ECONOMIC GROWTH

Devolution needs to be more 'Kevin Keegan'

If the UK wants to emerge from its ‘odd decade’ into a better place, it must use devolution to boost the economic potential of its regions, says Henry Kippin.

The former Newcastle and England football manager Kevin Keegan once lamented: ‘I know what is round the corner. I just don't know where the corner is.'

I feel somewhat similar being asked to speculate on the future of economic growth in the regions. Over the last 15 years the UK has navigated a path through a financial crash and recession, austerity, Brexit, Covid, a deeply confusing mini-Budget, war in Europe and the Middle East and an ensuing inflationary crisis. What next?

One could argue we have emerged somewhat close to where we started – with an imbalanced economy that is, to quote the economist Duncan Weldon, like ‘Portugal with Singapore in the bottom right-hand corner'. Yet despite the challenges, we have seen moments of light and progress.

Devolution deals have been struck that have begun to change the narrative within our core cities and hitherto under-powered regions. We have seen inward investment successes that have defied post-Brexit doom-mongering, such as Nissan in Sunderland, HSBC in the West Midlands and Astra Zeneca in Cambridge. And, in levelling up, the Government has landed on a narrative that rhetorically – if not always tangibly – has cut through into public meaning.

We are likely to see a General Election called towards the back end of this year. Any party hoping to form a government will need to double down on its commitment to supporting economic growth in the regions for sound political and economic reasons. But what should they be saying? Here are five suggestions.

1. Deepening devolution is vital and inevitable. We need to keep the faith and continue to back devolution – building on trailblazer deals in Greater Manchester, the West Midlands and the North East and opening up the possibility of shifting power in skills, welfare, education, housing and culture.

This is not just about moving money from one place to another, but changing the logic of policymaking and giving local leaders the ability to effect system change that can make a real difference to local economies. The Levelling Up White Paper and Gordon Brown Commission both point in this direction.

2. Industrial strategy is dead. Long live industrial strategy. It is uncontroversial to suggest the country needs a more coherent economic strategy that can focus investment towards key industries and sectors and support net zero transition. But this can't be a classic top-down document that assumes some magic will happen to effect delivery once a plan is written.

It needs to build on local and regional insight, working with local and mayoral authorities and articulating the cross-regional relationships (such as the East Coast clean energy corridor) that can unlock long-term job creation and economic cluster growth in key industries.

3. Remember the human capital factor. Avid Centre for Cities report readers over the years will know that the key underlying factor driving long-term prosperity in cities and regions worldwide is human capital: education, skills, innovation and the ability to flex the system to ensure current and future employers have the skills pipeline they need to grow. Learners, too, need clearer routes in to work and training that can work around them – blending school age, further education and higher education provision where that is needed.

The devolution of adult skills is a success story and we are starting to see greater local influence on employment support. The next phase needs to be extending influence and innovation through stronger collaboration between the Department for Education and local system actors.

4. The return of public service reform. The flip side of accelerated growth is sustainable public services and social infrastructure – that can manage demand and adapt to a changing set of citizen wants and needs. Inequalities of access and provision that have been exacerbated by Covid (as Sir Michael Marmot and others have pointed out) require a tailored and more holistic way of working.

Recent reports from New Local, Changing Futures Northumbria, and the long-term advocacy of people like Victor Adebowale and Hilary Cottam point us towards greater local flexibility and a stable financial settlement that can enable this. Innovation in prevention and inclusive economic growth are both interdependent and essential.

5. A creative re-emergence. The re-industrialisation of regions like the North East, South Yorkshire or the West Midlands looks quite different this time around. Advanced manufacturing, engineering and energy remain critical sectors but we must also look to culture, creative industries, tourism and sport – fast growing sectors which are already transforming the economic landscape and citizen experience in places like Manchester, Leeds and Birmingham.

The announcement of Crown Works Studios in Sunderland is another key milestone. The project could deliver 8,000 jobs and deliver £336m to the local economy every year, and could help spur a wider regional renaissance in writing, publishing, film and music production through organisations like Generator, New Writing North and North East Screen.

If the UK wants to emerge from its ‘odd decade' into a better place, it needs to use devolution as a way of boosting the economic potential of its regions. Government needs to set the tone – but let's not be under any illusions about where the agency will come from to drive this forward. Much has been written about the atrophy of capability and resource from local government through austerity, and the chickens coming home to roost via section 114 notices in recent months. But despite this we still also have incredibly strong and resilient local leadership that will continue to push for greater self-determination and power. As Kevin Keegan says, we need to find the better settlement that lies around the corner.

Henry Kippin is chief executive of the North of Tyne Combined Authority and interim chief executive of the North East Mayoral Combined Authority

@h_kippin

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