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Centrally-led growth policy holding back cities outside London

07 December 2011

Cities outside of London and the South East are at risk of being left behind by the economic recovery unless the government adopts a less centralised growth and innovation policy. This is according to a report published today (Wednesday  7 December) by The Work Foundation.  With the economic development of cities crucial to our recovery, the report calls on the government to boost funding and autonomy to Local Enterprise Partnerships (LEPs), so that many cities in the North and Midlands can fulfil their potential.

The research argues that current innovation policy needs to reflect the localism agenda and cities must be able to tailor policy  to fit their unique challenges. The strength of business, technology and high-tech manufacturing services varies from city to city and many face a tough economic landscape, worsened  by public sector spending pressures and the fragile state of the national economy.

The report, Streets Ahead: what makes a city innovative?, calls on the government to give more power to Local Enterprise Partnerships (LEPs) through an innovation fund, by which cities can co-ordinate inward investment, innovation and  business support.

Lizzie Crowley, Report author and Researcher at The Work Foundation, said: “We know that high-performing, competitive cities, such as London  and cities in the South East like Guildford and Cambridge, are more successful because their economies have established strong networks between the public and private sector - what we call an ‘innovation ecosystem’. In these cities, businesses and public institutions such as universities regularly work together to collectively drive growth and job creation. This helps them attract world-class businesses and nurture home-grown entrepreneurs.”

She goes on to say: “We need a place-based innovation policy which recognises that not all cities are the same. Economies, such as Bristol, are rooted in the knowledge-intensive services of software and design so they need a very a different set of policy responses compared to cities like Preston and  Derby, which have a strong high-tech manufacturing base.”

“The Chancellor seems to think that many cities outside London are  still stuck in the 1980’s,and can only be turned around with outdated policies like Enterprise Zones. What this one-size-fits-all policy ignores is that our most successful cities, such as Milton Keynes, have economies driven by strong business services. Many cities outside London have a huge amount of economic potential, but they need the freedom to build on their own strengths, and to develop a unique appeal to businesses.”

The report goes on to make further recommendations for firms and institutions to help facilitate economic recovery. Struggling cities need to create effective ‘ecosystems’ which will see private sector businesses and public sector organisations work more effectively together, for example through public procurement agreements. Cities also need to look at ways of developing skilled workers if they are to attract and retain flourishing businesses, while universities need to strengthen their links with business. Taking these important steps now will help prevent regional economic disparities in the years to come.

EndNotes to Editors:

  • Report author Lizzie Crowley is available for comment, interviews and briefings.
  • The report, Streets Ahead: what makes a city innovative? is available at www.theworkfoundation.com or from the media team in advance.
  • Proposed Innovation Fund - The Regional Growth Fund and Local Enterprise Partnerships are part of the government’s agenda for replacing Regional Development Agencies (RDAs) and promoting growth in the private sector. However, RGF is not targeted to support innovation and the reduction in RDA budgets means that much of the support and funding available for place based innovation policy has ended. To help to plug this gap, the government should offer an Innovation Fund, of a similar value to RGF (£1.4 million) for LEPs to support innovation related policy and delivery.
  • This report is informed by detailed work undertaken in Bristol looking at the cities innovation system. This work will be available in a forthcoming release for The Work Foundation.
  • This report is sponsored by Bristol City Council, Essex University and the Higher Education Funding Council (HEFCE).
  • The Work Foundation aims to be the leading independent authority internationally on work and its future, influencing policy and practice for the benefit of society. The Work Foundation is part of Lancaster University – an alliance that enables both organisations to further enhance their impact.
  • *Local Enterprise Partnerships (LEPs) http://www.communities.gov.uk/localgovernment/local/localenterprisepartnerships/

 

Appendix:

The following is taken from Streets Ahead: what makes a city innovative? By Lizzie Crowley, researcher at The Work Foundation:

  • High performing cities are highly productive, specialised in a range of knowledge intensive innovative sector, and benefit form a concentration of skilled labour. This set of cities include London as well as other cities located in the Greater South East: the cities of Guildford, Peterborough, Southampton and Swindon.
  • Service sector innovators have highly productive economies but are specialised in high tech services and businesses services activities. They include the cities of Milton Keynes, Glasgow, Manchester, Reading and Bristol.
  • High technology innovators generate significant economic output and are specialised in high tech manufacturing activities. The include Coventry, Derby, Northampton, Preston and Warrington/Wigan. These high tech clusters are often anchored by one large global firm, such as Rolls Royce in Derby and Coventry.

 

 

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