What society needs now
Having long-term capital to invest in what society needs right now has never been more important.
Despite years of austerity, we have a state and a public sector that is indebted on a grand scale. The hundreds of billions of pounds the UK government spent supporting public services, households and business during the pandemic has caused the government deficit to reach a peacetime record.
Brexit also means that direct EU funding has been lost and we are importing less talent so will need to educate and, organically and sustainably, train people ourselves to produce creativity and innovation. Against this background, I believe having long-term capital to invest in what society needs right now has never been more important.
As far as the built environment is concerned, society needs social infrastructure to meet local need and contribute to the quality of life. Part of that is in transportation and renewable energy, the delivery of which is a huge investment challenge. Alongside this, the transition to net zero by 2050 requires massive-scale investment in both retrofitting existing assets and capital spend on new infrastructure for society.
There are plenty of urban areas up and down the UK in need of regeneration which have historically not benefited from large-scale private investment. In many of these cases, Legal & General* has brought partnership models, expertise, and capital to stimulate mixed-use redevelopment over the past decade. Central Square in Cardiff reflects what patient investment can achieve; our activity there is a prime example of “levelling up” long before the phrase became fashionable.
The 12-acre site immediately outside the main train station has transformed people’s first impressions of the city. The project has already delivered the impressive BBC Cymru Wales broadcasting studio and a headquarters for HMRC in Wales, as well as retail space. Another major milestone has been the opening of the 170-bedroom Parkgate Hotel next to the Principality Stadium. The final phase of the regeneration project includes a 14-bay bus station, 318 build-to-rent homes, and the 120,000 sq ft Interchange office building.
The single biggest issue for us to work on is ensuring there is a productive and impactful partnership between the public and private sectors. Both sides need to focus on engagement, enabling and the best provision of medium and long-term economic plans. When we come out of the pandemic, the recipe for success will involve less competition – whether between places or through superfluous procurement processes – and more leadership and collaboration. These ingredients will determine how to boost jobs, support growth businesses and digital infrastructure, address health inequality, and tackle the ever-growing crises in housing and climate change.
Good-quality places that are intra- and inter-connected are crucial to support the UK’s economic position, fuelling future growth and ensuring inclusivity. Engaging with the right type of patient capital in a constructive way will allow progress to be made around building the productive net-zero society of the future. It will crystallise the government’s ambitions to bring forward projects that have a positive impact on the built environment, the landscape of our urban areas and ultimately the British people.
*For illustrative purposes only. Reference to a particular security is on a historical basis and does not mean that the security is currently held or will be held within an LGIM portfolio. The above information does not constitute a recommendation to buy or sell any security.