The Industrial Strategy’s approach to place

Woefully low levels of productivity in the UK have been observed for a number of years now. Data from the Office of National Statistics (ONS) shows that UK GDP output per worker is 16.6% below the combined G7 nations level. As the Government’s Industrial Strategy White Paper recognises – this stark differential has implications for people in terms of their pay, work opportunities and life chances. Therefore, quite rightly, politicians and commentators alike have pointed to this failing, and its potential fix, as something of a ‘silver bullet’ capable of curing the country’s economic ills.

Recognising this productivity challenge, Government published its Industrial Strategy White Paper in a bid to arrest the country’s productivity malaise. The scope of this agenda is admirable in that it was the first explicit recognition in decades of the need for strategic intervention in the growth and development of the UK economy and industry. Such an interventionist approach is well overdue, given the colossal global and domestic economic shifts that have occurred in recent times.

At a more micro-level – It is also the case that more specific attention is required for rural and coastal areas, which can suffer from high levels of deprivation. On account of their isolation and bespoke requirements – more thought and attention needs to be focussed how the specific needs of these areas can be addressed to bring them more centrally in to the economic fore. NLGN have also undertaken research on how councils could themselves be more active drivers of productivity, through devolution of the necessary policy levers.

‘Place’ is one of the five pillars around which the Industrial Strategy and its bid to boost productivity is centred. While regional disparity is far from a new problem in the UK, the importance of focussing on the place-based dimensions of economic growth becomes even more evident upon a quick view of ONS data. This evidence shows how economic growth in the decade prior to the 2008 financial crash was far more balanced than in the subsequent decade.

Source: ONS

The reason why some regions have performed markedly better than others over the last decades depends to a large extent on the degree to which the region has been able to specialise, typically in either knowledge-intensive services or medium high-tech manufacturing. These sectors have prospered in recent years.

The Local Industrial Strategies (LISs) proposed in the Industrial Strategy White Paper will seek to build on the strengths of the area concerned, encouraging the locality to develop specialisms that will also lead to beneficial economic agglomeration effects that can boost comparative advantage. However, for all this endeavour there is a shortcoming in the Industrial Strategy’s approach to place. The vernacular is distinctly urban – with analysis drawing attention to the frequency of descriptions such as ‘smart cities’, ‘city regions’ and ‘clusters’ prominent. There is a glaring omission in that rural areas, coastal areas, and areas which lack an identifiable sectoral or technological basis that chimes with those set out in the Industrial Strategy, risk being left behind. Indeed, the first three areas for LISs are Greater Manchester, the West Midlands and the Oxford-Milton-Keynes-Cambridge corridor. This trio are referred to as the three ‘trailblazers’.

What makes this omission all the more concerning is that Local Enterprise Partnerships (LEPs) are one of the main drivers underpinning the Industrial Growth Strategy. But when it comes to rural areas, LEPs have been found wanting. A report recently published by the Campaign to Protect Rural England outlines survey evidence to show that LEPs largely neglect rural communities.

More peripheral places, or those without a distinctive industrial profile may not benefit from ambition and investment that the Industrial Strategy sets out. Were this to happen the strategy would in fact compound growth that is not inclusive of areas that are economically disadvantaged. Such economic dislocation and isolation has been put forward as one of the drivers behind the 2016 EU referendum result for the UK to leave the union.

Rural areas need investment to thrive. This is particularly the case when it comes to transport infrastructure. Academics from the University of Lincoln have found that economic agglomeration effects are more likely to develop in rural and semi-rural areas that enjoy good links to nearby urban centres.

Just under a fifth of the population live in the rural areas. Rural businesses, such as small farms, account for almost a quarter of all registered businesses in England. To discount such a broad base of the UK’s economy, on account of it not being perceived to fit with a tech-y industrial profile, would be to run the risk of sowing the seeds of yet more societal discord.

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