Fixing place based challenges with an industrial strategy

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The Industrial Strategy Green Paper has landed and includes a focus on ‘place’. As the Green Paper sets out:

"For Britain to achieve its maximum prosperity, and for the economy to work for everyone, all parts of the country must be firing on all cylinders."

We couldn’t agree more – which is why EEF has had a strong policy focus on devolution and place for quite some time.

Read next: What to expect from devolution in the year ahead

The relevant pillar of the industrial strategy “Driving growth across the whole country” sets out the challenges and solutions based around some core principles. 

place-and-IS-grid 

Perhaps the most scathing thing that could be said is, who would disagree with any of that? And herein is the problem; solutions to place based challenges are fairly obvious. So why don’t we just get on with it?

Well the government has been doing just that. From City Deals, Devolution Deals, LEPs, the Local Growth Fund, initiatives such as the Northern Powerhouse or Midlands Engine or even the Regional Growth Fund.

Each had the core ambition of giving power, responsibility and funding to ‘places’ to prioritise.

For some this hasn’t been enough – but this is a tanker with limited fuel turning slowly so priorities will have to be made about how best to use that fuel to build up the greatest amount of momentum.

 

How does EEF think this tanker can be turned around?

  1. Weaknesses in transport and connectivity

    While originally there was a mad scramble up on deck, it has now been settled that transport and infrastructure is worth some fuel to really get some momentum going. We've previously set out the reasons why this is a good early focus.

    We are therefore pleased to see this as a focus of the place industrial strategy pillar. For manufacturers this has consistently been one of the bigger issues in the local business environment.

  2. Different qualification and skills levels of people in different places

    When it comes to place, “skills” as a challenge should forever be followed up with two questions

    1. Which skills? And
    2. What is the local policy response to supplement national action?

    Too often the priority is to shout about the latest challenge in the skills bucket and argue for the national policy response to be devolved to local areas as they’ll be able to tackle it better.

    Given that a significant part of the skills challenge is the poor numeracy and literacy attainment of students being churned out by (largely) local authority run schools, you’ll forgive me for not buying the argument, that on skills, local is better.

    The green paper recognises this point in arguing for the raising of skill levels “nationwide” and the wider issue of highly skilled people being highly mobile. The government’s answer is to build on national reforms and encourage local places to test innovative approaches.

    This testing what works best in each area is a good approach, to avoid yet another wholesale reform of the skills system.

  3. Overall research and development investment tends to be lower in places with low productivity

    We’ve previously covered the green paper chapter on R&D, so I won’t rehash the key arguments here. On place and innovation the government is also keen to test approaches to see what works.

    The long running challenge on innovation is how to ensure a focus on national excellence, driven through Innovate UK, while also helping companies not at the innovation frontier to catch up?

    Our view is that tweaking the definition of innovation for R&D tax credit qualification and prioritising the Industrial Strategy Challenge Fund to support technology diffusion across supply chains will significantly boost R&D levels across the country.

    For places the answer should be working with Innovate UK to provide additional funding alongside but in line with the Industrial Strategy Challenge Fund, to really focus and put the afterburners on boosting local research and development.

  4. Local institutional leadership is a crucial element

This is, in our view, the biggest challenge that needs to be tackled and the bit we hope the government focusses the most on.

In fact, we wrote a whole report on it last year – Manufacturing Local Growth.

In short – while transport might provide some added momentum in turning the tanker around. The anchor that will stop anything happening is expecting any of this to be delivered by over 300 local authorities in England. 

There is a desperate need for more councils to merge to give them the capability to deliver at scale. As we argued in our paper last year there are benefits to tackling this issue once and for all, including:

  • greater impact in the delivery of services

  • lower cost of delivering those services

  • balancing budgetary risk and reward across a larger area

This change would go some way to help deliver the institutional framework necessary to support local industries as part of an industrial strategy.

What do you think? You tell us - what institutions, either existing or new, could help support your business ambitions? What else should be done at a 'place' level to support your manufacturing business to grow?

You can tell us what you think by email: research@eef.org.uk or on Twitter: @EEF_Economists

 

 

 

Author

This person has now left EEF. Please contact us on 0808 168 1874 or email us at enquiries@eef.org.uk if you have any questions.

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