Forget picking winners: the government’s industrial strategy should focus on the places that are losing

Clacton-on-sea in 2014. Image: Getty.

Take the 80 minute train from London Liverpool Street to Clacton-on-Sea, and you’ll start to understand why government wants a more active industrial strategy.

Your journey begins in the City, a main plank of the country’s economy which contributes just over 10 percent of UK tax revenues, but is perceived to be overly dominant. It ends in the district of Tendring, ranked in a recent Localis report as one of the thirty structurally weakest economies in England. Once past Chadwell Heath, on the eastern fringe of London, every district the train passes through voted to leave the European Union. In the Brexit tour guide of discontent, it is one of the quicker trips.

The Localis report refers to areas like Tendring as England’s “stuck places”. They are penumbra economies still recovering from the 1980s, with weak labour markets sagging at both ends: their working populations are poorly skilled, while over 65s predominate. They are typically rural, and are clustered across the country.

If the Brexit vote is interpreted as the manifestation of a general discontent with the way the country and economy is run – Theresa May has called it a “quiet revolution” – then it is these stuck places to which the industrial strategy should give most attention and support. Yet this goes against the grain on two fronts.

First, to date much of government’s domestic economic policy has focused on city-regions. Many will elect a mayor in May, but the majority of the country – around 36m people – will be left without. They will have limited options in who can lead the industrial strategy in their area, because there will be no structure in place locally that government is willing to devolve to.

Second, historically government has preferred to focus on industries, sectors and even individual companies. The idea of treating places differently according to their need has rarely been a feature.

A successful industrial strategy for the nation as a whole needs to change this. As business secretary Greg Clark has said, “for too long, government policy has treated every place as if they were identical… What is needed in each place is different, and our strategy must reflect that.”


Given the breadth of government action that influences industry – both as policymaker and purchaser – the potential scope of the industrial strategy is huge. All arms of the state should be harnessed to support the prospects of places most stuck. From more local control of immigration to changes in the tax system, no recourse should be discounted.

One option is to double tax reliefs offered to investors in specific areas, for instance via the Enterprise Investment Scheme. Launched in 1993-94, the scheme provides 30 per cent tax relief on investments of up to £1m a year in shares of smaller, high-risk companies. It raised just under £2bn in 2014-15, over half of which went to companies registered in London.

Upping the rate of relief to 60 percent in a stuck place such as Tendring would give the area a boost. Companies registered there would have preferential access to financial benefits, and venture capitalists and entrepreneurs alike would be attracted to do business in the area.

Only so much can be done to mitigate a place’s history and geography. However the clear links between the Brexit vote and industrial strategy demand a response that raises the floor of our economy as well as its ceiling. For all the connotations of industrial strategy with picking winners, it’s the places that are losing who we ought to focus on.

Jack Airey is senior researcher at Localis.

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A growing number of voters will never own their own home. Why is the government ignoring them?

A lettings agent window. Image: Getty.

The dream of a property-owning democracy continues to define British housing policy. From Right-to-Buy to Help-to-Buy, policies are framed around the model of the ‘first-time buyer’ and her quest for property acquisition. The goal of Philip Hammond’s upcoming budget – hailed as a major “intervention” in the “broken” housing market – is to ensure that “the next generation will have the same opportunities as their parents to own a home.”

These policies are designed for an alternative reality. Over the last two decades, the dream of the property-owning democracy has come completely undone. While government schemes used to churn out more home owners, today it moves in reverse.

Generation Rent’s new report, “Life in the Rental Sector”, suggests that more Britons are living longer in the private rental sector. We predict the number of ‘silver renters’ – pensioners in the private rental sector – will rise to one million by 2035, a three-fold increase from today.

These renters have drifted way beyond the dream of home ownership: only 11 per cent of renters over 65 expect to own a home. Our survey results show that these renters are twice as likely than renters in their 20s to prefer affordable rental tenure over homeownership.

Lowering stamp duty or providing mortgage relief completely miss the point. These are renters – life-long renters – and they want rental relief: guaranteed tenancies, protection from eviction, rent inflation regulation.

The assumption of a British ‘obsession’ with homeownership – which has informed so much housing policy over the years – stands on flimsy ground. Most of the time, it is based on a single survey question: Would you like to rent a home or own a home? It’s a preposterous question, of course, because, well, who wouldn’t like to own a home at a time when the chief economist of the Bank of England has made the case for homes as a ‘better bet’ for retirement than pensions?


Here we arrive at the real toxicity of the property-owning dream. It promotes a vicious cycle: support for first-time buyers increases demand for home ownership, fresh demand raises house prices, house price inflation turns housing into a profitable investment, and investment incentives stoke preferences for home ownership all over again.

The cycle is now, finally, breaking. Not without pain, Britons are waking up to the madness of a housing policy organised around home ownership. And they are demanding reforms that respect renting as a life-time tenure.

At the 1946 Conservative Party conference, Anthony Eden extolled the virtues of a property-owning democracy as a defence against socialist appeal. “The ownership of property is not a crime or a sin,” he said, “but a reward, a right and responsibility that must be shared as equitable as possible among all our citizens.”

The Tories are now sleeping in the bed they have made. Left out to dry, renters are beginning to turn against the Conservative vision. The election numbers tell the story of this left-ward drift of the rental sector: 29 per cent of private renters voted Labour in 2010, 39 in 2015, and 54 in June.

Philip Hammond’s budget – which, despite its radicalism, continues to ignore the welfare of this rental population – is unlikely to reverse this trend. Generation Rent is no longer simply a class in itself — it is becoming a class for itself, as well.

We appear, then, on the verge of a paradigm shift in housing policy. As the demographics of the housing market change, so must its politics. Wednesday’s budget signals that even the Conservatives – the “party of homeownership” – recognise the need for change. But it only goes halfway.

The gains for any political party willing to truly seize the day – to ditch the property-owning dream once and for all, to champion a property-renting one instead – are there for the taking. 

David Adler is a research association at the campaign group Generation Rent.

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