2022: What Can We Expect?

Taking the opportunity to look ahead at the next 12 months, anticipated policy announcements and broader economic trends will mean that 2022 has the potential to be a year of considerable change for our sector. Here, we set out our view on some of the most important changes and consider how that may impact our work and the work of our clients going forwards.

The continuation of existing initiatives

However, before focusing on the changes to come, in many senses 2022 will be business as usual. In England, recipients of Towns Fund are continuing to navigate their local assurance processes to release investment on the ground. ekosgen is working with a range of authorities to develop and implement local assurance processes for the Towns Fund and we recognise this represents a significant investment. While there is a risk of this being a one-off activity, building on the local governance arrangements established to deliver the Towns Fund has the potential to enhance local decision-making over the longer-term.

We, like many others, are also anticipating that the Levelling Up Fund Round 2 will be announced for the middle of the year. Significant Levelling Up Fund investment has already been announced across the UK in a range of locally and nationally significant investments – including the acceleration of a major 240-acre regeneration scheme in Salford, a new City Centre Master Plan for Aberdeen, and Renfrewshire Council’s improvements to travel links between the Advanced Manufacturing Innovation District and Paisley. There were some high profile winners focused on and heritage led investments (such as Liverpool Waterfront and the net zero carbon cultural regeneration project focusing in Inverness Castle), however Lichfields estimate that only 17% of Round 1 funding went to projects in this category.  Given the importance of culture and heritage to the health and vitality of communities up and down the country – and their role in attracting people back to our towns and cities post-Covid – it will be interesting to see whether these project fare better in subsequent rounds.

Long awaited policy and funding announcements

Looking ahead, the much-anticipated Levelling Up White Paper has the potential to have the greatest impact on the focus of our activity in 2022 and beyond. With an expected shift to greater local devolution and a clarified role for Local Enterprise Partnerships in England, the basis for identifying and prioritising investments locally will become increasingly important. Some areas are well on this path, with Growth Deals and Combined Authorities, but for others, significant and rapid adjustments in ways of working locally and collaboratively will be required.

We also expect the White Paper to provide clarity over the Shared Prosperity Fund. Initial investments piloted through the Community Renewal Fund are underway, with their evaluations expected in early summer. That doesn’t give long for lessons to be incorporated into SPF. The scope and distribution of investment will also have significant impact on the direction of Levelling Up and provide an indication of wider government priorities over the coming years.

Clarity should also be provided in relation to Homes England’s new housing capital programme. With £1.8 billion allocated in the Budget to bring brownfield land back into use, there is a clear likely focus of future activity. Following the Green Book refresh, we also anticipate changes to the DLUHC Appraisal Guide, which will inform decision making concerning the areas and types of housing schemes that will be prioritised for funding. While there is no guarantee, changes may make it easier to secure funding in lower value areas where the scope to generate significant land value uplift is weak but the need for public intervention is high.  

Drivers of change

The Scottish Government’s Programme For Government sets out some key policy areas that will increasingly impact on how we live, learn, work and do business. Economic, social and environmental factors are already having a major impact on how we think about and plan for growth and this is set to continue.

Beyond specific programmes and policy areas, a range of broader economic, social and environmental factors will come to the fore in 2022 and will have a major impact on how we plan for – and potentially think about – growth.

COP 26 demonstrated the growing commitment to tackling climate change and the move to net zero. Extreme weather events, such as the one that affected swathes of eastern Scotland and the north of England in December, highlights the need to factor resilience into our growth plans.  We also need to factor in uncertainty around security of supply chains and the costs of production, with steep rises in energy prices and raw materials. This will also have implications for the costs of retrofitting – a subject of increasing prominence nationwide, but particularly in Scotland with the Government’s commitment to decarbonising housing stock.

New businesses and new jobs will flow from net zero, and other jobs will change and perhaps disappear.  There will be government support for people working in carbon-intensive sectors to upskill, reskill and transition in to green jobs, so we need to make sure that the training is in place and that it is responsive to industry need. The key here will be timing.

The development of the digital economy will continue throughout 2022 and in to the future. Recognising that employers in all sectors are seeking to harness the benefits of technology to drive innovation, enhance productivity and increase competitiveness, there has been a shift in thinking, moving away from thinking about only the digital tech sector to an economy-driven approach.  There will be investment in programmes to increase the digital capacity and capabilities of businesses so they can capture the opportunities. There will also be investment in ensuring that the workforce has the necessary skills and confidence to use them.

Much has been discussed about the health of our high streets and we can expect these trends to continue.  The latest data suggests that, prior to the arrival of Omicron, the UK economy grew above its pre-pandemic level, and with 2022 (hopefully) seeing us moving beyond the pandemic, there will be an opportunity to distinguish between the temporary and permanent adjustments to the economy and how we organise ourselves. This will have a major impact on how we consider the role and function of local economies across the country and the extent to which the shift towards hybrid working, for example, interplays with wider priorities relating to levelling up and net zero.

Finally, despite officially leaving the EU in 2020, the effects of Brexit will continue to play out. As we leave the pandemic behind us, and with the cessation of remaining transition arrangements, the lasting benefits and costs to businesses will become clearer.

So, lots to come in 2022, and the economic development world might look quite different as we approach 2023.