Government must consider bold ideas to allow all corners of the country to compete on the global stage after Brexit, pursuing schemes like investment incentives outside the South East and ‘urban wealth funds’ for major cities, the Institute of Directors proposes today.
In a new report, Connected Economies, People, and Places, the directors’ body argues for action on local growth to be stepped up a gear, calling for ‘regional Cabinet’ meetings, an independent taskforce to monitor areas vulnerable to emerging global and technological trends, and making the Industrial Strategy Council a statutory body.
The recommendations are supported by a survey of over a thousand IoD members, published in the report, revealing that business leaders in every region and nation of the UK lacks confidence in their area’s ability to compete for trade, talent and investment with the rest of the world.
Directors’ number one priority for their local industrial strategies was improving infrastructure, followed by a long-term skills strategy and support for small businesses and start-ups. Meanwhile only one in seven in England said that the current system of LEPs and Growth Hubs was effective at boosting regional business growth.
The IoD report ‘makes a strong business case to give the regions more tools to drive innovation and prosperity’, according to West Midlands Mayor Andy Street. Other proposals included greater control over skills policy for local areas, a suggestion welcomed by Lord Jim O’Neill in his foreword to the report.
Tej Parikh, Chief Economist at the Institute of Directors, said:
“British businesses want to compete on the world stage, and many do, but too often they feel their region is fighting with one hand behind its back. The local growth agenda in the Industrial Strategy is a good starting point, but there have been too many delays and distractions in getting it up and running. Our towns and cities need more autonomy to respond to economic shifts and invest in their specialisms sooner rather than later.
“If our recent industrial history has taught us anything, it’s that we need to get ahead of economic and technological changes before they cause long-lasting damage to local communities. Future-proofing our regions by supporting innovative activities can help generate productivity gains and high-quality jobs across the country, not just in the Southeast. Our regions also need the support to showcase their strengths, boosting their ability to compete both nationally and internationally.
“Finding the cash to stimulate our regional economies will also become more challenging as competing demands intensify, so we must explore new ways to raise long-term funds that will build thriving local business environments. By strengthening networks between regional stakeholders – including key employers, government, universities and training providers – we can cultivate more responsive labour markets and business support. Parts of the country with low productivity will also benefit from placed-based reliefs and investment incentives to turbocharge their economies.
“As the UK leaves the European Union it is an opportune moment to refresh how we drive growth across the country. Encouraging enterprise in every region will be crucial to making ‘Global Britain’ a reality.”
Further detail on some of the proposals (see page 13 of the report):
- Develop a stronger institutional framework to co-ordinate regional policy. Create an independent taskforce to assess areas vulnerable to global trends, develop a regular schedule of ‘regional Cabinet’ meetings between ministers and regional authorities, and make the Industrial Strategy Council a statutory body akin to the Office for Budget Responsibility.
- Drive innovation through regional autonomy and specialisms. Outline a long-term plan for devolution and decentralisation, invest in innovative industry clusters, and support collaboration between business and universities.
- Create new funding channels and incentives to support local investment. Explore new long-term funding options, evaluate place-based incentives such as investment reliefs to stimulate disadvantaged areas, further enable local authorities to raise finances through retained revenues and investment funds, and design the Shared Prosperity Fund to drive growth in low-productivity regions.
- Improve the responsiveness of local skills policy. Consider further devolution of skills powers, enhance communication between LEPs, local businesses, and education institutions, and increase the flexibility for employers and local stakeholders to decide how to allocate Apprenticeship Levy funds.