Industrial Strategy what challenges for place

The current policy focus on the Northern Powerhouse and Midlands Engine, and specifically on the major cities in those regions, is underpinned by the concept of New Economic Geography.

Within this concept, the process of ‘agglomeration’ emphasises the importance of increasingly dense, short, and complex flows of ideas, innovation, trade, and people across limited distances in growing economies.

The Prime Minister has stated that she wishes to see support for growth in all parts of the UK, with no place ‘left behind’.

This implies strongly a widening of geographic focus to many more local places which do not fit with that concept.

A different economic underpinning for public policy will help support a new approach to public investments in smaller towns, rural areas and peripheral places, especially those which have suffered long-term decline.

Scale of the challenge

Recent research into the spatial balance of the UK economy and the regional-national economic problem reveals the scale of this particular challenge.

Poor local areas infographic

Across the OECD, employment, skills and incomes are much more evenly distributed than in England, where they are more heavily biased towards certain regions than in almost any other advanced economy.

Indeed our economic geography now resembles patterns of development similar to parts of Central and Eastern Europe. When relative incomes and costs are considered, 9 of the poorest 21 local areas across the whole of Northern Europe are now found in England.

The focus of investment

The Single Local Growth Fund, has been allocated on the basis of regular competitions.

Much of this fund has been targeted implicitly on the weaker parts of the country, but the Government may want to target more significant amounts of public resources on a more explicit basis.

The ready availability of very cheap capital has seen an understandable and strong focus of recent investments on physical infrastructure, especially where the need to replace an outdated Victorian infrastructure has been increasingly acknowledged.

A ‘smarter, more sustainable and inclusive approach’ at the local level will also emphasise a renewed focus on human capital and environmental performance – but such actions are more likely to need valuable revenue monies that remain in shorter supply.

Universities

Universities will be tasked, and will want to contribute to, the successful delivery of the Industrial Strategy. They are well placed to do so.

Many universities are heavily embedded in these local economies.

In many towns, the local university is not only the largest employer, but the most, and sometimes only, successful undertaking in the local economy, providing many high and low skilled jobs, supporting local firms in the supply chain.

Most recently, through a vigorous building programme, they have sustained the construction industry, where other commercial property markets have otherwise struggled badly.

The renewed importance of universities to place can and should feature strongly in the Industrial Strategy.