This report explores what placed-based industrial strategies can do to make sure that no matter where people are born or where they work, everyone has the chance to get a great job.
We argue that the creation and sustainment of great jobs should be a core objective of an industrial strategy. To achieve this, the government should fundamentally change the way the economy works, shifting power to people in their workplaces, and to their communities.
The UK economy is currently too reliant on consumer spending, and suffers from a chronic lack of investment. Workers have experienced exceptionally weak pay growth, and a rise in job insecurity, with damaging consequences for productivity. GDP growth in the first half of 2017 was 31st out of 34 OECD countries, and is expected to grow at half the rate of the Euro area in 2018. Local government funding and public services have suffered huge cuts, with working people footing the bill for the excesses that led to the 2008 financial crisis.
Sharp regional disparities mean that certain parts of the country are bearing the brunt of these challenges. These inequalities are often (though not always) most sharply evident in comparing England’s North and South: children in the North East are twice as likely to live in a workless household as those in the South East. And since 2011, almost half of jobs created in the North West, and two-thirds of jobs created in the North East have been insecure (e.g. agency, temporary, or zero hours). Prosperity is not, however, evenly shared across the South: for example, inner West London’s GVA as a share of UK output was around 6 times greater than that of Suffolk in 1997, increasing to almost 10 times by 2015.
Two issues present additional challenges: first, the impacts of Brexit will likely manifest in different ways across the country, as different regions are home to sectors that are reliant on trade with and labour from the EU in different ways. Secondly, to meet our international commitments to reduce emissions and fight climate change, heavy industry and the jobs that depend on them need to change significantly as part of the low-carbon transition.
Whilst there are risks, devolution can bring significant new opportunities. Around half of all union members and a third of the workforce in England now live and areas covered by city region devolution deals. Combined Authorities and Mayors have a new and increasing set of powers relating to economic growth, transport, skills policy, and more.
An ambitious industrial strategy that is sensitive to the needs of different places is therefore essential, and in this vein, this report aims to influence the government’s forthcoming White Paper on Industrial Strategy. Findings stem from research the TUC commissioned on regional industrial strategies in three diverse areas: Liverpool City Region, Tees Valley, and Norfolk and Suffolk.
These regions have common problems: each has been affected by decades of deindustrialisation; each is home to a service sector too often delivering poor quality jobs that hold back productivity; and, like the rest of the country, each has suffered from tremendous cuts to local government and public services funding. The report assesses further common issues, including:
But each region is also home to unique problems that require tailored policy interventions:
Liverpool City Region suffered not only a decline in manufacturing but also its service sector throughout the 1970s–1990s. Unemployment was stubbornly higher than the national average and areas of poverty persisted. This trend began to reverse with the help of EU Structural Funds in the late 1980s. However, following the financial crisis and declining collective bargaining, unemployment and lower wages have returned to worrying levels when compared with national and other city region rates.
Tees Valley is a city region with major ports and an historical industrial base including steel, shipbuilding, oil, gas, chemicals, process and pharmaceuticals. These energy intensive sectors in the region are well unionised, providing skilled, highly productive jobs. However, the region has experienced industrial shocks over the years, most recently including the collapse of the SSI steelworks in 2015. The region also has extremely high carbon emissions which must be brought down to meet the UK’s climate change commitments.
Norfolk and Suffolk have high levels of employment but low wages, low productivity and high inequality. It does not share in the prosperity of neighbouring Cambridgeshire, nor London. Its population is aging, and the two counties are characterised by the worst income inequality in the UK.
These challenges must be met with a long-term industrial strategy, using the different tools that are appropriate for both central government and, crucially, for local actors. Reflecting on all three pieces of commissioned research, we identify the strategies that need to be deployed at both levels.