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.

 
 
 
 

To beat rising temperatures, Vienna launches a network of 'Cool Streets'

A Vienna resident cools off at one of the city's new Cool Streets installations. (Courtesy Christian Fürthner/Mobilitätsagentur Wien)

Over the past several months, Austria has recorded its highest unemployment rate since World War II, thanks to the economic aftermath of the Covid-19 pandemic. With no job or a suddenly smaller income – not to mention the continued threat of the virus – many Viennese will opt for a staycation this summer.  

At the same time, last year, Austria’s capital experienced 39 days with temperatures of over 30°C (86°F), one of its hottest summers in history according to the Central Institute for Meteorology and Geodynamics.

Climate experts expect a similarly sizzling 2020 season, and city officials are now doubling down on efforts to combat the heat by launching a “Cool Streets” initiative as well as a new, state-of-the-art cooling park.

“As the city councilwoman in charge of climate, it is my job to ensure local cooling,” Vienna’s deputy mayor Birgit Hebein proclaimed at the opening of one of 22 new “Cool Streets” on 22 June.

“In Austria, there are already more heat deaths than traffic fatalities,” she added.

Hebein was referring to the 766 people the Austrian Agency for Health and Food Security included in its 2018 heat-associated mortality statistics. The number was up by 31% compared to 2017, and in contrast to the 409 people who died in traffic collisions the same year.

The project includes 18 temporary Cool Streets located across the city, plus four roads that will be redesigned permanently and designated as “Cool Streets Plus”.

“The Plus version includes the planting of trees. Brighter surfaces, which reflect less heat, replace asphalt in addition to the installation of shadow or water elements,” said Kathrin Ivancsits, spokeswoman for the city-owned bureau Mobilitätsagentur, which is coordinating the project.


Vienna's seasonal Cool Streets provide shady places to rest and are closed to cars. (Petra Loho for CityMetric)

In addition to mobile shade dispensers and seating possibilities amid more greenery provided by potted plants, each street features a steel column offering drinking water and spray cooling. The temporary Cool Streets will also remain car-free until 20 September.

A sensor in the granite base releases drinking water and pushes it through 34 nozzles whenever the outside temperature reaches 25°C (77°F) . As soon as the ambient temperature drops to 23°C (73°F), the sensor, which operates from 10 a.m. to 8 p.m., turns off the water supply.

The sensors were included in part to allay concerns about legionella, a pathogenic bacteria that can reproduce in water.  

“When the spray stops, the system drains, and therefore no microbial contamination can develop,” said Dr. Hans-Peter Hutter, deputy head of the Department of Environmental Health at the Center for Public Health at Medical University Vienna, in a televised interview.

Hutter also assured the public that there is no increased risk of a Covid-19 infection from the spray as long as people adhere to the one-meter social distance requirement.


But Samer Bagaeen of the University of Kent's School of Architecture and Planning notes that air cooling systems, like the ones used in Germany at abattoirs, have been found recently to be a risk factor for Covid-19 outbreaks.

“The same could be said for spay devices,” he warned.

Vienna’s district councils selected the 22 Cool Street locations with the help of the city’s Urban Heat Vulnerability Index. The map shows where most people suffer from heat by evaluating temperature data, green and water-related infrastructure, and demographic data.

“Urban heat islands can occur when cities replace the natural land cover with dense concentrations of pavement, buildings, and other surfaces that absorb and retain heat,” as the US Environmental Protection Agency states.


A rendering of Vienna's planned park featuring a Coolspot, which is scheduled to open in August. Click to expand.
(Courtesy Carla Lo Landscape Architecture)

Vienna’s sixth district, Mariahilf, is such an area. The construction of the capital’s first “Cooling Park”, a €1 million project covering the 10,600 square-metre Esterházypark, is designed to provide relief. 

Green4Cities, a centre of excellence for green infrastructure in urban areas, designed the park’s main attraction, the “Coolspot”. The nearly 3.40-metre high steel trellis holds three rings equipped with spray nozzles. Textile shading slats, tensioned with steel cables, cover them.

The effects of evaporation and evapotranspiration create a cooler microclimate around the 30 square-metre seating area, alongside other spray spots selectively scattered across the park.

The high-pressure spray also deposits tiny droplets on plant and tree leaves, which stimulates them to sweat even more. All together, these collective measures help to cool their surroundings by up to six degrees.

The landscape architect Carla Lo and her team planned what she calls the “low-tech” park components. “Plants are an essential design element of the Cooling Park,” Lo says. “By unsealing the [soil], we can add new grass, herbaceous beds, and more climate-resistant trees to the existing cultivation”.

Light-coloured, natural stone punctuated by grass seams replaces the old concrete surfaces, and wooden benches meander throughout the park.

Living near the park and yearning for an urban escape close by, Lo says she’s motivated to ensure the park is completed by mid-August.

“If we don't do anything, Vienna will be another eight degrees Celsius hotter in 2050 than it already is,” Hebein said.

Vienna recently came in first in the World's 10 Greenest Cities Index by the consulting agency Resonance.

“There is no one size fits all on how cities respond to urban heat,” says the University of Kent’s Bagaeen, who points out that Vienna was one of the first European cities to set up an Urban Heat Islands Strategic Plan in 2015.

In the short term, prognoses on the city’s future development may be more difficult: Vienna votes this autumn.

Petra Loho is a journalist and photographer based in Austria.