County leaders urge Government to speed up devolution as report suggests their areas lag behind in foreign investment

County councils in England have called on the Government to “unshackle” their areas, after a report revealed that foreign investment is unevenly focused across the country.

The research by EY, commissioned by the County Councils Network (CCN), found that the per-capita ratio of foreign direct investment (FDI) projects in England’s 36 county areas over the past four years was just half of that of England’s big cities that have access to devolved powers, and seven times fewer than London.

“This is despite county areas securing more FDI projects in total over the last four years than the major cities which are governed by mayoral combined authorities – but when adjusted by population the data shows a disparity,” CCN said.

The EY report, Global Britain, Global Counties: Attracting Foreign Direct Investment, can be downloaded here. It suggested:

• FDI in England had a strong 2021, rebounding from the Coronavirus pandemic. FDI projects across the whole country rose by 1.8% year-on-year to 993 in 2021, whilst the total number of projects into England since 2018 stands at 3,480, with the creation of more than 125,000 jobs announced.
• These projects are unevenly focused across the country, with England’s counties seeing a lower level of investment when adjusted for population. Between 2018-2021, there were 761 FDI projects secured in counties, which is 7.3 per capita. This was almost half the ratio of projects secured by the nine combined authorities (13.2 per capita) which cover major cities in the North, the West Midlands, and South West and where their local leaders have access to bespoke powers to drive growth and skills improvements via devolution deals. The counties’ total is seven times less than London’s ratio of 50 FDI projects per capita.
• Counties in England’s regions "lag far behind the country’s major urban areas". Counties in the West Midlands have attracted the most amount of FDI per head of population at 11.95 – followed by the North East (10.3) and the East Midlands (9.1). Counties in the South West attracted the least FDI (4.1), followed by Yorkshire and the Humber (6.3) and the South East (6.6).
• Investment in county areas creates more jobs compared to urban areas. FDI created more jobs (40,169) in county areas over the last four years than London’s total (39,357) despite the capital attracting almost 1,000 extra projects. On average, FDI projects in county areas generate 83 jobs each – higher than any mayoral combined authority and London, which sees an average of 39 jobs per project.
• County and rural areas are “better placed to support a more diverse range of FDI investments to support the economy through a recession. With business, professional, and digital accounting for a smaller proportion of FDI, the analysis shows county and rural areas have a major comparative advantage in transport and logistics, agri-food and manufacturing; with counties accounting for 42% of all England’s FDI in these sectors between 2018-21. This means that counties are uniquely placed in being able to attract both emerging industries whilst helping to deliver a renaissance in manufacturing and food economies in England.”

CCN called on the Government to conclude negotiations with the nine county areas that Levelling Up Secretary Michael Gove announced in February that he was beginning discussions with. Deals have only been agreed in three areas. It said there should then be a fresh wave of county deals before the end of the year with the ultimate ambition of two-thirds of county areas having a deal in place or have started discussions by the end of this Parliament.

Cllr Tim Oliver, Chairman of the County Councils Network, told the CCN Conference taking place this week: “Today’s research on FDI is a success story for county areas. We are uniquely placed to attract investments in both new and traditional industries and locating in county areas creates more jobs than other parts of the country.

“But despite this, county areas lag behind the major cities and London when it comes to FDI, which is unevenly spread across the country. The cities are the ones with devolution deals where they can pull the levers that make places more attractive to investors, so it is vital the government turbocharges devolution to the county areas currently at an economic disadvantage.

“If we are to level up the country, then government must unshackle county areas. In order to maximise investment in all four corners of the country, county local authority leaders must have all the tools available at our disposal.”

Rohan Malik, EY UK&I Government and Infrastructure Leader, comments: “While the report’s findings highlight that the UK as a whole remains a leading destination for inward investment, there are deep-rooted inequalities between regional economies which won’t be reversed overnight. The Government’s announced freeze on capital spending after 2025, alongside the increasingly significant financial constraints faced by local authorities, means that the opportunity for the private sector to play a role in addressing these inequalities has never been greater.

“Attracting foreign direct investment, and business investment more generally, is a key lever to stimulate regional growth with. The potential for local authorities to attract greater private sector investment is there, but it will require a combined approach with business, central government and local authorities working closely together and taking action for the long term.”