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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Can you have capitalism without capital? Brighton, Ankara, Ghent and the intangible economy

The Fusebox, Brighton. Image: WiredSussex.

As you head north out of Brighton on the A23 things take a distinctly granular turn. The cool bars and trendy eateries give way to second-hand shops and nail bars.

Looming over the area, New England House, an eight-storey brutalist office block, is home to Wired Sussex, a collection of digital and media companies, as well as its offshoot The Fusebox. Here, a collection of entrepreneurs, tech visionaries and creative technologists are seeking to transform their ideas into successful businesses. This island of cutting-edge thinking, surrounded by the evidence of the glaring consequences of austerity, could stand as a synecdoche for the suddenly vogueish concept of the “intangible economy”.

Towards the end of last year, on Radio 4’s Start The Week, Jonathan Haskel, author of Capitalism Without Capital, laid out the features of this brave new economy. The ideas are scalable, have sunk costs, their benefits spill over, and they have synergies with other intangible assets. All of these things are, to a greater or lesser extent, attributes featured in the virtual reality games, apps for care home workers, and e-commerce ideas mapped out by the bright sparks in the Fusebox.

Its manager, Rosalie Hoskins, explains that it exists to support the work of small companies doing creative work. Within these clean white walls they can bounce their ideas off each other and reap the fruits of collaboration. “We’ll provide the doors,” she says. But “it’s up to them to open them.”

One innovative thinker hoping to make her entrance is Maf’j Alvarez. She tells me she studied for a masters in digital media arts at the University of Brighton, and describes herself as an ‘interactive artist’. “Right now I am playing with virtual reality,” she tells me. “There’s a lot of physics involved in the project which explores weight and light. It definitely has a practical application and commercial potential. VR can be used to help people with dementia and also as a learning tool for young people.”

The Fusebox, she says, is “about collaboration. The residents of the Fusebox are in all a similar situation.”

The willingness to work together, identified by Haskell as a key element of the intangible economy, is evident in the Fusebox’s partnership with like minded innovators in Ankara. Direnç Erşahin from İstasyon, a centre for “social incubation” based in the Turkish capital, visited the Fusebox toward the end of last year.

“It was a good opportunity to exchange knowledge about the practice of running a creative hub – managing the place, building a community and so on,” he says.

Erşahin and his colleagues have launched a fact-checking platform – teyit.org – which he believes will provide “access to true information”. The co-operation between the Fusebox in Brighton and İstasyon in Ankara  is “a good opportunity to reinforce a data-oriented approach and university and society interaction,” he argues.

But the interaction between wider society and the denizens of the intangible world is often marked by friction and, ironically, a failure of communication.

This point is underlined by Aral Balkan, who runs a company called indie.ie which aims to develop ethical technologies. “There’s a good reason we have a trust problem,” he says. “It’s because people in mainstream technology companies have acted in ways that have violated our trust. They have developed systems that prey upon individuals rather than empowering them.”

A former Brighton resident, Balkan is almost a walking definition of Theresa May’s “citizen of nowhere”. He is a regular speaker on the TED and digital circuits, and I crossed paths frequently with him when I covered the industry for Brighton’s local newspaper. He left the city last year, chiefly, he tells me, in protest over the UK government’s overweening “snooper’s charter” laws.


He has Turkish and French citizenship and is now based in Malmö, Sweden, while working with the city of Ghent on a radical redevelopment of the internet. “Ghent is a beautiful example of how location affects the work,” he tells me. “They don’t want to be a smart city, they want to encourage smart citizens. We are exploring alternatives.”

Karl-Filip Coenegrachts, chief strategy officer at the City of Ghent, is another believer in the synergies made possible by the intangible economy. “The historic perspective has impacted on the psychology and DNA of the city,” he says. “The medieval castle built to protect the nobility from the citizens not the other way around. People in Ghent want to have their say.”

Left out of this perspective, of course, are those who cannot make their voice heard or who feel they are being ignored. The fissures are easy to find if you look. The future of Belgium’s coalition government, for example, is threatened by Flemish nationalists in the wake of a scandal over the forced repatriation of 100 Sudanese migrants. In Ankara, President Recep Tayyip Erdogan has purged local government and continues to stamp on any dissent.

In the UK, the gig economy makes headlines for all the wrong reasons. Back in the area around the Fusebox, the sharp observer will notice, alongside the homeless people curled up in sleeping bags in charity shop doorways, a stream of gig-worker bikers zooming from one order to another.

The intangible economy throws up all-too tangible downsides, according to Maggie Dewhurst, vice chair at the Independent Workers Union of Great Britain. She gives short shrift to the idea of ‘capitalism without capital’.

“It does get a bit irritating when they muddy the waters and use pseudo academic definitions. They pretend tangible assets don’t exist or are free.”

In fact, she adds, “The workers are a human resource.”