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The physical infrastructure of everyday life in England is broken. Millions in the country have unmet housing need, our homes are not well insulated, we are burning gas for electricity and large swathes of the country have grossly inadequate public transport systems. There is a geography to England’s neglect – four of the five worst bus services are all in the north, and so, on average, are the least energy-efficient homes. Across the country, the material foundations of a good life are in dire need of renewal. The urgency of this task is underscored by the twin climate and nature emergencies. We are in a race against time to decarbonise our electricity supply, retrofit the building stock, and expand public transport to hit our carbon targets.

For too long, public investment has been too low with scarring effects on our economy. However, announcements trailed ahead of the government’s first Budget suggest that Labour plans to reverse this trend. This investment must deliver meaningful change to people’s lives, and this requires place to be a key consideration in any investment strategy. Indeed, as more powers are devolved from the national government, the task of renewal after years of neglect and of addressing the state of our essential infrastructure will increasingly reside with local leaders.

Over the coming months, as mayors and local councils negotiate the terms of devolution deals and finance settlements, they will need to be able to argue for adequate funding to meet the specific challenges and opportunities in their areas. In this context, this report presents local estimates of the size of the public capital investment need in England across four critical areas that provide the foundation of a good life, and which fall in the purview of devolved and local authorities – new housing, retrofit, transport, and local energy. These estimates cover the decade from 2025 to 2034 and draw on a combination of our new modelling first presented here and, in some areas, existing, well-regarded work by others.

• Housing: £11.8bn of public investment outside London is needed annually to deliver 92,000 new social rent homes required to meet the housing need, in addition to housing cross-subsidy from a full and consistent application of planning obligations.

• Retrofit: £3.4bn of public investment across England is needed annually (£2.9bn of which is outside London) to retrofit the homes of all 3.18m fuel-poor households, including improving fabric efficiency to EPC rating C and installing low-carbon heating systems.

• Local energy: £1.4bn of public investment across England in municipal and community energy projects is needed annually between 2025 and 2029 (£1.2bn outside London) to meet the UK’s renewable energy commitments and £0.7bn annually (£0.6bn outside London) between 2030 and 2034.

• Transport: £15.6bn of public investment outside London is needed annually to invest in rail, buses, light rail, road maintenance, and walking, wheeling, and cycling infrastructure to drive the significant shift to sustainable modes of transport required for net zero.

The guiding principle underpinning our estimates is to enable everyone to live well while meeting the net zero challenge. Our estimates are informed by need: every individual’s need for solid foundations and our societal need to avert the worst of the unfolding climate and nature crises. These are the pillars of human flourishing, as well as the bedrock of a productive and resilient economy.

Correspondingly, our approach translates into a clear geographical pattern of investment need (Figure 1), with the largest per capita allocations going to areas outside London and the south-east. This is in contrast to current capital investment allocation, which has – despite all the talk of levelling up – favoured London and other economically strong performing areas.

Our estimates focus on four key sectors, but needless to say, other areas of investment need fall outside the scope of this report. For example, we do not include public infrastructure best delivered other than at the local scale (eg the national power transmission grid), or areas where we see less of a clear role for significant public investment (eg high-street retail). The estimates of housing investment requirements only cover the delivery of new homes, but we also urgently need to invest in existing social housing stock – not just to retrofit it, but also to address fire safety or damp and mould issues. Some relevant areas, such as climate change adaptation or green infrastructure, are not covered because we lack reliable data. Finally, we consider these estimates as separate from a local industrial strategy – but also believe that local industrial strategy should be informed by them and aim to create good jobs in related sectors.

The investment need is as large as the challenges we are facing. Acting on it requires more than doubling the recent transport investment outside London and increasing newbuild housing investment outside London by 4.5 times. These estimates also highlight the sheer inadequacy of recent levelling up programmes, which added up to £1.89bn per annum – and as such even if fully allocated and spent would only fund three weeks of the annual investment we estimate is needed.

The size of the gap is a result of decades of public under-investment and the extent to which the little public investment there has been being concentrated in London. Yet, the required level of investment is not completely out of reach – it is comparable in scale to the annual investments made to close the gap between East and West Germany, and part of the shortfall could come from a better allocation of existing expenditure.

Still, the scale of the shortfall calls for a rethinking of how we manage public finances at both the national and local levels, from changing our approach to investment and reforming fiscal rules to advancing fiscal devolution. We outline some key principles for fiscal reforms in the final chapter of this report.