One of the most eye-catching policies announced in February’s Levelling Up White Paper was the plan for 20 “King’s Cross-style” regeneration projects across the country. These schemes could be crucial to boosting regional economies if they’re targeted at city centres, where there is already substantial headroom for growth in city centres. It’s a worthwhile policy for the Government to pursue but, as our latest report Making places: The role of regeneration in levelling up shows, it will not be successful without significant public sector investment.
The Government’s goal for regeneration should be to ensure city centres can attract the firms and jobs that they have previously struggled to pull in. In principle, high-skilled businesses have a preference for a city centre locations because of the benefits these locations offer – namely access to high-skilled workers and a knowledge network of other high-skilled businesses. The fact that several UK city centres have not been able to attract such businesses suggests they are not offering these benefits to the extent they should, and this is having implications for wider economic performance of the cities they sit within.
To overcome this issue, regeneration policy should focus on tackling failures in the market (e.g. land remediation, transport infrastructure and urban blight) and policy (e.g. complexity of the planning process). Our report shows that there is much to learn from the approach that was taken in King’s Cross to overcome these issues and transform from a dilapidated industrial site and railyard to an extension of London’s central business district, with many thousands of new high-skilled jobs.
This project again shows the importance of public sector investment. If public funds were not necessary to deliver regeneration, then the private sector would have already invested. Yet even King’s Cross, located on the fringe of one of the most successful central business districts in the world, needed infrastructure funding and public sector bodies acting as anchor tenants to make the scheme work.
In other places where the market failures are larger, the requirement for public investment will be ever greater if the schemes are to deliver in the same way. Nottingham’s Broad Marsh is a good example of this. Half demolished, the site requires further public money to be cleared, and will very likely need further public investment to kickstart development.
Schemes will also need to focus on providing workspace – office or otherwise – if they are to attract the high-skilled jobs they need. The plans for Broad Marsh currently have an overwhelming retail focus and if Nottingham is to become an internationally competitive city, then it will need to ensure its centre is a much more attractive place for knowledge-based businesses than is currently the case. Similarly, in York Central, a regeneration site on the fringe of York city centre, plans are very housing heavy. While York undoubtably needs to build more homes (and this site should provide some housing), it should look to its suburbs to ease this pressure.
There is substantial institutional capital available for regeneration – we know this from the actions of the likes of Aviva and L&G in recent years. To leverage this capital though, public sector investment will be required. Therefore, if the Government does want to encourage growth, it needs to set out how it plans to use public sector investment to get it going, and city centres should be at the forefront of its plans.