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Industrial strategy must not ignore the potential of counties

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With all the attention currently being given to Brexit, the government’s plans for an industrial strategy for England have rather disappeared from the radar.

richard holt

richard holt

Richard Holt 

That is despite the fact that the original purpose of the proposed strategy was surely to be a substitute for EU membership, even if only in part.

Any properly balanced industrial strategy must reflect the needs of all parts of the economy. In work recently published by the County Councils Network, Oxford Economics has looked at the contribution of England’s counties to the national economy. These counties account for 44% of English employment (13 million people) and 41% of gross value added (GVA).

That compares with just 26% and 23% respectively in the combined authorities. It’s not that the two areas are in competition with one another: quite the contrary. But an industrial strategy for England that ignored the counties would be a deficient strategy.

This is all the more true because recent experience suggests the counties typically grow at least as fast as the big cities, outside London. GVA growth over the last 10 years in the counties has averaged 1.1% a year. That’s above the 0.8% average for the combined authorities. So counties matter.

A misperception is that England’s counties are rural and remote. On the contrary: CCN members account for 53% of English manufacturing, which means if an industrial strategy is partly about improving the UK’s manufacturing performance, and it surely must be, then it needs to address the reasons for success and failure of manufacturing companies located in the English counties.

A last issue is whether the industrial strategy can be assisted by devolution. Estimates exist which suggest that devolution from Whitehall to counties could yield savings approaching £12bn in a single year. If just half of that was reinvested in measures that successful increased economic growth, the impact could be large.

So long as there are no constraints on growth such as skill shortages, and no shortages of viable projects, then based on estimates made for the then-government of the effectiveness of the old regional development agencies, it is possible that GVA might over time be boosted by as much as £26bn. Assuming the same productivity, that would imply an extra half a million jobs.

So perhaps the industrial strategy and devolution should be linked, with county economies firmly part of the package.

Richard Holt, head of global cities research, Oxford Economics


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