What does the Industrial Strategy do for England’s regions?

Published date
01 Dec 2017

Monday’s white paper on Industrial Strategy was the biggest opportunity to bridge the country’s great regional divides that we’ve seen in years.  

Ending regional inequality is important, as yet more evidence from the Social Mobility Commission revealed this week.

They write that “Britain’s deep social mobility problem, for this generation of young people in particular, is getting worse.

“The divide is not just an economic or social one. It takes the form of a widening geographical divide. The Social Mobility Index reveals a growing gulf between our country’s great cities (especially London) and those towns and counties that are being left behind economically and hollowed out socially”.

The Social Mobility Commission has studied all 324 local authorities in England and found that – as we have argued – it’s not the case that Britain’s divides can be drawn across a border between the North and South.

It is far more complex than that, with low wages and poor educational outcomes across most of Britain’s rural and coastal areas, and its former industrial places, particularly the Midlands.

And while there is a growing divide between cities and the rest of the country, there are pervasive pockets of deprivation in most of our urban centres, not least London.

The government’s industrial strategy can be praised at least for its recognition of the problem. It says:

“Many places are not realising their full potential. The UK has greater disparities in regional productivity than other European countries. This affects people in their pay, their work opportunities and their life chances.”

But does the White Paper go far enough?

Here’s a quick run-down of the toplines relating to England:

First, it backs ‘Local Industrial Strategies’ which ‘build on local strengths and deliver on economic opportunities’. A welcome move, and an area on which the TUC has lot to say.

The paper says that places in England with a Mayoral Combined Authority will have a single strategy led by the mayor and supported by Local Enterprise Partnerships (LEPs). And for parts of the country without a mayor, strategies will be led by the LEP.

But there is no requirement for such bodies to engage with working people on the development of industrial strategies. This is a massive oversight: given that workers are businesses’ best assets, it makes no sense to ignore what they have to say.

And while some unions have good relationships with LEPs, there are big concerns surrounding their corporate governance and accountability. So it’s good news that the government has promised to review how they work – let’s hope that any reforms put worker voices at the table.

Second, it announced the £1.7bn Transforming Cities Fund, to improve intra-city transport.

Half will be allocated via competition for projects in cities and the other half will be allocated on a per capita basis to the six combined authorities with elected metro mayors (this excludes London).

No city in the UK – scarred from 7 years of austerity and suffering from decades of creaking infrastructure – would in its right mind turn down cash for transport. But the measure falls far short of the bold and ambitious investment needed, for example, through a project like CrossRail for the North.

Indeed, the Budget's £30m for WiFi on TransPennine trains is hardly going to transform the lives of workers from Todmorden or Huddersfield. 

But also, this focus on cities risks ignoring the problems facing workers in towns and rural areas. Workers that form the backbone of the economy – in sectors like retail, social care and hospitality – need to be able to rely on more local transport networks for every day commuting.

Third, the Paper announced £42m to pilot a Teacher Development Premium.

This will test the impact of a £1,000 budget for professional development for teachers in areas of the country that face the greatest challenge in driving pupil outcomes.

Investment in education in the poorest parts of the country is of course welcome. But it falls far short of what is required. The core school budget is set to decline in real terms by 4.6 % between 2015-2020. Schools in many rural, small town and coastal areas are facing severe funding shortfalls and have been comparatively underfunded for many years. This might explain why 50% of London’s disadvantaged youngsters make it to university, compared to just 10% in places like Hastings, Barnsley and Eastbourne.

While the government has tried to tackle this through the National Funding Formula, the shrinking schools budget means that gains for underfunded areas have had to be capped. 88 per cent of schools across England face funding cuts between 2015-2020.

And the extra cash doesn’t address growing class sizes, reduced curriculums and the loss of teaching and support staff arising from cuts.

Finally, the white paper’s ‘people’ section contains a set of ambitions on the skills agenda (which my colleague Tim mentions here). It certainly recognises the long overdue need for intervention to fix structural challenges in the economy, not least through a social partnership approach to a National Retraining Scheme.

On the ‘place’ side, it announced the creation of Skills Advisory Panels and local Digital Skills Partnerships in England. These will use data analytics to improve our understanding of employer demand for skills.

We backed this type of framework in a recent report. Going a step further, skills strategies should be more closely aligned with infrastructure and investment decisions, so that employment and training benefits accrue to local communities. We await the detail but hope that, as with the National Retraining Scheme, unions are given a voice on these Panels to help bring local industrial strategies to life.

Verdict

The ‘foundational economy’ supports 40 per cent of the workforce, creating and distributing “goods and services consumed by all (regardless of income and status) because they support everyday life”, says CRESC.

It forms the foundations of regional economies and includes our workers distributing health services, education, utilities and food; those in care homes, supermarkets, restaurants and bars. Yet how industrial strategy can support workers in low-paid, low-productivity sectors across the country is somewhat overlooked in the White Paper.

Overall, for the White Paper to have succeeded it needed to devolve power away from Westminster, towards people and their communities. In parts, it made strides towards this. But there is much further to go if we are to rectify the massive socioeconomic divides that scourge the country.