Britain's growth problem is not a shortage of capital. It is a shortage of confidence in place-based investment. Too often, we overlook a basic truth: local needs can differ dramatically, even between neighbouring towns and cities.
For two decades, the UK has wrestled with weak productivity, low investment and stubborn regional inequality. PwC's Good Growth Barometer underlines why that debate now needs a sharper local focus. Growth only counts if it improves prosperity, opportunity and wellbeing for people and communities. Yet our research shows that the barriers faced by local authorities vary widely, including access to jobs, services, and housing, as well as health and crime, and they rarely follow neat regional lines.
Once stronger pipelines are in place, government should reserve 10% of relevant impact-aligned PuFin deployment for Strategic Authorities. This is not a call for new borrowing or another institution. It is a governance shift within capital already authorised, with public money acting as anchor or mezzanine capital for mayor-led investment platforms.
The UK has built the institutions to respond. Over the past 20 years, the National Wealth Fund, British Business Bank, GB Energy, Homes England, Innovate UK and the expanded Dormant Assets scheme have come to command something in the region of £80 to £100bn in deployable capital, aligned to growth, clean energy and regeneration. That is not marginal money. Especially when you add in the private sector capital that many of the Public Sector Financial Institutions (the ‘PuFins') are looking to crowd in.
Across 10 Mayoral Combined Authorities, a structured 10% allocation would yield around £8 to £10bn for place-based deployment, alongside approximately £100m in development and readiness finance. Even if only half were mobilised effectively, it would mark a major shift in regional capital formation. Yet Britain remains near the bottom of the OECD investment league table. Productivity gaps persist. Private capital waits. Local leaders still talk of empty pipelines.
This is not really a problem of money. It is a problem of plumbing. The first fix should be a 1% top-slice across relevant PuFin envelopes, allocated directly to Strategic Authorities as grant funding for investment readiness. That would pay for feasibility work, technical due diligence, legal structuring, land assembly, portfolio aggregation and SME readiness. Without that first mile, the remaining 99% cannot deploy effectively.
Once stronger pipelines are in place, government should reserve 10% of relevant impact-aligned PuFin deployment for Strategic Authorities. This is not a call for new borrowing or another institution. It is a governance shift within capital already authorised, with public money acting as anchor or mezzanine capital for mayor-led investment platforms.
The Manchester Good Growth Fund shows the kind of model needed. It combines grant funding, local borrowing, Local Government Pension Scheme investment and private pension capital, creating a stack that matches risk to the right source of finance. Many regional growth projects are neither pure grant nor fully commercial. Left unsupported, they stall. With the right structure, they can scale.
Of course, concerns about local ‘white elephants' are real. But they can be managed. Conditional devolution, independent investment committees, transparent reporting and five-year gateway reviews would protect fiscal discipline. Defined local capital envelopes could also sharpen accountability by linking decisions more clearly to outcomes.
This is also a test of whether Britain really believes in devolution. Mayors have taken on more responsibility for transport, skills and regeneration, while central government still keeps tight control over capital. That leaves local leaders answerable for growth without full control of the inputs that drive it.
Replumbing the system will not solve every growth challenge. But it is a practical, low-cost reform that could improve capital flow, strengthen SME finance, crowd in pension investment, and accelerate net zero delivery. Announcements do not deliver growth, but investable projects do.
Britain has the capital and it has capable local leaders. What it lacks is a system willing to trust them with the tools. If we are serious about raising growth without breaching the fiscal framework, the next step is clear: not more money, just better plumbing.
Katie Johnston is a partner at PwC
