currently facing a charge of attempted murder after severely injuring a person during an eviction remains on the job, Zikode says.

South Africa’s 1996 constitution is intended to protect the public from arbitrary state violence and guarantees a right to housing, as well as due process in evictions. But for Zikode, the South African constitution is a “beautiful document on a shelf”.

“For the working class and the poor, it’s still difficult to have access to court. You’ve got to have money to get to court,” he says. 

The actions by municipal law enforcement are breaking down social trust, says Buhle Booi, a member of the Khayelitsha Community Action Network, a community group in the largest township in Cape Town.

“There’s a lack of police resources and those very few police resources that they have, they use to destroy people’s homes, to destroy people’s peace, rather than fighting crime, real criminal elements that we see in our society,” Booi says.

For him, it’s a continuation of the practices of the colonial and apartheid governments, pushing poor people, most of whom are Black, to the periphery of cities.

Around one-fifth of South Africa’s urban population live in shacks or informal dwellings, according to a 2018 report by SERI. Many more live in substandard housing. City governments maintain that the shacks destroyed during anti-land invasion operations are unfinished and unoccupied. But Edward Molopi, a research and advocacy officer at SERI, says that this claim is an attempt to escape their legal obligations to get a court order and to find alternative accommodation for affected people. 

The roots of the current eviction crisis go back to apartheid, which barred non-white people from living in cities. Between the 1940s and 1970s, tens of thousands of people were forcibly relocated from neighbourhoods like Johannesburg’s Sophiatown and Cape Town’s District Six to remote townships.

In the 26 years following the end of apartheid, deepening economic inequality and rampant unemployment have limited access to formal housing for millions of South Africans. Government housing programs have mostly focused on building small stand-alone homes, often on the peripheries of cities far from jobs and amenities.

While these well-intentioned projects have built millions of homes, they’ve failed to keep up with demand, says Marie Huchzermeyer, a professor at the Centre for Urbanism & Built Environment Studies at the University of the Witwatersrand in Johannesburg. Government-funded housing projects “will never on it’s own be enough,” she says. “It has to be accompanied by land release.”

Government policies call for the “upgrading” of informal settlements and the formalization of residents’ occupation. But “there are still very, very, very few projects” of that nature in South Africa, Huchzermeyer says. “Even if it’s an informal settlement that’s been around for 20 years, there still seems to be a political wish to punish people for having done that.” The government wants people to go through the formal process of being given a house, she says – and for them to be thankful to the government for providing it.

At the municipal level, change will require “real leadership around informal settlement upgrading and around ensuring that land is available for people to occupy,” she says. 

Despite the end of enforced racial segregation, spacial apartheid remains a factor in South Africa. There are few mixed-income neighbourhoods. Those who can afford to often live behind walls in sprawling low-density suburbs, while the poor live in overcrowded slums and apartment buildings.

The creation of the apartheid city “didn't happen by chance,” says Amira Osman, a professor of architecture at the Tshwane University of Technology. “It was a deliberate, structured approach to the design of the city. We need a deliberate, structured approach that will undo that.”

Since last fall, Johannesburg’s Inclusionary Housing Policy has required developments of 20 or more units to set aside 30% of those units for low-income housing.

The policy, which faced significant opposition from private developers, won’t lead to dramatic change, says Sarah Charlton, a professor at the Centre for Urbanism and Built Environment Studies, but it is “an important and significant step.”

Zikode isn’t optimistic that change will come for shack dwellers, however.

“People in the high positions of authority pretend that everything is normal,” he says. “They pretend that everyone is treated justly, they pretend that everyone has homes with running water, that everyone has a piece of land – and hide the truth and the lies of our democracy.”

Jacob Serebrin is a freelance journalist currently based in Johannesburg. Follow him on Twitter.