Prosperity before productivity – a call for new industrial strategy

Work Europe

Hannah Collins

The complexity of challenges we are faced with demands a rehaul of the 2017 Industrial Strategy. In a recent paper Professor Moore and I focus on industrial strategy as a tool to coordinate public, private and third sectors to meet the government’s objectives to level up and reach net zero GHG emissions by focussing on prosperity through securing livelihoods. Historically, industrial strategy has been used to counter the effects of uneven and unequal growth. But the current times require more than a focus on growth and productivity. Local industrial strategies are a mechanism through which to direct resources to what matters for people and planet through progressive forms of localism. Investment in local capabilities and capacities can build on the strengths and assets communities already have.

The 2017 Industrial Strategy is centred around five foundations (ideas, people, infra-structure, business environment, place) to boost productivity and earning power around the UK. It has been criticised for biasing innovative sectors and neglecting other sectors such as hospitality and retail. The focus is almost entirely on London and the South-East of England, doing little to tackle regional inequalities and is therefore not a mechanism through which to level up the UK. It relies on wealth trickling down to the majority by high value jobs creating demand for services and by redistribution through tax-and-spend policies. The concentration on cities as growth engines, on commercial property development, technological innovation and high-productivity trading sectors ends up neglecting the middle- and low-income earners. The focus on the global competitiveness of the UK perpetuates the social, political and economic divisions.

We propose shifting the overarching focus of a new industrial strategy from productivity to prosperity, therefore each of the 2017 Industrial Strategies’ five foundations requires a different approach. Ideas involves real inclusive innovation that rebalances power and prioritises local voice and decision making. People recognises the divide between essential and non-essential workers and recouple the social value of jobs with monetary value. Infrastructure investment would be given to the foundations of our economy that support daily life through Universal Basic Services. The ‘Green/clean jobs’ of the 2017 Industrial Strategy, expand beyond wind farms, solar panels and electric vehicles to incorporate many of the essential jobs that are labour intensive but have low-carbon impact. Business Environment involves creating shorter and more diverse local supply chains, that people, places and planet need rather than what shareholders need. Finally, Place involves local delivery of services, place-based solutions through enhanced fiscal capacity of local authorities to deliver citizen insights of the strengths, challenges and opportunities within their community and includes the protection and regeneration of natural ecosystems and biodiversity.

Embedded inequalities within places in the UK demand understanding the relationship between social and economic lives, and we will need the research tools, knowledge and pathways to help rebuild prosperity. The IGP’s project ‘Developing an Economy of Belonging’ employs mixed methods to show how important ‘place’ is in economic decision making to address inequality. It highlights the importance of the meso level, shifting the focus from between regional differences to those within regions.

Locally driven industrial strategy would reflect the public desire for government to prioritise health and wellbeing over economic growth. Through allocation of resources down to the local level and through affirming the value of social infrastructure in our lives we may begin to redress long-standing inequalities in the UK.

Image credit: Jason Leung on Unsplash