WMCA Industrial Strategy Consultation

Priorities

Increase infrastructure investment to enable us to compete with other advanced economies.

Maximise job and training opportunities and secure quality employment standards on infrastructure projects, through the use of framework agreements developed with unions, as seen at Olympics 2012 and HS2.

Use a social partnership approach to ensure infrastructure meets community need, supports connectivity and inclusive growth.

Key issues / evidence

The TUC has long campaigned for increases in infrastructure spending across the same broad categories as those set out in the Green paper, i.e. digital and communications, transport, and water and flood defences. We would also stress the paramount need for housebuilding, including for social accommodation.

There are several obvious benefits from such initiatives:

• immediately supporting both aggregate demand and the allocation of demand, in particular reducing reliance on the household sector
• the provision of more high-quality work
• supply gains from improved infrastructure
• the social benefits of useful initiatives irrespective of specific supply gains.

With interest rates still at historic lows, these schemes are a good investment for the public sector. Fiscal rules should recognise that the multiplier gains of such work are likely to outstrip the costs of implementation in the first place.

The UK’s continued lag in infrastructure spending provides a challenging context for the WMCA’s industrial strategy. The TUC has welcomed the ‘National Productivity Investment Fund’ of £23bn introduced in the 2016 Autumn Statement, but even with this spending, government investment as a share of the economy will be lower in this Parliament than it was in the last. Comparing spending across OECD countries (on a national accounts basis), UK government investment of 2.6% of GDP ranks 20 out of the 27 countries for which data are available. The Office for Budgetary Responsibility has this rising to only 2.7% by 2020, which will leave the UK ranking unchanged (assuming other countries’ shares remain constant). The WMCA’s industrial strategy provides an opportunity to harness central government funding and to lever private investment to drive greater infrastructure spending and target it more effectively on local need. But in addition, all partners involved in the WMCA industrial strategy should work together to make a stronger case to central government for greater funding and support for infrastructure investment going forward.

The National Productivity Investment Fund provides opportunities to support the development of infrastructure in the region that promotes connectivity, regeneration and new physical assets – supporting both supply side measures but also driving up demand in the local economy through the multiplier and employment effects. However, too many projects of this kind fail to meaningfully engage with local communities and more needs to be done to enable unions, civil society, community groups and others to help design and shape projects that meet need as defined by those communities in a way that provides real improvements in the wellbeing of those communities.

With major projects like Heathrow T5, the London Olympics and HS2, framework agreements developed with unions can ensure that the infrastructure projects can deliver great jobs, skills and access for local employment and training opportunities. And aligned with an intelligent procurement strategy, government can also use these projects to offer opportunities to businesses along the supply chain.

The Memorandum of Understanding signed between the Olympic Delivery Authority, delivery partner CLM and construction unions on the construction of the London Olympic Games infrastructure committed contractors to promote high quality employment standards, including adherence to relevant national collective agreement, direct employment, trade union access, the promotion of local labour and training initiatives and effective partnership between unions, contractors and delivery partners on securing safety and wellbeing of all those working on the project.

Similarly, the framework agreement signed by unions and HS2 commits to a share purpose of promoting the best employment standards and industrial relations, recognising national agreements, using direct employment, promoting opportunities in disadvantaged communities, paying the real Living Wage where applicable, investing in workforce development and training, ensuring world class health and safety standards and promoting positive relations with trade unions.

Infrastructure and regeneration projects do not provide these outcomes without agreement and commitment between all partners and, without such agreements, opportunities for using regeneration and investment as a driver for inclusive growth will be missed.

The WMCA should use HS2 as a key vehicle for releasing greater connectivity both across the WMCA and the wider midlands region. Improving connectivity across the midlands region is essential in unlocking growth potential. The present transport network is creaking and a significant brake on growth. Moreover, in delivering greater connectivity the bus network must not be overlooked. An ambitious road, rail, tram and bus programme should be a cornerstone of the industrial strategy.

Recommendations

WMCA, LEPs and other local actors should work together to articulate the need for greater government investment in infrastructure and define what works best for those areas.

The WMCA and LEPs should work with community and workforce representatives to ensure that infrastructure and regeneration is delivered in a way that meets genuine need and 11 enhances wellbeing in those communities – not just in terms of identifying the infrastructure that meets that need but in shaping the way it is constructed and delivered in a way that maximising community benefits. Consultation at the outset, through the local industrial strategy for example, is welcome but this must be an on-going process that provides a feedback loop from communities and the workforce to the relevant delivery partners, to relevant local authorities and LEPs.

All infrastructure projects, including house building, should include framework agreements that maximise employment and training opportunities for local people and deliver great jobs, employment standards and positive industrial relations.