Towards Local Industrial Strategies

Towards Local Industrial Strategies

The Industrial Strategy White Paper has outlined what the UK government sees as the five foundations of productivity, one of which is places. This is specifically intended to lead the drive towards more prosperous communities and tackle the vast regional and local disparities that exist across the UK. Local industrial strategies are central to this focus.

What are local industrial strategies?

A local industrial strategy (LIS) should bring together a strong, well-informed evidence base about an area’s economy and outline a long-term set of priorities that capitalise on existing opportunities in the economy, address weaknesses and resolve an area’s needs. You might think that having “industrial” in the title means a focus on particular sectors nationally, but the reality is they should give direction to an area’s whole economy and the sectors which are locally impactful.

Who will be responsible for them?

The six areas with mayoral combined authorities (MCAs) will have a single strategy led by their respective mayor, with support from their local enterprise partnership (LEP). In areas without an elected metro mayor the LIS will be led by the local LEP, even where there is a combined authority (CAs) like Sheffield City Region or West Yorkshire. For Scotland, Wales and Northern Ireland, the approach will be agreed in consultation with the devolved administrations.

Given the increased responsibility and need to deliver that comes with this process, LEPs will be reviewed and reformed accordingly. The government says it will make additional financial resources available following its review of LEPs. The review will look at leadership, governance, accountability and geographic boundaries to give LEPs a clearly defined set of activities, objectives and responsibilities. We will most probably see the end of overlapping LEP boundaries.

With the stated aim of delivering the first LISs by March 2019, the White Paper shows that areas including Greater Manchester and the West Midlands Combined Authority will work in partnership with the government to develop the first LISs.

Are they different from SEPs?

Strategic Economic Plans (SEPs) were used to define local economic strategy and guide negotiations between the UK Government and LEPs to access the Local Growth Fund.  These documents outlined each LEP’s offer and overarching aims; they were developed and are owned by LEPs.

LISs on the other hand will engage more widely and closely with existing institutions including universities, research institutes and combined authorities (CAs); they will be agreed in partnership with government not merely informed by government policy, as was the case with SEPs.

Areas will need to build on their SEPs to develop their respective LISs.  And in maximising local advantages within the national framework, LISs will also be a need to align with the national IS. We anticipate that LISs will operate as both a strategy to guide local policymaking (along the lines of SEPs) and as an investment plan for deploying an area’s portion of the Shared Prosperity Fund (SPF), along the lines of European Structural and Investment Fund Strategies, to meet the future needs of the area.

What will they be used for?

LISs will outline the long-term economic strategy for local areas and ensure that skills, infrastructure, housing policy, land supply and other important areas align to local needs. LISs will guide policy and decision-making across a broad range of local areas, particularly in places with MCAs, where LISs will guide mayoral policy.   Given that they will all be agreed by government, they are also likely to play a role in decisions made in Whitehall from allocating funding to devolution deals and approving new infrastructure.

The White Paper says that LISs will guide how devolved funding streams will be used. This includes the UK Shared Prosperity Fund which will be consulted upon in 2018 and will replace EU structural funds as we leave the EU. Other funds are expected to be included such as the £115m Strength in Places Fund.

Next steps, and how we can help

By 2019 the first local industrial strategies will be agreed with MCAs. In the coming months LEPs and MCAs will need to start assessing what insights they will need to develop a post-Brexit strategy. Regeneris has been working with a number of combined authorities and LEPs already on this. Our advice to anyone going down this route would be to:

  • Make the case for your boundaries: particularly LEPs with overlapping boundaries should review if they have a sufficiently robust and up-to-date evidence base that makes the case for their economic geography.
  • Think broad: ensure you have evidence across the five foundations of the Industrial Strategy: ideas, people, infrastructure, business environment and (local) places. The scope of your thinking should also embrace cultural institutions, the quality/role of urban centres and the critical issue of inclusive growth to show how your economy can stay on a sustainable path.
  • Focus on locally significant priority sectors: be ready to make tough and early choices about which sectors will generate the biggest growth and can drive the important productivity agenda. This may mean making some difficult decisions about lower value sectors which support a large number of local jobs.
  • Be realistic about trade & investment: in a post-Brexit world competition for inward investment and export businesses could be dramatically reshaped. At the same time, the core base of businesses which trade in domestic markets and your local start-ups need to be nurtured.
  • Keep labour market, demographics centre-stage: the skills agenda is clearly already a major concern for many sectors, especially higher value ones. Over time demographic changes combined with the housing challenge will, in many areas, become a constraint on economic growth. Some really difficult choices will be required in conjunction with local planning authorities as well as educational bodies.

Above all, act! There are many uncertainties which could lead to paralysis. We know also that resources are tight. But these cannot be reasons to sit back. Those areas which make sense of the opportunities emerging will be best able to mould the investments and progress their own local priorities.

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