What the West Midlands’ local industrial strategy means for other cities

West Midlands mayor Andy Street and Prime Minister Theresa May learn a little something. Image: Getty.

Back in May, the West Midlands won the race with Greater Manchester to publish the first local industrial strategy. No doubt both will become the benchmark for other areas to follow as they produce their own strategies. But if these or other strategies are to be successful, they will need to focus on making their areas more attractive to highly productive businesses.

As with the national strategy, the purpose of the local industrial strategies is to improve the productivity of the economies that they cover. While the prevailing thought is that poor productivity is the result of a “long tail” of unproductive businesses, a point referenced in the West Midlands’ strategy, our previous work has shown how this isn’t the case. And looking at the West Midlands and Greater Manchester specifically shows this to be true for these areas too.

The charts below look at the distribution of businesses according to their productivity for the West Midlands, Greater Manchester and cities in the Greater South East. They show two key things.

Source: ONS, Annual Business Survey.

The first is that the long tai’ in all areas is dominated by local services businesses such as cafés, bars and hairdressers. And there is very little difference in the distribution of these businesses, meaning they do not explain the difference in productivity between the areas as a whole.

The second is that the difference between the areas is in the distribution of exporting businesses – those that sell beyond their local market – such as advertisers, finance businesses and software developers. While Greater Manchester has a higher share of higher productivity exporters than West Midlands (the distribution is more skewed to the right in the chart), both lag well behind cities in the Greater South East of England.

This difference is not because exporters in the West Midlands and Greater Manchester are performing below par, but because the nature of the activities is different, with highly productive, innovative activities more likely to locate in the Greater South East than elsewhere. So the challenge for both areas is to make themselves more attractive to this type of activity (such as software design), rather than the lower skilled exporting activities (such as back-office functions for a bank or data handling company).


This has been increasingly happening in Manchester in recent years.  Bet365 have opened a city centre office in Manchester to locate its tech team, rather than at its headquarters in Stoke. Siemens engineers its wind turbines in the city that are then built in Hull. And JLR is to open a software, IT and engineering centre there too.

But the chart above and overall productivity figures for the city region show that even with these moves there is still a considerable gap. And so the challenge for the local industrial strategies will be to identify the specific barriers that prevent more investment from these types of exporting activities.

This holds true for many other places too, especially in the north of England. They will no doubt take great interest in the local industrial strategies of West Midlands and Greater Manchester, and take inspiration from them.

But if they want their own strategies to be useful, they must be clear in how the actions that they propose – be it investment in skills, transport or commercial space, for example – will help them be more attractive to higher productivity exporters in the future than they have in the past.

Paul Swinney is head of policy & research at the Centre for Cities, on whose blog this article first appeared.

 
 
 
 

Community-powered policies should be at the top of Westminster’s to do list

A generic election picture. Image: Getty.

Over the past five decades, political and economic power has become increasingly concentrated in the UK’s capital. Communities feel ignored or alienated by a politics that feels distant and unrepresentative of their daily experiences.

Since the EU referendum result it has become something of a cliché to talk about how to respond to the sense of powerlessness felt by too many people. The foundations of our economy have been shifted by Brexit, technology and deindustrialisation – and these have shone a light on a growing divergence in views and values across geographies and generations. They are both a symptom and cause of the breakdown of the ties that traditionally brought people together.

As the country goes through seismic changes in its outlook, politics and economy, it is clear that a new way of doing politics is needed. Empowering people to take control over the things that affect their daily lives cannot be done from the top down.

Last week, the Co-operative Party launched our policy platform for the General Election – the ideas and priorities we hope to see at the top of the next Parliament’s to do list. We have been the voice for co-operative values and principles in the places where decisions are made and laws are made. As co-operators, we believe that the principles that lie behind successful co‑operatives – democratic control by customers and workers, and a fair share of the wealth we create together – ought to extend to the wider economy and our society. As Labour’s sister party, we campaign for a government that puts these shared values into practice.

Our policy platform has community power at its heart, because the co-operative movement, founded on shop floors and factory production lines, knows that power should flow from the bottom up. Today, this principle holds strong – decisions are best made by the people impacted the most by them, and services work best when the service users have a voice. Our policy platform is clear: this means shifting power from Whitehall to local government, but it also means looking beyond the town hall. Co-operative approaches are about placing power directly in the hands of people and communities.


There are many great examples of Co-operative councillors and local communities taking the lead on this. Co-operative councils like Oldham and Plymouth have pioneered new working relationships with residents, underpinned by a genuine commitment to working with communities rather than merely doing things to them.

Building a fairer future is, by definition, a bottom-up endeavour. Oldham, Plymouth and examples like the Elephant Project in Greater Manchester, where people with experience of disadvantage are involved in decision-making, or buses in Witney run by Co-operative councillors and the local community – are the building blocks of creating a better politics and a fairer economy.

This thread runs through our work over the last few years on community wealth building too – keeping wealth circulating in local economies through growing the local co-operative sector. Worker-owned businesses thriving at the expense of global corporate giants and private outsourcers. Assets owned by communities – from pubs to post offices to rooftop solar panels.

And it runs through our work in Westminster too – with Co-operative MPs and peers calling for parents, not private business, to own and run nurseries; for the stewards of our countryside to be farmers rather than big landowners; and for workers to have a stake in their workplaces and a share of the profit.

Far from being ignored, as suggested in last week’s article on community power, our work has never been more relevant and our co-operative voice is louder than ever.

Anna Birley is policy offer at the Co-operative party.