UK Cities DNA | Meet the new boss, same as the old boss?
The "levelling up" moniker may have been consigned to history, but the new Labour Government continues to recognise the need to address regional disparities.
4 minutes to read
Key takeaways:
- The "levelling up" moniker may have been consigned to history, but the new Labour Government continues to recognise the need to address regional disparities.
- Labour's approach emphasises empowering local authorities, decentralising power, and integrating environmental sustainability into planning and infrastructure development.
- Investment in regional initiatives and infrastructure could be a major driver of real estate activity.
- Fiscal constraints pose a major stumbling block.
In recent years, UK policy has focused on reducing regional disparities in growth, investment, and opportunity, with mixed progress in areas like economic development, housing, infrastructure, education, and climate change.
The Conservative Party's "levelling up" initiative sought to boost regional growth but faced delays and inefficiencies in key projects. After coming to power in 2024, Labour shifted focus to devolving power to local governments, aiming to reduce disparities by increasing local fiscal autonomy. However, success depends on overcoming financial and administrative challenges.
The start of a new parliament offers a chance to reassess some of the key strategy components.
Civil Service
Both the Conservative and Labour parties have pushed for relocating civil service jobs outside London to address regional inequality. The Conservatives planned to move 22,000 jobs by 2027, while Labour proposed moving up to 50,000. The relocation of these jobs could drive demand for commercial real estate in regional cities, as evidenced by the approval of new government office developments in Darlington and York. However, concerns remain over whether such relocations contribute to meaningful regional development or shift jobs without retaining experienced staff, as seen with the Office for National Statistics' move to Newport.
Transport
Infrastructure is crucial for the growth of regional cities. The Conservatives' "levelling up" agenda included significant investments in road and rail, such as HS2, but encountered cost overruns, technical difficulties, and delays. Labour has pledged a 10-year infrastructure strategy, which includes nationalising railways, expanding public transport, and prioritising greener options. These developments are essential for economic growth and boosting demand for commercial real estate. However, funding Labour's ambitious plans, including establishing Great British Railways, will be challenging given current public budget pressures.
Digital Infrastructure
The expansion of digital infrastructure is a critical aspect of modern economies. The Conservative government aimed for full gigabit broadband and 5G coverage but was slowed by an estimated £25 billion investment gap. Labour has committed to achieving nationwide gigabit broadband and 5G coverage by 2030, particularly in underserved areas. This expansion could boost the demand for specialised commercial properties like data centres and laboratories, although the rollout's slow pace under the Conservatives has already delayed some opportunities. Labour's plans to accelerate this could be beneficial, but success depends on overcoming regulatory and financial barriers.
Planning and Sustainability
Labour's planning reforms give local authorities more control over development while promoting environmental sustainability. However, introducing ministerial determination, which allows ministers to intervene in planning decisions, could undermine local autonomy. Labour aims to prioritise development on brownfield and Grey Belt sites to protect Green Belt areas. The emphasis on environmental standards could complicate and increase the cost of commercial development, potentially slowing the pace of new projects.
Climate Change
Both parties approach climate change differently. Labour's ambitious target of achieving net-zero emissions by 2030 contrasts with the Conservative's more incremental 2050 target. Labour plans to create over a million green jobs through renewable energy projects and retrofitting homes for energy efficiency. This focus on green jobs and sustainable energy, such as offshore wind, could transform regional cities into hubs for renewable energy, driving demand for commercial real estate in these areas. However, the cost of meeting higher regulatory standards for green buildings could raise the value of properties that comply.
Education
Education and skills development are vital to boosting regional cities' economies. While the Conservative Party emphasised vocational training, Labour focuses on free education and lifelong learning. Graduate retention remains a challenge for regional cities, although there have been improvements in cities like Bristol and Manchester. Successful skills development and retention of graduates would stimulate economic growth and boost demand for commercial properties in these cities. However, failure to retain talent could hinder the development of commercial centres.
Conclusion
Efforts to address geographical inequality in the UK have proven complex and difficult to implement. The Conservative "levelling up" agenda struggled with execution, while Labour's focus on decentralisation and sustainability offers a different, albeit challenging, approach. Success will require significant financial investment, overcoming local resistance, and balancing economic growth with environmental protection. Achieving geographical equality will demand a long-term, concerted effort across multiple fronts.
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