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.

 
 
 
 

What’s killing northerners?

The Angel of the North. Image: Getty.

There is a stark disparity in wealth and health between people in the north and south of England, commonly referred to as England’s “north-south divide”. The causes of this inequality are complex; it’s influenced by the environment, jobs, migration and lifestyle factors – as well as the long-term political power imbalances, which have concentrated resources and investment in the south, especially in and around London.

Life expectancy is also lower in the north, mainly because the region is more deprived. But new analysis of national mortality data highlights a shockingly large mortality gap between young adults, aged 25 to 44, living in the north and south of England. This gap first emerged in the late 1990s, and seems to have been growing ever since.

In 1995, there were 2% more deaths among northerners aged 25 to 34 than southerners (in other words, 2% “excess mortality”). But by 2015, northerners in this age group were 29% more likely to die than their southern counterparts. Likewise, in the 35 to 44 age group, there was 3% difference in mortality between northerners and southerners in 1995. But by 2015, there were 49% more deaths among northerners than southerners in this age group.

Excess mortality in the north compared with south of England by age groups, from 1965 to 2015. Follow the lines to see that people born around 1980 are the ones most affected around 2015.

While mortality increased among northerners aged 25 to 34, and plateaued among 35 to 44-year-olds, southern mortality mainly declined across both age groups. Overall, between 2014 and 2016, northerners aged 25 to 44 were 41% more likely to die than southerners in the same age group. In real terms, this means that between 2014 and 2016, 1,881 more women and 3,530 more men aged between 25 and 44 years died in the north, than in the south.

What’s killing northerners?

To understand what’s driving this mortality gap among young adults, our team of researchers looked at the causes of death from 2014 to 2016, and sorted them into eight groups: accidents, alcohol related, cardiovascular related (heart conditions, diabetes, obesity and so on), suicide, drug related, breast cancer, other cancers and other causes.

Controlling for the age and sex of the population in the north and the south, we found that it was mostly the deaths of northern men contributing to the difference in mortality – and these deaths were caused mainly by cardiovascular conditions, alcohol and drug misuse. Accidents (for men) and cancer (for women) also played important roles.

From 2014 to 2016, northerners were 47% more likely to die for cardiovascular reasons, 109% for alcohol misuse and 60% for drug misuse, across both men and women aged 25 to 44 years old. Although the national rate of death from cardiovascular reasons has dropped since 1981, the longstanding gap between north and south remains.

Death and deprivation

The gap in life expectancy between north and south is usually put down to socioeconomic deprivation. We considered further data for 2016, to find out if this held true for deaths among young people. We found that, while two thirds of the gap were explained by the fact that people lived in deprived areas, the remaining one third could be caused by some unmeasured form of deprivation, or by differences in culture, infrastructure, migration or extreme weather.

Mortality for people aged 25 to 44 years in 2016, at small area geographical level for the whole of England.

Northern men faced a higher risk of dying young than northern women – partly because overall mortality rates are higher for men than for women, pretty much at every age, but also because men tend to be more susceptible to socioeconomic pressures. Although anachronistic, the expectation to have a job and be able to sustain a family weighs more on men. Accidents, alcohol misuse, drug misuse and suicide are all strongly associated with low socioeconomic status.

Suicide risk is twice as high among the most deprived men, compared to the most affluent. Suicide risk has also been associated with unemployment, and substantial increases in suicide have been observed during periods of recession – especially among men. Further evidence tells us that unskilled men between ages 25 and 39 are between ten and 20 times more likely to die from alcohol-related causes, compared to professionals.

Alcohol underpins the steep increase in liver cirrhosis deaths in Britain from the 1990s – which is when the north-south divide in mortality between people aged 25 to 44 also started to emerge. Previous research has shown that men in this age group, who live in the most deprived areas, are five times more likely to die from alcohol-related diseases than those in the most affluent areas. For women in deprived areas, the risk is four times greater.


It’s also widely known that mortality rates for cancer are higher in more deprived areas, and people have worse survival rates in places where smoking and alcohol abuse is more prevalent. Heroin and crack cocaine addiction and deaths from drug overdoses are also strongly associated with deprivation.

The greater number of deaths from accidents in the north should be considered in the context of transport infrastructure investment, which is heavily skewed towards the south – especially London, which enjoys the lowest mortality in the country. What’s more, if reliable and affordable public transport is not available, people will drive more and expose themselves to higher risk of an accident.

Deaths for young adults in the north of England have been increasing compared to those in the south since the late 1990s, creating new health divides between England’s regions. It seems that persistent social, economic and health inequalities are responsible for a growing trend of psychological distress, despair and risk taking among young northerners. Without major changes, the extreme concentration of power, wealth and opportunity in the south will continue to damage people’s health, and worsen the north-south divide.

The Conversation

Evangelos Kontopantelis, Professor in Data Science and Health Services Research, University of Manchester

This article is republished from The Conversation under a Creative Commons license. Read the original article.