More than £20bn economic growth at risk unless Government tackles energy and water constraints leaders of Fast Growth Cities warn

Image: Radcliffe Square, Oxford

Oxford City Council reports that leaders from the six Fast Growth Cities group have written to Government urging action to be taken to provide a £21bn boost for UK GVA over the next decade.

Council leaders of the Fast Growth Cities group – comprised of Cambridge, Milton Keynes, Norwich, Oxford, Peterborough, and Swindon – have written to the Government urging action to be taken to unlock £21bn of growth for the UK economy over the next decade.

• A new economic report highlights that these cities – which already sit above the UK average when it comes to economic and employment growth – could have an outsized impact on UK GVA if the right conditions are put in place.

  
  

• But, with each city sitting within a ‘seriously water stressed’ area, transport connectivity lacking, and housing affordability and supply low, leaders of the FGCs highlight that this potential growth is being inhibited and action needs to be taken ahead of the Spring Statement.

As revealed in a new economic report, the six cities are among the UK’s most productive and fast-growing economies outside London and already play a critical role in supporting national productivity, innovation, inward investment and long-term fiscal returns.

The report reveals that the cities have grown at a rate of 2% per year over the last decade, above the UK average of 1.7%, while the group has attracted around 10% of total UK venture capital investment despite accounting for less than 2% of the UK population. Combined, they also produce £34bn of global exports, accounting for 4% of the UK total.

Scenario modelling contained within the report indicates that, with sustained productivity growth and a return to pre-pandemic employment trends, the Fast Growth Cities could generate £21bn in additional real GVA by 2035 and £78bn by 2050 for the UK economy.

Maintaining all these benefits and realising this opportunity, however, is reliant on high levels of employment growth. As made clear in the letter sent in by the six council leaders, this growth is currently at serious risk due to a number of factors:

• Water and electricity are emerging as binding constraints to regional growth. All FGCs sit within areas classified as ‘seriously water stressed’ by the Environment Agency, meaning existing supply is already under pressure before accounting for the additional demands that will come with growth in the region.

• Without improved connectivity by both rail and road, the FGC’s labour markets will remain constrained, housing supply will not be able to expand at pace, and productivity gains will become increasingly localised. This means prioritising inter-city and regional connectivity, while upgrading strategic road corridors.

• Housing delivery is increasingly constrained by affordability pressures, infrastructure capacity and planning complexity. Without additional support, these constraints risk slowing housing delivery, tightening labour markets and reinforcing deprivation and inequality.

  
  

As the Chancellor prepares to deliver her Spring Statement on 3^rd March, the six Council leaders have therefore written to HMT urging the right investment conditions to be put in place to catapult not just the growth of each city, but that of the UK.

• Between 2011 and 2022, the University of Oxford generated 225 spin‑out companies, the highest number of any UK university, while around 57% of its population have degree level qualifications (vs. a UK average of 42.7%).

• Cambridge attracts a notable 1.6% share of the UK’s net FDI earnings, underscoring its global appeal to investors, while it has had over 6,000 patent applications and 33,000 scientific publications per million people, second only to Silicon Valley in World Intellectual Property Organisation’s ranking for innovation intensity.

• With over 189,000 jobs, Milton Keynes is in the top 8% of local authorities for total employment.

• A large share of Norwich’s population (63%) is of working age, strengthening its labour force base, providing a strong base to fuel future growth.

• Peterborough ranks among the top 30 areas in the UK for access to high-speed internet and its housing is the most affordable across FGC areas.

• Swindon boasts the 9th highest GVA output per filled job, making it one of the most productive places in the country.