Party conference season is in full swing, and infrastructure is at the top of the agenda for good reason. The announcement to restart the electrification of the two key railway lines last week, coupled with the chancellor’s four-point infrastructure plan announced at the opening of the Conservative party conference, show this government’s commitment to overhauling the way that large-scale infrastructure projects are developed.
These announcements are bold steps towards developing regional powerhouses. Infrastructure, especially transport, will play a huge role in allowing business to thrive outside of London and the South East.
Britain’s pockets of expertise, based all around the country, can power economic growth. Spreading this around the UK is key to unlocking our productivity puzzle. Better roads and rail links will give the best return if they connect potential powerhouses – good links mean that information and ideas can be shared, spread and sold.
Read more: Heathrow or Gatwick expansion? Government ministers promise airports decision by Christmas
Restarting the electrification programme will be vital in order to link major cities across England – not just with London, but each other. And while the plans are welcomed, they need to be sped up.
As it stands, cities along the two main lines will not see the benefits of electrification for seven years. Leeds and Manchester are already thriving, productive and wealth-creating cities, but they could be so much more successful if they had faster links between each other and to neighbouring conurbations. The delay to electrification is a delay to growth, and it must be reconsidered.
HS2 also has the potential to transform trade by creating better links between eight major cities – and in turn, boosting regional economies. The current proposals connect London and Birmingham, two cities which already have good transport links. But instead, the HS2 build should start in the North, linking up Leeds, Manchester and the East Midlands with each other, as well as other powerhouses in the UK.
But infrastructure doesn’t just mean rail and road. Increasingly, businesses are reliant on digital infrastructure to do even the most basic tasks. Fast, reliable broadband means that businesses can connect with customers in new ways – and open up the possibility of new markets all around the world. However, poor connections currently mean that many ambitious businesses are stymied if they try to locate outside city centres.
Read more: Business secretary Sajid Javid says Trade Union Bill strike laws are for "working people"
We think that these ideas have the potential to strengthen multiple powerhouses across the UK and help create stable and balanced growth for the economy. But creating regional powerhouses through infrastructure investment is part of a much bigger picture. In order to build a new resilient and balanced economy for the UK, we need to also focus on two more areas.
First of all, we need to strengthen the UK as an open trading economy – one that gives British businesses the ability to seize opportunity wherever in the world it arises. Unblocking European trade negations, for example, will boost the exporting power of UK businesses, especially those in the mid-market.
Enabling the movement of financial capital around Europe by developing a more diversified financial system could also offer businesses a greater choice of funding at lower costs. The EU will become even more important to Britain’s success as emerging economies expand: European trade deals open up the whole world to ambitious UK companies and, as its standards become globally recognised, stamps of excellence.
And second, we must make the most of the mid-market – the backbone of Britain’s economy, and often overlooked by the media and policymakers. For example, some mid-sized businesses are struggling to find the finance they need to grow.
Research by BDO and the CBI has found that over half of mid-sized businesses have difficulty in accessing long-term growth capital. So, alongside the CBI, we believe that Long Term Lending Trusts should be used to encourage investment in mid-sized business.
These would offer income tax relief to savers investing in long-term debt funding for ambitious firms. It currently exists through the successful Venture Capital Trust scheme, and has for at least five years.
These three pieces of the puzzle – creating powerhouses, strengthening our open economy and making the most of the mid-market – are the keys to realising a “new economy” for the UK: one that is more resilient, and more balanced.