Research - 19/11/2020

Oxbridge Arc report in focus - economic and politics

The Oxford-Cambridge Arc has the potential to be a key engine of future UK economic growth but it requires strong leadership and a clear vision in order to move beyond rhetoric.

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The Oxford-Cambridge Arc has the potential to be a key engine of future UK economic growth. It has the capacity to play an important role in both the immediate recovery from the COVID-19 pandemic, and in driving national growth over the long term.

The Rising Arc

The Arc is defined by the government as comprising the county areas of Bedfordshire, Buckinghamshire, Cambridgeshire, Northamptonshire and Oxfordshire. This region is home to 3.8 million people, and includes some of the UK’s most successful cities, world-leading universities and unique concentrations of high-tech knowledge based industries. 

The Arc is already an economic success story, contributing £112bn to the UK economy in 2019. Over the last decade, its economic output has grown at an average annual rate of 2.5%, more than a third higher than the national growth rate. GVA per capita is 7% higher than the UK average. 

Strong economic growth has come in spite of significant infrastructure challenges. Poor transport links make travel between the Arc’s towns and cities difficult, while a scarcity of affordable housing is an obstacle to firms seeking to attract and retain talent. Solutions to both of these infrastructure issues are crucial to maximising the Arc’s future growth potential.



Knowledge Centres

The Arc benefits from the presence of some of the most dynamic cities in the UK. Cambridge, Milton Keynes and Oxford are consistently ranked among the fastest growing economies in the country.

Oxford and Cambridge are home to two of the top three universities in the world, as rated by the Times Higher Education World University Rankings. The global expertise of these universities has been showcased during the COVID-19 pandemic, with a leading vaccine candidate being developed at Oxford, while key research into SARSCoV- 2 genomic sequences has been conducted at Cambridge. 

The universities are unique assets for the Arc, supporting a science and technology ecosystem that includes internationally recognised research centres such as the Cambridge Biomedical Campus and the Harwell Science and Innovation Campus in South Oxfordshire. 

The focus on science and technology gives rise to clusters of world-leading expertise across the Arc. Key sectors include digital technology and life sciences in Cambridgeshire; high performance technology and motorsport in Northamptonshire; and life sciences and space technology in the Oxfordshire ‘Science Vale’.

Skilled and Productive Workforces

The Arc’s knowledge-intensive industries benefit from the presence of highly skilled workforces across the region. On average, workers are better qualified and more productive than in the rest of the UK. 

The Arc has seen high levels of job creation, with its largest cities all recording employment growth above the UK average in recent years. Milton Keynes has been a hotspot, with full time equivalent (FTE) employment rising by over 50% since the turn of the millennium. 

While the COVID-19 lockdown has impacted employment levels across the UK, the Arc’s knowledge-oriented employment base has proved to be relatively resilient. The proportion of employees furloughed under the government’s Coronavirus Job Retention Scheme is below the national average across the majority of the Arc, with Cambridge having one of the lowest furlough rates in the country.



Growing Pains

Employment growth in recent years has been accompanied by strong population increases. The Arc’s population has grown over a third more quickly than the national rate over the last decade. Milton Keynes, Peterborough and Luton have been among the top ten fastest growing UK cities during this period.

However, Oxford and Cambridge have recorded comparatively low population growth rates, reflecting shortages of available housing in these cities. Housing pressures are a potential inhibitor of the Arc’s future growth, and large volumes of new affordable housing may be needed to attract a continued inflow of talented workers.


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Connecting Places

Transport infrastructure challenges will also need to be addressed if strong economic and demographic growth is to be sustained. Improved connectivity would help to ensure that the benefits of growth are felt across the entire region, and not just concentrated in a handful of very successful cities.

Existing transport infrastructure within the Arc is imbalanced, with the region crossed by multiple road and rail corridors running north-south to London, while east-west connections are poorly developed. There is, for example, no direct rail connection between Oxford and Cambridge.

