CCN Latest News, CCN News 2022 |: 21 November 2022
Foreign investment is unevenly focused across England, with county and rural areas lagging far behind the major cities and London, a new report reveals.
Leaders of England’s county local authorities have urged the government to ‘unshackle’ their areas as part of its leveling-up drive. The call coincides with the publication of EY research, commissioned by the County Councils Network (CCN), which reveals that the per-capita ratio of foreign direct investment (FDI) projects in England’s 36 county areas over the past four years is just half of that of England’s big cities that have access to devolved powers, and seven times less than London.
The study is released at the County Councils Network’s Annual Conference, and this morning the network’s chairman Cllr Tim Oliver will tell over 200 delegates at today’s conference that the government must unleash the power of county areas by ‘turbocharging’ devolution deals for those places, giving local leaders the tools and powers to attract foreign investors to help drive local growth and close the gap between rural areas and the major cities.
Download the report here.
The analysis shows that FDI in county and rural areas creates more jobs and supports a more diverse range of private sector investment than in urban areas, and is therefore better equipped to support the UK economy during a period of economic recession.
He will tell delegates that is why ‘levelling up cannot overlook counties – we must spread opportunity and growth further than the cities. In order to maximize investment in all four corners of the country, we must have all the tools available at our disposal.’
The report, Global Britain, Global Counties. Attracting Foreign Direct Investment, reveals:
- FDI in England had a strong 2021, rebounding from the Coronavirus pandemic. FDI projects across the whole country rose by 1.8% year-on-year to 993 in 2021, while the total number of projects into England since 2018 stands at 3,480, with the creation of over 125,000 jobs announced. . FDI also creates significant value for the economy. For example, Department for International Trade estimates suggest that, from FDI projects between 2019-20, the UK economy has seen a GVA uplift of £2.8bn.
- However these projects are unevenly focused across the country, with England’s counties seeing a lower level of investment when adjusted for population. Between 2018-2021, there were 761 FDI projects secured in counties, which is 7.3 per capita. This almost half the ratio of projects secured by the nine combined authorities (13.2 per capita) which cover major cities in the North, the West Midlands, and South West and where their local leaders have access to bespoke powers to drive growth and skills improvements via devolution deals. The counties’ total is seven times less than London’s ratio of 50 FDI projects per capita.
- Counties in England’s regions lag far behind the country’s major urban areas. Counties in the West Midlands have attracted the largest amount of FDI per head of population at 11.95 – followed by the North East (10.3) and the East Midlands (9.1). Counties in the South West attracted the least FDI (4.1), followed by Yorkshire and the Humber (6.3) and the South East (6.6).
- But investment in county areas creates more jobs compared to urban areas. FDI created more jobs (40,169) in county areas over the last four years than London’s total (39,357) despite the capital attracting almost 1,000 extra projects. On average, FDI projects in county areas generate 83 jobs each – higher than any mayoral combined authority and London, which sees an average of 39 jobs per project.
- County and rural areas are also better placed to support a more diverse range of FDI investments to support the economy through a recession. With business, professional, and digital accounting for a smaller proportion of FDI, the analysis shows county and rural areas have a major comparative advantage in transport and logistics, agri-food and manufacturing; with counties accounting for 42% of all England’s FDI in these sectors between 2018-21. This means that counties are uniquely placed in being able to attract both emerging industries while helping to deliver a renaissance in manufacturing and food economies in England.
Responding to the findings, CCN said that its members have had success in attracting and expanding FDI over the last four years, but local leaders are ambitious to go even further.
The report finds that investors value a skilled and available workforce, efficient and comprehensive infrastructure, strong business networks and financial support to locate and invest – all of which devolution can help enable.
But despite a highly publicized announcement from the Leveling Up Secretary Michael Gove that he has been beginning discussions with nine county areas in February, deals have only been agreed in three areas.
CCN argues that county areas are at a disadvantage compared to the major cities, and is calling for the government to conclude negotiations with all nine areas as soon as possible, then begin a fresh wave of county deals before the end of the year with the ultimate ambition of two-thirds of county areas having a deal in place or have started discussions by the end of this Parliament.
Cllr Tim Oliver, Chairman of the County Councils Network, will today tell the CCN Conference.
“Today’s research on FDI is a success story for county areas. We are uniquely placed to attract investments in both new and traditional industries and locating in county areas creates more jobs than other parts of the country.
“But despite this, county areas lag behind the major cities and London when it comes to FDI, which is unevenly spread across the country. The cities are the ones with devolution deals where they can pull the levers that make places more attractive to investors, so it is vital that the government turbocharges devolution to the county areas currently at an economic disadvantage.
“If we are to level up the country, then the government must unshackle county areas. In order to maximize investment in all four corners of the country, county local authority leaders must have all the tools available at our disposal.”
Rohan Malik, EY UK&I Government and Infrastructure Leader, comments:
“While the report’s findings highlight that the UK as a whole remains a leading destination for inward investment, there are deep-rooted inequalities between regional economies which won’t be reversed overnight. The Government’s announced freeze on capital spending after 2025, alongside the increasingly significant financial constraints faced by local authorities, means that the opportunity for the private sector to play a role in addressing these inequalities has never been greater.
“Attracting foreign direct investment, and business investment more generally, is a key lever to stimulate regional growth with. The potential for local authorities to attract greater private sector investment is there, but it will require a combined approach with business, central government and local authorities working closely together and taking action for the long term.”
Notes to the editor:
- Download the report Global Britain, Global Counties: Attracting Foreign Direct Investment here.
- This EY research was commissioned by the County Councils Network and is based on EY UK Attractiveness Survey data from 2018 – 2022.
- FDI projects have been mapped to mayoral combined authority (MCA) and upper-tier authority destinations. FDI project data has been analyzed within standard EY European Investment Monitor breakdowns, and drivers of FDI have been drawn from the EY Attractiveness Survey and through testing FDI project data against local indicators.