Local leaders need more powers over skills to boost productivity, writes Andy Norman for LGC.
A year has passed since Boris Johnson won his majority, promising in his victory speech to level up the regions outside of London and the south east by spreading opportunity to every corner of the UK. Twelve months on and the outbreak of Covid-19 has made achieving this goal both more difficult and more urgent.
The impending jobs crisis for low skilled workers is threatening to derail the levelling up project before it has even begun. To address this huge challenge, we need a radical shift in industrial policy and governance, giving places agency to invest in the industries that can provide the good jobs of the future.
Regional inequalities can be tough to shift. They are often deeply woven into the country’s social and economic fabric. But evidence is growing that targeted interventions to boost local high value-added industries can make a big difference. A new report from the Centre for Progressive Policy has unveiled more than 60 opportunities across the UK to do just that. These are high productivity sectors with growth potential in low productivity parts of the country, represented by a “British BRICS” of Blackburn, Rother, Inverclyde, Conwy and Stoke-on-Trent.
Instead of trying to invest in these sectors directly from Whitehall, central government should empower local leaders – primarily metro mayors in mayoral combined authorities (MCAs) – to apply their local knowledge and take advantage of these local opportunities. Industrial policy should therefore be a central weapon in each MCA’s policy arsenal, with mayors taking responsibility for achieving a set of economic and social outcomes in a framework mutually agreed with Whitehall.
Front and centre should be action on skills policy. Efforts to boost local industries are doomed to fail if businesses cannot access the skilled workforce they need to thrive. It is also important for ensuring local residents can share in the economic benefits of growing high value-added industries. Investing in the civil engineering sector, for example, will do little to help the people of Craven in Yorkshire if they lack the skills to access the jobs that investment creates.
The West Midlands CA Skills Agreement that grew out of the last industrial strategy unlocked £69m of funding to be spent on a range of initiatives. It’s an example of what can be achieved if there is sufficient political will, although it still falls short of the necessary levels of devolution. MCAs should be given greater powers to commission skills courses that link to their local growth sectors. The devolution of the adult education budget (AEB) from August last year was a step towards achieving this. But there are further steps the government can take to shift power on skills to the regionally elected mayors.
Devolution of the National Skills Fund would add to mayors’ fire power, but Whitehall’s decision to set funding conditions centrally means it will lack the flexibility to effectively support local industrial policy. More widely, the Levelling Up Fund and the UK Shared Prosperity Fund should also be devolved, with mayors free to use as much of the funds to improve skill levels as they see fit. Cuts made to the AEB, which have severely compromised the ability of mayors to shift the dial on their skills systems, should be reversed as a matter of urgency.
The failure of multiple generations of policy initiatives to tackle the UK’s longstanding regional inequalities can in large part be traced to the over centralisation of political power. International evidence strongly suggests a positive link between decentralisation and the easing of regional inequality. Whether it be machinery manufacturing in Oldham or IT in Stoke, what CPP’s analysis has shown is that low productivity places have assets and industries that offer real potential. We must empower local leaders to invest in these opportunities, with localised reskilling and upskilling critical to success.