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.

 
 
 
 

America's cities can't police their way out of this crisis

Police deployed tear gas during anti-racism demonstrations in Los Angeles over the weekend. (Mario Tama/Getty Images)

As protesters took to the streets across the United States over the weekend to express their anger at police killings of unarmed black Americans, it was hard to miss the hypocrisy coming from local authorities – including the otherwise progressive, left-leaning officials who are in power in most major American cities. 

Many US mayors and their police chiefs had issued public statements over the past week that seemed – only briefly, as it turned out – to signal a meaningful shift in the extent to which the Black Lives Matters movement is being taken seriously by those who are in a position to enact reforms. 

The sheer depravity of the most recent high-profile killing had left little room for equivocation. George Floyd, 46, died last Monday under the knee of white Minneapolis police officer Derek Chauvin, while three additional officers helped to hold Floyd down, doing nothing to aid him as he begged for them to stop and eventually lost consciousness. The officers had been attempting to arrest Floyd on suspicion of having used a counterfeit $20 bill at a deli. All four have since been fired, and Chauvin was arrested Friday on charges of third-degree murder and second-degree manslaughter. 

“The lack of compassion, use of excessive force, or going beyond the scope of the law, doesn’t just tarnish our badge—it tears at the very fabric of race relations in this country,” Los Angeles Police Chief Michel Moore told the Washington Post in response to the Floyd case. Meanwhile Moore’s boss, Los Angeles Mayor Eric Garcetti, on Friday claimed that he understood why his city, which is no stranger to police brutality, was protesting. “We absolutely need as a nation, certainly as a city, to voice our outrage, it’s our patriotic duty to not only stand up for George Floyd but for everybody who has been killed unnecessarily, who’s been murdered for the structural racism that we have in our country,” Garcetti said. 

Normally, US police chiefs and mayors tend to ask citizens to withhold judgment on these types of cases until full investigations can be completed. But a 10-minute video recording of Floyd’s killing had made what happened plain. Police chiefs across the country – and even the nation’s largest police union, which is notorious for defending officer abuses – similarly condemned the actions of the Minneapolis officers, in a rare show of moral clarity that, combined with the arrest of Chauvin, offered at least a glimmer of hope that this time things might be different. 

As the events of the weekend have since shown, that glimmer was all too fleeting. 

In city after city over the past three days, US mayors and their police chiefs made a series of the same decisions – starting with the deployment of large, heavily armed riot units – that ultimately escalated violent confrontations between officers and protesters. Images widely shared on social media Saturday and Sunday nights made it clear that members of law enforcement were often initiating the worst of the violence, and appeared to treat protesters as enemy combatants, rather than citizens they were sworn to protect. 


In New York City, two police SUVs were seen plowing into a crowd of protesters, while elsewhere an officer was recorded pulling down a young protester’s coronavirus mask in order to pepper spray his face

In Louisville, the city where Breonna Taylor, a 26-year-old black woman was fatally shot by police on 13 March, state police in riot gear were captured confiscating and destroying protesters’ supplies

In Minneapolis, forces opened fire with nonlethal rounds on residential streets, much to the shock of homeowners standing on their own front porches. 

Images of police pushing or shoving peaceful protesters were almost too numerous to count, including, in Salt Lake City, an elderly man with a cane

In many places, police also targeted journalists who were covering the protests, firing at clearly identifiable media crews with rubber bullets, injuring and even arresting reporters

Some protesters did commit acts of vandalism and looting, and the leaders of cities where that happened generally responded in the same ways. 

First, they blamed “outside agitators” for the worst protester behaviour, a claim that harkens all the way back to the civil rights era and for which the evidence is murky at best

Next, they enacted sudden curfews with little to no warning, which gave law enforcement an excuse to make mass arrests, in some cases violently. 

In a pair of widely criticized moves, Garcetti of Los Angeles closed the city’s Covid-19 testing centers and suspended the entire mass transit system Saturday evening, stranding essential workers on their way home from daytime shifts. Late Sunday night in Chicago, the city’s public school system halted its free meal distribution service for low-income children, citing “the evolving nature of activity across the city”.  

Governors in at least 12 US states, in coordination with city leaders, have since called in National Guard troops to “help”. 

At this point it’s clear that the leaders of America’s cities are in desperate need of a radically different playbook to respond to these protests. A heavily armed, militarised response to long-simmering anger toward the heavily armed, militarised approach to American policing is more than ironic – it’s ineffective. Granting police officers wider latitude to make arrests via curfews also seems destined to increase the chances of precisely the tragic, racially biased outcomes to which the protesters are reacting. 

There are other options. In places such as Flint, Michigan, and Camden, New Jersey – both poor cities home to large black populations – local law enforcement officials chose to put down their weapons and march alongside protesters, rather than face off against them. In the case of Camden, that the city was able to avoid violent clashes is in no small part related to the fact that it took the drastic step of disbanding its former police department altogether several years ago, replacing it with an entirely new structure. 

America’s cities are in crisis, in more ways than one. It’s not a coincidence that the country has tipped into chaos following months of emotionally draining stay-at-home orders and job losses that now top 40 million. Low-income Americans of colour have borne a disproportionate share of the pandemic’s ravages, and public health officials are already worried about the potential for protests to become Covid-19 super-spreading events.

All of this has of course been spurred on by the US president, who in addition to calling Sunday for mayors and governors to “get tough” on protesters, has made emboldening white nationalists his signature. Notably, Trump didn’t call on officials to get tough on the heavily armed white protesters who stormed the Michigan Capitol building over coronavirus stay-at-home orders just a few weeks ago. 

US mayors and their police chiefs have publicly claimed that they do understand – agree with, even – the anger currently spilling out onto their streets. But as long as they continue to respond to that anger by deploying large numbers of armed and armored law enforcement personnel who do not actually live in the cities they serve, who appear to be more outraged by property damage and verbal insults than by the killings of black Americans at the hands of their peers, and who are enmeshed in a dangerously violent and racist policing culture that perceives itself to be the real victim, it is hard to see how this crisis will improve anytime soon. 

Sommer Mathis is the editor of CityMetric.