This lack of east-west transport infrastructure restricts the viability of commuter travel between the Arc’s towns, and hinders its ability to function as a single, coherent economic region. 

The East West Rail project is at the forefront of attempts to reconnect the Arc. It will resurrect the ‘Varsity Line’ connecting Oxford and Cambridge, which was last operated in the late 1960s.

Political Momentum

Works to progress East West Rail, and the now-paused Oxford to Cambridge Expressway road project, were among the recommendations of a National Infrastructure Commission (NIC) report published in 2017. This report effectively kickstarted the current debate around the Arc and provided impetus to the notion of the Arc as a nationally important future growth corridor. 

The central finding of the NIC report was that house building rates would have to double in order for the Arc to achieve its economic potential. The report estimated that between 782,000 and 1,020,000 new homes would be needed by 2050. This is the source of the headline figure, much repeated in media reports, that the Arc needs up to one million new homes. However, neither the NIC nor the government have ever made one million new homes a hard-and-fast target.

In its response to the NIC, the government provided broad support for its findings and designated the Arc as a key economic priority. Following this, the government and its local partners issued a joint declaration in March 2019, affirming a collective determination to deliver new homes and infrastructure.

A Growing Conversation

A series of subsequent reports and initiatives have added to the conversation around the Arc. In 2019, the four local enterprise partnerships covering the Arc – Cambridgeshire and Peterborough, Buckinghamshire, Oxfordshire and the South East Midlands – issued an economic vision document, and delivered the coordinated release of four local industrial strategies. 

Additionally, the England’s Economic Heartland alliance has released a Draft Transport Strategy for an area centred on the Arc, while the Arc Universities Group has been formed, bringing together ten universities across the region. 

In October 2020, the Local Enterprise Partnerships, the Arc Universities Group and local government leaders came together to jointly publish an economic prospectus for the Arc.

Bumps in the road

However, parts of the conversation are still missing. A much-awaited government-commissioned AECOM study, promised for summer 2019 and intended to provide an economic evidence base for the Arc, has so far failed to materialise. Likewise, a ministerial champion for the Arc is yet to be appointed, despite a commitment first made in the 2018 budget.

Another concern for the Arc’s future may be the government’s announcement in March that it will pause plans for the Oxford to Cambridge Expressway. The project has been met by strong local opposition due to concerns over its environmental impact.

Lockdown Legacy

The March 2020 Budget provided some reassurance that the Arc is still high on the government’s agenda. The government reiterated that the Arc is a national priority, announced that a spatial framework would be developed for the region, and said that the case would be examined for four new development corporations at Bedford, St Neots/Sandy, Cambourne and Cambridge. 

However, the Budget was almost immediately overshadowed by the COVID-19 lockdown. Huge amounts of government time and money have been funnelled into supporting businesses and workers throughout the pandemic, raising the possibility that major long-term projects such as the Arc could be delayed or have resources diverted away from them.

There may also be a need to re-think some plans for the Arc in light of social and environmental issues arising in the wake of COVID-19. Future housing and infrastructure development may need to be designed to support visions for a post-COVID ‘green recovery’.

The need for leadership

Stronger leadership from central government is required to push the Arc forward. Despite all of the talk and reports about the Arc in recent years, there is still a need for a clear vision statement outlining the government’s overarching aims for the region and establishing the principles that will underpin new development. 

The appointment of a minister with responsibility for the Arc would also be an important step forward. Furthermore, while the government has said that it will consider the creation of four new development corporations, a more ambitious approach would be to establish a single regional body with oversight of planning and development across the entire Arc, to ensure the consistent delivery of the government’s vision. 

It is important that the narrative around the Arc is re-focused on economic growth, and its potential benefits to local communities. These have been lost in the existing focus on infrastructure projects and housing targets. Housing and infrastructure should not be the aims in themselves, but they need to be planned in support of broader economic, social and environmental goals.

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