What to do about industrial communities?
Authors: Damian Walne
21 May 2014
Another set of encouraging employment figures emerged last week. This Work Foundation blog explored the challenges around productivity, underemployment, and self-employment beneath the data. But it is also the case that there are parts of the country where the recovery from recession is proving slow.
The ONS has a handy set of area classifications for every district in Britain. This includes a “Mining and Manufacturing” group with over 70 districts, from East Ayrshire to Swale, from Neath Port Talbot to Sunderland, where the economies reflect a legacy of coal mining and heavy industry.
And there is little sign that these areas are sharing in the recovery in jobs. Employment in these areas was growing more slowly than the national average during the 2000s. The jobs losses were sharper during the recession of 2008-09. And in contrast to Britain as a whole, these areas have continued to lose jobs since 2010. Employment has not yet returned to pre-recession levels.
It is into this context that the Industrial Communities Alliance recently launched a ten point action plan for those former industrial and mining areas. It is a welcome contribution to the policy debate, drawing from the views of the Alliance’s member authorities. But I wondered if the ten action points really begin to meet the challenges that industrial communities face.
1. Some of the actions are very general: Keeping the economy growing. But a growing economy could accelerate movement away from those areas. Deliver structures that work. It is hard to disagree with that, but we cannot prove what structures work. Make the most of European funds. But making the most of European funds does not necessarily mean industrial areas should be prioritised.
2. Some of the actions are, at best, a little contentious. Beef up Enterprise Zones. Except it is not clear that Enterprise Zones really work. Keep financing aid to business. Perhaps, but the evaluation evidence for business support – including the Regional Growth Fund - is not always compelling. Use procurement as a development tool. The economic evidence is again fairly weak, and may risk local protectionism.
3. Some of the actions may simply not be the best things to do. Rebalance towards industry . A bold goal in a competitive world – but even then it does not mean that new industries would go to the old industrial areas. A job creation programme. But the UK economy keeps creating jobs – so why target that to the industrial areas? Invest in infrastructure. But what infrastructure and where? It’s not clear that a shortage of infrastructure is the barrier in industrial areas. The action plan has no mention of whether big infrastructure spending like HS2 is desirable.
4. But one action is worth exploring. Addressing low pay and not cutting benefits . The argument that the economies of industrial areas are affected by recent reforms to social security does need to be better understood. Although the same argument could also apply to major cities, seaside towns, and rural areas.
So I am yet to be convinced that the ten-point action plan is the right approach. If the industrial communities are to aspire to a more prosperous future, perhaps we could look to a plan that is much more imaginative in identifying the problems and developing effective solutions.
So where do I think we should start?
1. With land use and the planning system? I am always struck by the data from the Valuation Office Agency which shows that office rents in Newcastle are higher than in Reading. Alongside the research by LSE economists that property is cheaper in Manhattan than in Birmingham. So let’s have an action to see where and why new development is being held back in industrial areas.
2. With the taxation system? The Council Tax on a modest Band D home in an old industrial area like Stoke-on-Trent is more than a prestigious Band H residence in the heart of Westminster . There may, of course, be all sorts of sensible reasons why a tax is higher is Stoke than in central London. But let’s have an action to see if our existing system of property tax works against industrial areas.
3. With education and meeting the needs of young people? A provocative study from the Centre Forum think tank identified that when adjusting for the characteristics of pupils - some local education authorities in industrial areas are underperforming others. The Work Foundation's own research on young people's employment highlights areas where more is needed to help school leavers in their transition to the workplace. This may point to how many of these industrial areas could be doing more to prioritise chances for young people growing up there.
There are, of course, no easy answers. Policy-makers have been trying to wrestle with the challenges faced by old industrial areas since at least the 1945 Distribution of Industry Act. But maybe that's all the more reason why we need to think much more imaginatively.
All blog posts for this author