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Spending Review 2020: government aims to ‘level up’ greener UK

26 November 2020: The government’s plans for levelling up the UK are welcome, but more detail is needed on how funds will be spent and what that means for businesses.

With the economic impacts of the coronavirus pandemic likely to be felt for at least five years, a major focus of the government’s Spending Review 2020 (SR20) was how the UK can speed up its recovery in all regions and nations.

Much of the plans to ‘level up’ all areas of the UK revolve around three themes: addressing the historic infrastructure issues that have held back growth, furthering the UK’s ambitions for a green industrial revolution and the regeneration of communities.

There had been fears that any recovery plans might focus on short term gains rather than sustainable investments. These plans seem to assuage those fears, but questions remain around the detail of how these measures will be delivered.

Fixing the UK’s broadband and transport holes

The UK has had long standing issues with connectivity which has held back development in certain regions such as mid-Wales. SR20 outlines over £58bn of investment for road and rail infrastructure, and £1.2bn to subsidise further rollout of gigabit-capable broadband across some of the least connected areas of the UK. Mobile connectivity is also addressed, with £50m to be spent on building a 5G network and £200m going into digital infrastructure programmes such as the Shared Rural Network for 4G coverage.

This is all welcome news. ICAEW members across the UK have cited broadband and mobile connectivity as among the biggest issues they’d like to see addressed. With the rate of transformation that has occurred in response to the coronavirus and the technology required to facilitate that transformation, reliable broadband has never been more of a business imperative, wherever that business is located.

The green industrial revolution

Green investment plays a central role in infrastructure spending plans for 2021/22. The National Infrastructure Strategy, published in conjunction with SR20, has greener infrastructure as a prominent part of its 10-point plan.

From a green transport perspective, the government is investing £1.9bn in charging infrastructure and consumer incentives to encourage the uptake of zero-emission vehicles.

This includes £950m to support the rollout of rapid electric vehicle (EV) charging hubs at every service station on England’s motorways and major A-roads, £275m to extend support for charge point installation at homes, workplaces and on-street locations, reforming the schemes to target difficult parts of the market such as leaseholders and SMEs, and £90m to fund local EV charging infrastructure to support the rollout of larger on-street charging schemes and rapid hubs in England. A further £257m is being spent on walking and cycling paths, with £120m for zero-emission buses, in 2021-22.

The real impacts in stimulating a green industrial revolution may come from an investment in green technologies. The £1bn for a Carbon Capture Storage and Infrastructure Fund could create completely new kinds of jobs in areas such as the north of England, Scotland and Wales.

The government also wants to aid the creation of a new low carbon hydrogen industry that could contribute significantly to the decarbonisation of power, homes, transport and industry. A £240m Net Zero Hydrogen Fund and £81m for pioneering hydrogen heating trials are two of the measures that will contribute towards this.

Further investment in wind power, nuclear energy and grants for emerging technologies could also stimulate the creation of new projects, businesses and jobs.

This is all welcome, but any shift away from traditional industries towards new ones should take place with one eye on the transition from one set of jobs to another. The previous industrial revolution was disruptive to people’s lives on an unprecedented scale. It is crucial, with jobs already at risk, that appropriate attention is placed on ensuring that people have the opportunity to learn new skills and transition smoothly into new careers.

Smaller community projects also get the ‘level up’ treatment

The £4bn Levelling Up Fund has been earmarked for community projects across England, attracting up to £0.8bn for Scotland, Wales and Northern Ireland “in the usual way”. This fund is for smaller projects such as bypasses, road improvements, new bus lanes, the regeneration of ‘eyesores’, upgrading town centres and local arts and community initiatives.

Though smaller in scale than the ambitious plans around green recovery, they are no less important. With enforced isolation of entire communities throughout the pandemic, these projects could have vital social impacts such as supporting the younger generation or isolated elderly, in addition to their economic benefits.

These projects must have a place-based approach, with the support of the community and the local MP. They also have to be delivered within the lifetime of the current government, which does create the need for ambitious completion targets for any projects that want to receive funding from the scheme. This could limit the kinds of projects that will get off the ground as a result of the fund, and asks for strong collaboration with the private sector to deliver.