2020 Spending Review: Government infrastructure spending to ‘pivot away’ from London

2020 Spending Review: Government infrastructure spending to ‘pivot away’ from London

National infrastructure spending will “significantly shift” away from London in the coming years and towards the “regions and nations” of the UK with “all but one of the major new capital projects” being outside the south-east of England, the government has announced.

A new National Infrastructure Strategy released as part of Chancellor Rishi Sunak’s spending review introduced in the House of Commons today, says there has been “insufficient funding for regions outside London” and pledges £4.2 billion for “intra-city transport settlements” for the “largest city regions outside London”.

Better news for the capital is a commitment to invest in “financing the completion of Crossrail”, the apparent inclusion of London in both a “new, £4 billion cross-departmental Levelling up Fund” for local infrastructure in England and “a new UK infrastructure bank”, to be “based in the North of England”, to co-invest along with the private sector.

In his Foreword to the document Boris Johnson described “levelling up” as his government’s “core purpose”, repeating a pledge to “unleash the productive power not just of London and the south east, but every corner of England, Scotland, Wales and Northern Ireland.” The strategy document says this entails “pivoting investment away from London”.

There is also a commitment to “relocate 22,000 civil servants” away from London and the south east of England and a statement that “levelling up” will mean “ensuring that decisions are not just made in Whitehall but reflect the diversity of this country” and that the Treasury’s Green Book is changed to “reflect the government’s levelling up agenda”.

Sadiq Khan responded scathingly to the spending review as a whole, saying the government is continuing to “ignore the true scale of the economic challenges we face in the capital”, including fast-rising unemployment.

“Right now, businesses across our hospitality sector in London are on a financial knife edge, facing more restrictions over winter but without the grants and government support they need to stay afloat,” added the Labour Mayor. “The same applies to our retail, leisure and culture sectors which, before the pandemic, were contributing hugely to our economy.”

Sunak’s Commons speech included a promise to give local authorities more leeway for funding social care, but Khan underlined London boroughs’ disappointment that a pledge by communities secretary Robert Jenrick to fully compensate councils across the country for a funding shortfall they have incurred due to the effects of the pandemic has not been honoured.

Khan continued: “If the government continues with its approach of starving the capital of investment it will do nothing more than hamper our recovery from Covid, both in London and across the UK.” He emphasised that London would need its “fair share” from the “levelling up” fund and from the Shared Prosperity Fund, designed to compensate for funding losses resulting from the UK’s departure from the European Union.

London Chamber of Commerce & Industry chief executive Richard Burge welcomed the commitment to funding the completion of Crossrail but warned that “it’s vital that the government also continues to support Transport for London until passenger levels are able to safely return”.

Burge also noted the infrastructure strategy’s mention that “levelling up the rest of the UK does not mean levelling down London” and urged that this must mean “continuing to invest in London” in practice because “the nation’s economy relies on London’s global position”. The case for “targeted support for Central London recovery” will continue to be made, he said.

London First chief executive Jasmine Whitbread too praised the Crossrail commitment and, in line with the Mayor, said it is “vital that deprived areas in the capital – some of the most deprived in the country – will be able to fairly access the levelling up fund.” She described the infrastructure strategy as a whole as “mixed news for London” because Crossrail 2 has been “stopped in its tracks”.

Looked ahead to tomorrow’s announcement about which Covid-alert Tier London will allocated to once the national lockdown ends, Whitbread said it is important that the decision is “evidence-based and data led and that the government stands ready to support those firms that cannot trade normally.” Given London’s “critical role in driving the recovery across the whole of the UK” she called on the government to “encourage people back onto public transport and to Covid-secure offices” as soon as is practical “so the job of kick starting the economy can begin again.”

Richard Brown, Deputy Director at think tank Centre for London, said Levelling Up Fund chimes with Centre for London’s proposal for a Community Wealth Fund including for “many of the country’s poorest communities that are peppered across London and the south east”, yet he added: “With short timescales and a limited pot of £4 billion, it will be tough for many communities to prepare and submit bids for projects that will really have an impact, even with support from elected local councils. Addressing local needs will be better achieved through long-term devolution to councils and communities, not through bidding for a gracious disbursement of funds from Whitehall.”

Image of Rishi Sunak from BBC TV.

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