Introduction
The Levelling Up White Paper (Feb 2022) turned out to be a nine-day wonder. Strong on analysis and thoughtful on government structures, but woefully lacking in long-term, tangible policy. Nevertheless, it is useful to rake through the ashes of the past, and some of the principles are worth revisiting. In particular, the use of the ‘six capitals’ to address growth disparities.
Six capitals, and the one that moves
The six capitals framework argues that places prosper when physical, human, intangible, financial, social and institutional capital build up together, and stall when they do not. The levelling up label has been consigned to the dustbin, but the framework itself needs to be more durable, because it explains why some places turn investment into growth, and others do not.
Financial capital sits awkwardly within it. The other five are rooted in place. A skilled workforce, a rail line, or a research-led university does not disappear in the short term. Money can, and does, at the click of a mouse. Financial capital is therefore less an asset a place holds than a flow it attracts, and securing that flow turns on three things: attraction, fit and investability.
Attraction: how uneven is the flow?
The British Business Bank's Small Business Equity Tracker 2026 provides the clearest baseline. Smaller UK businesses raised £12.3bn across 2,002 equity deals in 2025. London-based firms secured 48% of deals but 57% of the value, down from 60% a year earlier, yet still well over four times the capital's share of the UK population. Firms outside London now account for more than half of all deals but raise markedly less per deal; the shortfall lies in the larger growth rounds that turn promising firms into substantial employers.
There are encouraging signs. Equity investment value rose 82% in the North West, 104% in the South West and 74% in Scotland in 2025. Single-year movements are driven by a handful of large rounds and should be read with caution, but regional deal activity has been building for several years.
Public capital has also moved – and is the current flavour of the month, with PuFins starting to be more widely recognised and considered. The National Wealth Fund (£27.8bn) expanded its Regional Partnerships to eight city regions in September 2026. The British Business Bank's financial capacity has risen to £25.6bn, including the £660m Northern Powerhouse Investment Fund II. The Pension Schemes Act 2026 also requires every LGPS administering authority to set a local investment objective and target range. Attraction still matters, but for most places at least some money is closer to hand than it was.
Fit: which capital for which project?
Lumping conversations about regional finance measures into a single conversation misses the point. Each source of finance has a different appetite for risk, return, term, and scale, and each suits a different kind of project. Pitching a skills programme to a pension fund, or an early-stage spin-out to a high-street lender, wastes time on both sides.
| Project type | Most relevant capital | What investors need to see |
| Early-stage, high-growth firms | Equity: BBB regional funds, angel syndicates, venture capital | A scalable market, a credible team and a route to exit |
| Established SMEs expanding | Debt: banks, BBB-backed lenders, community development finance | Trading record, cash flow and security |
| Revenue-generating infrastructure (energy, heat networks, transport) | Patient capital: National Wealth Fund, LGPS pools, institutional investors | Contracted long-term revenues, clear risk allocation and sufficient scale |
| Regeneration and housing | Blended: grant gap funding alongside NWF, PWLB or pension fund lending | A quantified viability gap, assembled land and planning certainty |
| Skills, public realm and social infrastructure | Grant and devolved funding, including integrated settlements | An outcomes case; these rarely generate a repayable return |
Illustrative mapping. Most significant schemes will need more than one source, layered by risk.
Two points follow. First, the National Wealth Fund and LGPS pools are best suited to large, long-dated, revenue-backed assets; they are not a substitute for grant where no return exists. Second, the most important regeneration schemes are usually blended, and the skill lies in sequencing sources so that a modest public contribution de-risks a much larger private one.
Investability: are projects ready to absorb it?
Regional fund managers routinely cite pipeline, not money, as the binding constraint. Projects are framed seductively, but when the investigation starts, too few businesses are investment-ready, and too few projects have a credible revenue model and a developed business case. This is where the six capitals stop being theory. Weak intangible capital means fewer spin-outs to back. Weak human capital means growth firms struggle to recruit. Weak institutional capital means projects reach investors half-formed. Put more money into a place with thin absorptive capacity and the usual results are slow deployment, weaker deals, or capital that drifts back to places with stronger pipelines.
Where are the trade-offs?
- Repayable finance favours revenue. A shift from grants to loans and equity tilts towards commercial property, energy and housing for sale, and away from the skills and social infrastructure that underpin the other capitals.
- Risk moves onto public balance sheets. Woking's debt-funded commercial investment strategy ended in a Section 114 notice in 2023, with borrowing approaching £2bn. The council was not short of financial capital; it lacked the institutional capital to manage it.
- Additionality is hard to prove. Public co-investment can crowd in private money or simply displace it, between firms or between regions. Robust counterfactuals, measured under the Green Book and subsequently demonstrated under the Magenta Book, are essential.
So what for places?
- Attract: know which national and institutional investors are active in your area, and what is already in their pipelines. Build additional relationships on fully developed business cases rather than flimsy promotional promises. Identify the investment houses that may have funds to back the type of projects you offer.
- Match: map each priority project to the capital source that fits its risk, return and scale, and be honest about where only grants will do. Projects that do not offer a return are of no use to any source of patient capital – public or private.
- Make investable: invest in the business cases, land assembly, commercial capability and investment-readiness support that turn ambitions into propositions investors can back.
Two questions sit beyond the scope of this piece: how to appraise repayable instruments, rather than grants, within a Green Book business case; and how to build a place-level investability assessment that pension funds and national investors will recognise. Both deserve fuller treatment, and we will return to them in the next blog.
If you are interested in examining your own economic strategy, commercial business case development or your attraction of investment, contact Nigel Wilcock, Mickledore at nwilcock@regionaldevelopment.co.uk