Levelling up and infrastructure policy: How connecting the UK’s cities could be the key to boosting productivity

This insight reviews the evidence on what infrastructure policies are likely to contribute to levelling up by increasing productivity in places outside of London and the South East, and compares this to the government’s current approach. It focuses on transport and broadband, which are covered by two of the 12 levelling up missions. 

The main findings are: 

• Transport infrastructure will lead to the biggest economic benefits when improving links into and around cities, which will help cities to grow and so become more productive due to ‘agglomeration benefits’. The UK should prioritise links in big cities such as Manchester and Birmingham which under-perform given their size. This broadly matches the government’s approach. 
• Broadband investments are unlikely to play a big role in levelling up. While the initial broadband roll-out led to big productivity improvements, subsequent improvements are likely to be marginal, and benefits will accrue to already-productive places that have better digital skills. However, this does not mean that the government’s mission to widen access to fast broadband is misguided: it may contribute to other outcomes, including improving wellbeing. 
• Infrastructure investments alone cannot deliver levelling up. Increasing transport capacity, for example, will only be worthwhile if there is demand for the service from commuters and other travellers. Complementary investments in skills and – especially – housing are critical to ensure infrastructure policies are effective.  

This insight includes recommendation to government to ensure infrastructure policies contribute to levelling up: 

• The government should make use of the best available analysis from the National Infrastructure Commission to distribute bus funding effectively. 
• The government should build in regular review stages for big infrastructure projects to deal with ongoing uncertainty around the impact of working from home. 
• The government should commission research to address stark gaps in the evidence on the impact of infrastructure on productivity.