Andy Burnham’s triple helix growth model risks being undermined by fuel, food and finance headwinds

The UK’s new government is as dependent on generating growth as the last but aims to generate it through different means. During his first speech at the despatch box at the start of this month, Andy Burnham outlined his plans for the snappily titled “triple-helix model”. This involves a combination of infrastructure and public investment provided by the state; research, skills and innovation from the academic sector; and commercialisation and increased employment by business.

By name, it comes across as highly theoretical but in practice triple helix thinking has underpinned the place-based partnership model driving growth in the Greater Manchester area. The model works naturally in places like Oxford and Cambridge.

Intensive and high-quality academic research, industrial co-location and government investment in infrastructure have for decades created a self-reinforcing growth engine in the “golden triangle”. Devolution aims to reallocate power outside of traditional growth areas to create growth partnerships. The triple helix might not deliver growth in every postcode, but if applied effectively it could get better results from existing and new regional investment.

This is the work of decades, and it depends on growth. While the Greater Manchester Combined Authority (GMCA) dates to 2011, Manchester’s place-based partnership approach was already under development in the mid-1990s, triggered by one-off factors such as reconstruction after the IRA bomb and the Commonwealth Games held in the city in 2002.

The triple helix needs a catalyst and growth, as well as a place and a partnership. The partnerships themselves will also need time to build capability and local consensus, and to demonstrate concrete results.

Time is never on the side of a reforming government, and the current one is no different. News that NHS reforms are being delayed by workforce reduction and TUPE issues, just as the reorganisation of unitary councils comes under further review, highlights the complexities that will be faced as local and regional institutions are reorganised along triple-helix lines.

Devolution will take place, but it needs growth to succeed. Even if growth does not follow, the political effort and resources will be expended. Labour’s reprioritisation towards the shift of power is a gamble that risks distraction from other, equally vital, aspects of government.

In my last column I pointed out the importance of public sector capital programmes. There has not been much growth for construction elsewhere. Latest data covering the second quarter points to a loss of momentum well before Burnham was appointed prime minister.

The value of new work orders for road, rail and other public programmes continued to fall up to June, even though the new spending period is in full flow. Public sector orders for new construction work were down by over 25% in the second quarter, compared with the average quarter last year. That is a big drop by any standard, but this took place when the economy was outperforming – what will happen if the growth stalls?

Unfortunately, headwinds to growth are intensifying. Fuel, food and the cost of finance represent three largely unconnected inflationary drivers that have a growing hold on the UK economy – even as the overall picture appears to be stable.

Take fuel, for example. Oil is now flowing from the Persian Gulf, but the price remains over $90 a barrel. Refined fuels like diesel and liquefied natural gas (LNG) are under greatest pressure.

There will always be supply, but it will come at a price. The energy outlook is for higher costs and scarce supply, particularly for the LNG that cannot safely pass through the Strait of Hormuz.

Food supply is rapidly emerging as the next market challenge, with falling crop yields and livestock already eating winter feed. Not only has the heatwave severely reduced crops in Europe, but attacks on shipping in the Black Sea have cut off Ukrainian grain exports too.

Now a very strong El Niño threatens poor harvests in Asia and Africa. People rely on food even more than fuel, and increased food costs will sap demand across the world, harming UK exports as well as the domestic economy.

Finance is the final arm of this inflationary trifecta. Long-term bond yields are at their highest levels since the great financial crisis, with knock-on effects for borrowing costs and the value of fixed-income investments.

The triple headwinds – fuel, food and finance – threaten the momentum of the triple helix, diverting government spending away from infrastructure and crowding out productive investment in research and production

Government deficits are one cause, but the explosion of AI-related borrowing, totalling at least $500bn in 2026, has created new long-term competition for capital. Ironically, even as AI drives growth and productivity, it will drive up the cost of borrowing – for everyone – once again diverting productive spending and sapping growth.

The triple headwinds – fuel, food and finance – threaten the momentum of the triple helix, diverting government spending away from infrastructure and crowding out productive investment in research and production. They will form an important backdrop to this year’s Budget, particularly given their effect on the Office for Budget Responsibility (OBR) annual assessment of financial headroom, and their potential for triggering second-round inflationary effects.

However, the impact on next year’s spending review could be far more consequential. One of the ironies of reforms to public spending is that measures designed to provide long-term certainty around spending commitments could introduce new sources of uncertainty. One example is the accelerated cadence of spending reviews – undertaken every two years to avoid the third-year “cliff edge”.

Departments might benefit from better visibility of spending as plans are updated, but might also find themselves planning for cuts as spending pressures increase. Uncommitted capital programmes could be at risk.

Ten-year allocations of capital funding for health, education and defence also reduce flexibility. Investment in local government and other unprotected departments does not share this guarantee – is it possible to maintain these promises even as problems pile up?

Construction markets rely just as much on the public and private sectors working in unison as the triple helix model. High finance costs and low levels of confidence mean that the sector continues to under-perform.

Redirecting growth just as growth faces new headwinds is a risky business. The triple lock of fuel, food and finance could prove to be very consequential for our new administration.

Simon Rawlinson is a partner at Arcadis