If the government’s Modern Industrial Strategy is to succeed, it will need to maximise the UK’s economic growth potential in a highly uncertain and rapidly changing global context, while at the same time ensuring that this growth comes from – and is felt in – all parts of an increasingly divided country. Getting that right is both politically and economically essential.
Impactful Devolution 03: A toolkit for regional growth and industrial strategy takes a deeply practical look at how the government can rise to that challenge.
Written by Alex Bevan, FGF Research Fellow and former Chief of Staff to the Welsh First Minister, the report first looks at the context: endemic regional inequalities having worsened since the financial crisis thanks to a combination of policy ‘chop and change’ and the weakening of local institutions. The state has too often been making this worse, not better: growth-friendly public investment is 19% higher per head in the Greater South East compared with the rest of England.
Impactful Devolution 03 sets out how to address this: reforming the state so that it is more reliable, capable and purposeful and can deliver regional growth so that communities across the country feel that the economy is ‘on the up again’. With a specific focus on the transformations taking place in energy, technology and defence – and the challenges and opportunities they create – the report proposes five tools to help the government’s new direction on industrial policy stick:
1. Fund the fundamentals: Develop a Renewal Investment Tracker to shine a light on how public investment is spread across the country, and ensure in future it is better targeted towards regional growth.
2. Build the evidence: Create an evaluation service for local growth to learn lessons, build evidence and protect value for money. This should enable the UK Government to focus more on strategy and outcomes, and less on micro-management.
3. End the funding ‘Hunger Games’: Replace the outdated grants system with a new approach that encourages collaboration and innovation in technology, defence and energy.
4. Create regional business banks: New local institutions that understand their regions and can help small businesses seize new opportunities at scale – close enough to ‘get it’, but big enough to act.
5. Put place at the heart of decisions: Adopt new data-driven investment criteria that ensure regional impact is central to spending decisions across all eight of the Industrial Strategy’s high-growth sectors.
