How to deliver great jobs: towards a regional industrial strategy for Liverpool City Region

At a glance - summary of this research

1.1 This report is based on work conducted by a research team at the Heseltine Institute of Public Policy and Practice at the University of Liverpool.  We seek to provide insight into how an industrial strategy can be developed and delivered to provide great jobs for the citizens of the Liverpool City Region.  Led by the new Metro Mayor, Steve Rotheram, the Liverpool City Region Combined Authority (LCR CA) can overcome social and economic problems facing local people and plan the whole economy to make it more social, to enable good jobs and shape the type of growth we pursue.  It is our view that such an industrial strategy can be achieved and in this report, we outline evidence that suggests not only should the local economy be considered in this way, but that it would be negligent not to do so.

1.2 This is an independent piece of research, funded by the TUC, with impartial evidence and views offered through a series of interviews with local stakeholders.  We argue that great jobs are an integral part of a vibrant local economy.  By good jobs we are referring to employment that provides dignity at work, with good terms and conditions, the living wage and the capability for free collective bargaining. Good jobs are an important part in making the City Region economy more social, not least because they support economic growth as part of a whole economy approach to social and economic development.

1.3 The Government Green Paper ‘Building our Industrial Strategy’ is an important starting point for this work.  We see that the current strategic focus for the Liverpool City Region – embodied in the Local Enterprise Partnership (LEP)’s Growth Strategy, commissioned by the Combined Authority – is consistent with the Green Paper.  Both the Green Paper and Growth Strategy fail to address the pressing problem of connecting those currently excluded from labour markets with those new jobs that growth sectors will allegedly create.

1.4 The vote to leave the EU and the 2017 General Election has let loose political uncertainty across the UK.  In this context we believe there is an opportunity to develop the local economy on bedrock sectors such as manufacturing and the visitor economy (VE), to establish good job principles across public, private and third sectors and demonstrate how the power of government can be used to enable and shape inclusive growth across Liverpool City Region.

1.5 In our research we have found the following:

• In the UK wages have fallen while the number of people in employment has risen.  In the Liverpool City Region structural problems persist including relatively high unemployment, a lower tax base and higher public expenditure per worker, lower productivity and pockets of entrenched deprivation.  Austerity measures, particularly local authority expenditure cuts, have become normalised across the City Region.
• While the endurance of such indicators does not bode well for the people of the City Region, we do have a period of successful economic growth fuelled in part by European Union Structural Funds.
• The Liverpool City Region has a relatively diverse industrial structure.  While it has a lower manufacturing location quotient than the rest of the North West, its manufacturing base is relatively productive.
• The visitor economy (VE) has been designated a sector of strategic importance by the LCR CA.  The VE supports over 49,000 jobs and contributes circa £3.8bn to the local economy.  This part of the economy is characterised as transient with low skill levels and relatively poorer terms and conditions of work.
• The public sector accounts for around 25% share of Liverpool City Region GVA.  There is a consensus emerging in the City Region that spending by public authorities can be undertaken in more strategic ways, to support social value, not least in the face of severe expenditure cuts.
• Our evidence indicates that stakeholders are concerned with the skills levels in the City Region.  However, the two aspects to this each require a different type of response.  First, there is the general low level of skills and educational attainment in the City Region that need attention.  Second, there is the changing nature of the labour market that will threaten existing skilled jobs.
• There is consensus on digital development across the City Region.  Again, there are different aspects to this that require more considered thought.  Current infrastructure is believed to be under developed, although there are key points across the City Region where this appears ripe for expansion.  This topic is considered a means by which productivity can be enhanced and a way to include hard to reach communities through processes of digital inclusion.

1.6 We conclude this work by making a series of recommendations, summarised below.  Firstly, those that can be sought under current devolution arrangements and should be confirmed in the next 12 months.

Actions in the City Region now

• The Liverpool City Region Fairness and Social Justice Advisory Board (FASJAB) should incorporate into its terms of reference a focus on the City Region economy.  FASJAB should promote a City Region social contract between employers and employees, and the principles of inclusive growth. 
• Task the newly established Liverpool City Region Skills Commission to lead on education and training pertinent to employers, and suitable for employees and potential employees.  Importantly, the Commission can help eradicate low value-added, exploitative training schemes where they exist, on a sector by sector basis. As a priority, the Commission should focus on the Visitor Economy.
• Social value processes that support procurement and commissioning by public authorities can be established.  We call for a lead person for inclusive growth and social value to be designated with immediate effect and for feasible social impact objectives during commissioning to be set, including the development of appropriate tools of measurement.

1.7 We also consider what is achievable with further devolved powers, and how new powers should be pursued.

More powers for the City Region

• Given the current limitations of the Metro Mayor’s remit, it would seem imperative that Liverpool City Region make a case for additional powers through a second devolution deal.
• An important prerequisite to any further devolution decisions, however, is the establishment of an inclusive process to ensure key stakeholders have a voice. This could be through the expansion of the advisory members on the Combined Authority, in particular to include a worker voice, or it could be via the establishment of an ‘assembly’.  
• Once this is established, further devolution of skills funding and transport powers should be strongly considered. Additional policy areas for consideration would include planning, transport, housing, health, skills and employment, and crime.
• Formal partnership arrangements with other Northern city-region combined authorities should be sought, including powers to raise additional finance for infrastructure development.
• New fiscal powers should be pursued with caution and adhere to the principle of benefit to local communities.  If confirmed, they should clearly improve health and wellbeing outcomes and support environmental protection as well as being designed to support growth of a wider City Region tax base.

1.8 Finally, we consider what central government can do to support industrial strategy in the region.

Central government action to support Liverpool City Region

• The uncertainty from Brexit needs to be overcome with a stronger commitment to a trade arrangement with Europe.
• Clarity on what is to replace European Structural Funds is needed.
• An end to austerity would help local authorities plan to develop combined initiatives.
• Increased levels of central government borrowing and financing at sustainable, if currently low, interest rates would support city-region industrial strategy initiatives.
• An investment bank for the North would help Liverpool City Region small and medium size enterprises and address the current asymmetry in the supply and demand for finance.

Action to tackle insecure work on employee representation, fair wages, dignity at work, regular employment and learning is urgently needed.

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