There has rightly been much excitement in the local government world about the 31 July Cabinet Statement on rewiring the state.
It represents a major break with centralised practice, not least in establishing a new governing imperative across Whitehall to support devolution as the default choice in any government consideration of domestic policy. But here, I want to look at the significance of this statement for inclusive growth.
Prime Minister Andy Burnham has been clear that his overarching mission is to support good growth in every part of the UK.
The Royal Society of Arts' Inclusive Growth Commission defined it as ‘growth that as many people as possible can both contribute to as well as benefit from'.
Put simply, that requires an economic strategy that supports the key sectoral drivers of future growth, connects this to local clusters of innovation and sectoral assets, and equips people with the right skills and opportunities to get good jobs everywhere.
Building a higher-growth, more inclusive economy needs to be a combined effort bringing together every level of government. Too often, since 2024, the impression was given that regional policy was just about devolution. But in any modern economy this is a shared responsibility across the government system.
A strategy for good growth everywhere needs to be based on three core elements: first, a compelling story of where growth will come from in the future. Second, a co-ordinated approach to drive growth everywhere, in which every layer of government and business works together. And third, a proper devolution of the tools that can support human capital development at sub-regional level.
The Prime Minister has rightly committed to the reindustrialisation of Britain and this must be connected to the sectors in our economy that can be at the forefront of growth in the future.
The Modern Industrial Strategy set out the eight priority sectors: advanced manufacturing; clean energy; creative industries; defence; digital and tech; financial services; life sciences and professional and business services.
If Britain is to move beyond the low growth and low productivity cycle of the last 18 years, we will need to turbocharge innovation in the sub-sectors between these industrial categories.
As Gordon Brown's Commission on the UK's Future highlighted, Britain is fortunate to have both clusters of sectoral opportunity and top-class universities spread across the UK.
Mayoral Local Growth Plans have already identified many of these opportunities. They now need to be wired into a national strategy to promote reindustrialisation though innovation.
Building a higher-growth, more inclusive economy needs to be a combined effort bringing together every level of government. Too often, since 2024, the impression was given that regional policy was just about devolution. But in any modern economy this is a shared responsibility across the government system.
When John Healey was last in the Treasury, he carried out a sub-national economic review, precisely because he understood that regional economic policy is a national government priority.
The rewiring of government needs to recognise this by connecting much more explicitly national industrial strategy with Local Growth Plans. The welcome reinstatement of the National Economic Council with mayors and ministers provides a vehicle for this. Meanwhile, No10 North can bring together the key economic departments into a co-ordinated system to support growth everywhere.
A clear vision for future growth and a system that connects national, regional and local strategy are both critical, but inclusive growth has always been about reform as well as growth.
The economic case for sub-regional economic governance is strongly connected with the functioning of local labour markets. One of the biggest inclusive growth priorities is not just physical and commercial investment, but also human capital development, enabling many more people to get good jobs.
However, this is where mayors have been forced to operate with their arms tied behind their backs. From the outset all they have had devolved is the adult education budget, together with some vague promises about influence over other aspects of skills and employment policy.
That has not stopped them from developing innovative approaches to reform despite these constraints. These include the Greater Manchester Baccalaureate, the South Yorkshire Pathways to Work Programme and the North East Combined Authority's Child Poverty Reduction Unit and strategy.
Now, at last, the rewiring paper has promised the full devolution of 16-19 skills and vocational policy and budgets. This must be accompanied by full devolution of employment support to allow mayors to tackle the scandal of youth unemployment in their places.
This more fully-fledged approach to devolution can make good growth everywhere a real prospect but, as Mike Emmerich's review (The MJ 9 July, Bringing dynamism into devolution) highlights, this will also need strategic authorities to have the capabilities and resources to deliver on this potential across the full spectrum of inclusive growth.
The signs are promising and the fate of democratic politics depends on being able to make big progress quickly on this urgent mission.
Ben Lucas is chair of the Growth and Reform Network and founder/director of Metro Dynamics
