Cambridge innovation hub at risk from lack of infrastructure, warn businesses

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Plans to make Cambridge a UK centre for growth and innovation are at risk of stalling because of a chronic lack of infrastructure, a group of leading academics, developers and tech business leaders has warned.

Cambridge Ahead, a lobby group that includes chipmaker Arm, the Wellcome Sanger Institute and the University of Cambridge, told the Chancellor Jeremy Hunt that a lack of housing, water and transport was holding back the city after a decade of strong economic growth.

“There are serious and urgent warning signs that this growth could stall. The infrastructure gap faced by Cambridge limits the city region’s economic potential, it also threatens the quality of life of its residents,” the group wrote in a letter seen by the Financial Times. 

They added that failure to tackle the Cambridge infrastructure deficit would also have “serious impacts” for the wider UK economy, given the links between the city’s innovation economy and other regional economic centres. 

The government announced plans last year to build a new science quarter including 150,000 new houses, in Cambridge but has acknowledged that infrastructure constraints, including a lack of water supply, must be tackled if they are to be built.

Over the past decade, the Cambridge growth story has been fuelled by an 11 per cent increase in employment in the life sciences sector and nearly 19 per cent growth in turnover for high-tech manufacturing, according to the Centre for Business Research at the University of Cambridge.

However over the same period, house prices in Cambridge increased by 78 per cent while pay grew by only 23 per cent, making only Central London less affordable for buying a home. 

The pressure on Cambridge led local government leaders to warn recently that the government’s ambitions for new houses in the area were “nonsensical” without a serious commitment to addressing infrastructure constraints. 

At present the Environment Agency, the public body that polices water conservation, has put the construction of 9,000 houses and some 300,000 square metres of research space in the Cambridge region on hold because planners were unable to demonstrate that there were sustainable water supplies.

The intervention by Cambridge Ahead adds the voices of large developers and investors to the growing clamour for a step-change in the approach to the city’s growth challenges or risk a wider impact on the UK economy.

“Cambridge’s growth is an incredible story, as the latest data shows. But it’s a story that risks an unhappy ending,” said Dan Thorp, CEO of Cambridge Ahead. that will hold a series of events, research reports and hearings to search for solutions. 

Cambridge was referred to more than any other city in March’s Budget. Subsequently, the Department for Levelling Up, Housing and Communities announced it was forming a Cambridge “growth company” to give central government a role in tackling development issues.

However local council leaders said the government would need to fund its ambitions, noting that plans for a water transfer pipeline and a reservoir to ease Cambridge’s water supply issues were not due for completion until 2032 and 2036, respectively.

“It’s great to hear the ambition, but there was still no real hard cash in the budget for the reservoirs, so you’re left asking ‘where’s the money?’,” said Mike Davey, the Labour leader of Cambridge City Council.

Bridget Smith, the Liberal Democrat leader of the South Cambridgeshire district council, added that there was also still no clarity about the government’s plans for obtaining land for new development. 

“We have had six months of drip-feeding of information about Cambridge 2050 yet still no real money to address the chronic infrastructure deficit which has halted already permitted development,” she added.

Lucy Nethsingha, Liberal Democrat leader of Cambridgeshire county council, said that local leaders shared the concerns expressed by Cambridge Ahead on the gap between the government rhetoric on supporting growth and the reality of their commitment.

She warned that the government would need to match developments in transport, housing and water infrastructure with necessary ‘social’ infrastructure — health, education and social care — or risk losing the support of local communities.

“If governments of whatever colour want to incentivise councils to accept future growth they need to make sure it doesn’t put current resources under even more pressure,” she said.

The Treasury said that it had announced a new development corporation for Cambridge at the 2024 Budget to drive forward growth and investment for the local area and the UK economy as a whole.

“[The] development corporation will receive a long-term funding settlement at the next Spending Review, helping us to unleash the city’s economic potential including building new homes, increasing the amount of lab space and improving transport infrastructure,” a spokesperson added.