Change always brings opportunities and that will include those to come in the wake of the pandemic. As ever, the challenge is to identify and seize those opportunities and so it’s great to see the way in which the so-called Oxford-Cambridge arc is gearing up to be a major social and economic success story.
In February, the government announced its plans to create a spatial framework for the region that would build on prior commitments and now aims to create up to one million new jobs and boost the economy by between £80 billion and £163 billion a year.
The framework would see the creation of a new body to oversee the development of the arc, which spans parts of Oxfordshire, Buckinghamshire, Northamptonshire, Bedfordshire and Cambridgeshire. The government’s plans for the area include a new rail link between Oxford and Cambridge. The intention is to build on the existing momentum in the region, which has seen its population grow by 17 percent over the last two decades and already provides work for two million people.
Crucially these jobs are often in a range of STEM and life sciences fields. The area may often be referred to as an answer to Silicon Valley, but the areas of expertise are far wider than tech. The pandemic has focussed attention on the role of pharma and life sciences in our lives and attracted both interest and investment.
Inevitably this is having an ongoing and significant effect on the property markets locally. The Spring 2021 report from real estate consultancy Bidwells that tracks trends in the area identifies the pressures this puts on local markets to meet demands, including for lab space. In Cambridge, already the largest centre of medical research and health science in Europe, knowledge intensive businesses accounted for nearly three-quarters of the take-up of commercial space last year.
The report suggests that both demand for Grade A office and laboratory space meant there was only around 10 percent availability at the end of last year, putting upward pressure on rents and building the case for investment.
Even this is struggling to keep up with demand. This year, around one million sq. ft. of new space will come onto the market, but 84 percent of it is already committed. There is inevitably similar pressure in local housing markets.
There may be implications for the Government’s wider plans to ‘level up’ the UK and perhaps even some for people planning a fresh approach to their own workplaces. While the Government has already begin to distribute civil service jobs around the country, including the proposed new HMRC hub in Teesside, the distribution of more knowledge-based STEM jobs around the UK will not only improve the lot of the regions but also transform the UK economy, its productivity and skills base.
This shift may be accelerated by the pandemic which has encouraged many people in the South East of England to reconsider the places they live and work.
The need to distribute skills, knowledge-based jobs and wealth around the UK has long been a campaigning issue for prominent figures such as Andrew Haldane, chief economist of the Bank of England.
One of his main point on the challenge has long been that innovation should not be a goal in itself. If you want to reap the full benefits of innovation, you have to find ways to share it. According to Andy Haldane, this issue is encapsulated by the fact that the UK is top 5 in the Global Innovation Index but only 38th in Europe for diffusion. We have great ideas, but don’t always capitalise on them.
In a recent interview with the Financial Times he said this: “I think we increasingly saw the coexistence of two sets of companies [in the past]. There were those that were at the bleeding edge of technology that were high-productivity, high-performance companies. They tended to attract highly skilled workers and tended to situate themselves in the better performing cities around the world.
“But, on the other end of the spectrum we had a different equilibrium, which was a set of companies that were locked in a low-performance, low-profitability, low-productivity equilibrium, who tended to hire lower-skilled workers and to locate themselves in some of the less well-performing parts of the country.
“I said that because I see the company productivity, workers skills and spatial dimensions of this as being closely interconnected. So, the productivity problem, the skills problem, the spatial problem, the regional problem, are part and parcel of the self-same problem.
One of the tasks of policy will be to think about how we can jolt or incentivise companies to shift the equilibrium in which they are operating towards a higher-productivity, higher-skilled equilibrium — and take workers with them.”
The Oxford-Cambridge arc might offer one example of how to address this at a regional level. But it might also offer us food for thought about how innovation works at local levels too. It’s one thing to have knowledge and ideas, but it requires other dimensions to allow more people to share them and for them to be applied. One of those dimensions is space and the way we use it together.
Andy Haldane argues that networking and agglomeration remain essential, even when more dispersed.
“I do think the forces of agglomeration are incredibly powerful,” he says. “The rise of super cities, the centripetal forces of skills and business and culture and people were overwhelmingly positive, and that is why cities are such a motor for growth. The flipside of that is why we have had regional disparities which in the UK are back to the highest levels since late Victorian times.
“Covid is set to be a game-changer on this. As urban density was a huge asset pre-Covid, it’s become something of a liability. To be clear, I don’t think we’re going to see the complete reversal of those agglomeration benefits, having something that is a cultural capital, a business capital and a financial capital. But if we are moving to a world of working and to a way of doing business that can be more decentralised, then I think it’s likely that activity, itself, will become more decentralised and evenly spread as well.”