Government ‘must not wait on councils to implement industrial strategy’

Written by Richard Johnstone on 22 March 2017 in News

Implementing Theresa May’s flagship plan must become a Brexit priority, says report

Whitehall must stand ready to create new regional quangos to implement Theresa May’s flagship industrial strategy if local authorities do not respond quickly enough to the plan, a think-tank has said.

In a report looking at the implementation of the government’s strategy, which has been published by the Department for Business, Energy and Industrial Strategy in a green paper, Localis said it should form the basis of a fresh industrial deal for Brexit Britain.

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Central government must broaden its focus on major cities and devolve powers to small town England if it is to make a success of Brexit, the review found. Many areas that voted for Brexit have seen little sustained growth since the 1980s, and these areas need radical new powers to revive moribund economies. 

However much of England does not have the organisational capacity to deliver on the government’s plan, which is intended to help areas address their own weaknesses by freeing investment decisions, increasing skill levels, or backing local innovation.

According to Localis, as much as two-thirds of England has no body with the strength and capacity to help drive local growth.

It concluded the government should back the creation of 47 strategic authorities to make use of new locally-held powers in areas such as local transport, taxation, business incentives and labour market freedoms as part of the industrial strategy.

This would be an extension of the combined authorities formed around cities in England in order to ensure the whole country is covered by a strategic agency.

Local areas should be given time to form these bodies, which would then reach an agreement with ministers to take a suite of economic and fiscal powers, through an ‘industrial compact’. Localis chief executive Liam Booth-Smith said these would be the biggest single domestic transfer of power since the establishment of the Scottish Parliament. Areas of control could include local labour markets, including work visas, powers to call in projects in the planning system and greater discretion over business taxation.

However, acknowledging that previous attempts at establishing collaborative governance through city and devolution deals had left most of the country without a strategic authority, the think-tank said government should be willing to establish them.

“Whilst places should be given time to set these authorities up locally, government should not tolerate extended periods of inertia. If local councils in an area can’t agree on the creation of a strategic authority then central government should,” the review stated.

Booth-Smith said that, in the aftermath of next week’s triggering of Article 50, the industrial strategy would become imperative to share the benefits of growth across the nation.

“We need to expand economic policy out from big cities to small town England. Our report is a roadmap for turning a national industrial strategy into local economic renewal.”

Writing in the foreword to the report, Greg Clark, the business, energy and industrial strategy secretary, highlighted the prime minister had made clear there is a need to drive growth across the country. The industrial strategy will not ignore this reality, he said.

“Place will be an important feature of the industrial strategy, it will be a lens through which to make decisions and judge success. Local civic and business leaders will be central to ensuring the government’s vision of a country sharing in the prosperity of growth. This means we need everyone to work together in the national interest.

“As the recent industrial strategy green paper sets out I am hoping for as much feedback and collaboration as possible from councils, businesses, universities, colleges and communities. Government won’t have all the answers and this means we need partners to help us build a strong industrial strategy.”

Responding to the report, Mark Hawthorne, the chairman of the Local Government Association’s People and Places Board, said councils must play a crucial role in developing the plan so it drives growth and tackles economic imbalances.

“Areas across the country have worked hard to produce ambitious and innovative devolution proposals and secure deals, but some local areas are increasingly concerned that the pace of devolution risks being lost because of the existing top-down approach to governance,” he warned.

“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. 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.”

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Richard Johnstone is CSW's deputy editor and tweets as @RichRJohnstone

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