Industrial Strategy must improve prospects of poorest places post Brexit

Transforming the prospects of the country’s poorest towns and cities must be at the heart of the post-Brexit economy, according to the independent Joseph Rowntree Foundation (JRF).

In its response to the Government’s consultation on the Industrial Strategy Green Paper, which closes today, JRF says the plan provides an opportunity to transform left behind places, whose prospects were highlighted by the Brexit vote.

The Government has set itself the aim to ‘build a stronger, fairer Britain, that works for everyone’. To achieve this, the Industrial Strategy needs to focus on the lagging parts of the economy: driving up productivity in low-pay sectors, meeting adult basic skills needs, and boosting struggling towns and cities.

JRF’s analysis highlights areas where people are not benefiting from record employment or have high levels of workers trapped in low-paid or insecure jobs.

Figure: The More and Better Jobs Gap

The ‘More Jobs Gap’ (on the left) shows the proportion of the workforce seeking work or more hours. The ‘Better Jobs Gap’ (on the right) shows the proportion who lack a good quality job, either through low pay or insecurity.

Local Enterprise Partnership (LEP) areas such as the Greater Birmingham and Solihull and Liverpool City Region have more than a fifth of the workforce seeking work or more hours, while some rural areas such as Greater Lincolnshire and Cumbria have high proportions of the workforce (27% and 24% respectively) trapped in low-paid or insecure work.

To boost national productivity, the needs of different places must be more central to the Industrial Strategy Green Paper. Even in England’s biggest cities outside of London (Birmingham, Manchester, Leeds and Liverpool), productivity is just two-thirds that of the capital.

Dave Innes, economist at JRF, said:

“The Industrial Strategy is an opportunity to transform the prospects of Britain’s poorest people and places by making sure that the economy really does work for everyone. It is a welcome step to help deliver on the Government’s ambition.

“To make that a reality, we need to put people and places that have missed on the country’s economic success at the heart of the Industrial Strategy. Almost five million adults lack basic skills, many places have not shared in the country’s record employment, while others see high numbers of workers trapped in low-paid, insecure work.

“These factors act as a drag on productivity and living standards. To boost national productivity, towns and cities must be more central to the Industrial Strategy, rather than added on at the end.”

To help deliver on the Government’s ambition, JRF highlights five priorities that need action in the Industrial Strategy to create an economy that works for all:

  1. Strategies for low-paid sectors – the Green Paper makes sector deals open to all, but Government should proactively seek deals with low pay sectors. Sectors such as retail and hospitality constitute 23% of the economy, but account for 30% of the productivity gap to countries such as France and Germany.
  2. Adult basic skills – meet all basic skills needs by 2030 by doubling the participation rate in skills programmes – such as night classes and workplace training - for digital skills, literacy, numeracy and basic English for Speakers of Other Languages. With 90% of the 2025 workforce having already left education, the need to increase adult skill levels is underplayed.
  3. A strategy for struggling places – Closing the gap between places requires growth in struggling towns and cities. As the UK withdraws from the EU, there is an opportunity to think afresh about how to combine funding, devolution deals and capacity building support.
  4. Devolution deals and capacity for all places – ensure all places have sufficient capacity, powers and strong institutions to lead local industrial strategies, including those without mayors or Combined Authorities.
  5. Rebalance national economic spending – especially transport and research and development, which are currently tilted towards London and the South East. For instance, Government investment per head on science and technology is 29 percent below the national average in the West Midlands, while transport spending per head in the North East is 29 percent below the national average.