Economy and Infrastructure

Localis: Industrial reform must be driven and led at local level

The government’s industrial strategy should be driven and led at a local level by handing space and powers to leaders to allow them to dictate policy “from the front”, a new report by Localis has argued today.

The research, titled ‘The Making of an Industrial Strategy’, was published to act as a ‘road map’ to turn Whitehall’s ambitions in the industrial strategy green paper into a reality.

Prime minister Theresa May had previously called for a strategy that would “help to deliver a stronger economy and a fairer society – where wealth and opportunity are spread across every community in our United Kingdom, not just the most prosperous places in London and the south east”.

Localis’ report aims to set out how this will be implemented in practice.

Business secretary Greg Clark, who wrote the foreword to the report, said: “Governments are fond of quoting national figures – of economic growth, of productivity, of employment.

“But the truth is economic growth does not exist in the abstract. It happens in particular places.”

One key finding in the report was that “although recent administrations have made progress in establishing collaborative governance across the country, for instance in the West Midlands and Greater Manchester, the devolution deal process has left two-thirds of the country without a strategic authority. The industrial strategy must address this matter urgently”.

To combat this, Localis suggested that every town, city and village should be covered by a recognised strategic authority.

As well as this, it recommended that new powers should be put in place in order to deliver growth and share benefits between local areas, arguing that “government should create an industrial compact which provides all strategic authorities, once established, with the tools to succeed and lead the industrial strategy”.

“Avoiding the attrition of negotiation that affected city and devolution deals, power transfer should be automatic,” the think tank added.

“Strategic authorities should also be granted greater fiscal flexibilities with which to raise revenue for infrastructure and deliver more redistributive growth. To do this, government should establish a series of fiscal devolution pilots in strategic authority areas across the country.”

Local councils respond

Cllr Mark Hawthorne, chair of the LGA’s People and Places Board, said that Localis was right to highlight the crucial role councils must play in developing the industrial strategy to drive growth and tackle economic imbalances across the whole country.

“We can only truly build a world-class economy if every local economy across the country is firing on all cylinders,” he said.

“For that to happen, all councils need greater freedom and funding from central government to build more homes, secure the infrastructure essential to economic growth, improve our roads, equip people with the skills they need to succeed and increase access to fast and reliable digital connectivity for all.”

Cllr Hawthorne added that areas across the country have worked hard to produce ambitious and innovative devolution proposals and secure deals, but that now local areas were becoming increasingly concerned that the pace of devolution risks being lost because of the existing top-down approach to governance.

“It is important that we build on existing locally-led economic strategies and partnerships, and not create unnecessary uncertainty or confusion through the creation of new institutions or structures,” he said.

“To see more deals agreed sooner rather than later, the government should work more flexibly with local areas to agree deals, recognise that not all deals need to follow the same governance framework and commit the resources necessary to get those deals over the line. 

“The ability to determine local approaches to investment and public services that support inclusive growth must be available to all who call for it.”

Simon Edwards, director of the County Councils Network, also argued that the success of the government’s industrial strategy rested on whether the potential of the counties was tapped into.

“Despite contributing 41% of England’s GVA, counties’ productivity is below the national average, and they have sizeable challenges in relation to infrastructure gaps, unaffordable housing and growing skills gaps that must be tackled,” he stated.

“Localis’ report, and their emphasis on counties as major strategic authorities built around county geographies, rightly recognises their central importance to any industrial strategy.

“Devolving power and resources to counties at scale rather than a heavy emphasis on the major cities and bureaucratic governance will help rebalance the country and deliver on the government’s aims of its Industrial Strategy and higher regional productivity.”

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