UK Industrial Strategy: Place is the new black March 2018

Mind the widening gap Source: ONS International Comparisons of Productivity, ONS Labour Productivity Introduction

Many factors contribute to the widening gap Our Industrial Strategy is built on 5 foundations: Raise total R&D investment to 2.4 per cent of GDP by 2027 Increase the rate of R&D tax credit to 12 per cent £725m in new Industrial Strategy Challenge fund programmes Technical education system rivalling the best in the world Additional £406m in maths, digital and technical education New National Retraining scheme Increase National Productivity Investment Fund to £31bn Support electric vehicles through £500m additional investment Over £1bn public investment in digital infrastructure Launch and roll out Sector Deals Drive over £20bn investment in innovative and high potential businesses, including a new £2.5bn Investment Fund Review of how to improve the productivity of small businesses Agree Local Industrial Strategies building on local strengths New £1.7bn Transforming Cities fund for intra-city transport Provide £42m to pilot a Teacher Development premium

Gearing to resolve Grand Challenges Grand Challenges give a mission for foundations to mobilise to deliver Growing the AI & Data-driven Economy We will put the UK at the forefront of the artificial intelligence (AI) and data revolution Four Grand Challenges areas were identified using five key criteria: critical to the future global economy existing UK strengths clear market opportunities to boost productivity coordination and market failures societal benefits to be realised Clean growth We will maximise the advantages for UK industry from the global shift to clean growth Ageing society We will harness the power of innovation to help meet the needs of an ageing society The Future of Mobility We will become a world leader in the way people, goods and services move For further information or to submit ideas contact:  grandchallenges@beis.gov.uk The independent Industrial Strategy Council will assess our progress and make recommendations to Government.

What’s place got to do with it? GVA per hour worked 2016 TOP £43 BOTTOM £23 MEDIAN £30 AVERAGE £33 Gross Value Added per head by Local Enterprise Partnership, 2014 Population weighted Gross Value Added per head by Local Enterprise Partnership, 2014 Source: ONS, Map produced by the Statistical Analysis Team, Analysis Directorate

Dispersion or distortion? Martin R. et al. (2015) Spatially Rebalancing the UK Economy

Place is the new Black UK productivity relies on the better performing areas to continue to grow but while the bottom performers continue to drift, efforts at the top have to grow exponentially Why does activity not flow from the rich London and the South East to other areas? Innovation Connectivity Skills access Business environment/Finance All foundations of the industrial strategy have a place element in them

Place-Based Policies Strength in Places fund - to build on science and innovation assets Transforming Cities fund – for intra-city transport Currently takes longer to travel from Hull to Liverpool (110 miles) than from London to Paris (285 miles) Cultural Development fund to make places attractive to live and work These ought to complement /compensate nationally based initiatives Sector Deals Industrial Strategy Challenge Fund (creative clusters) STEM skills

Bespoke is the new Smart Agree Local Industrial Strategies to Zoom into the specific needs of the place and proposes solutions accordingly Bring together national and local parts of the national industrial strategy Reform institutions (LEP) to ensure accountability and transparency Deliver locally through collaboration and partnership: Combined Authorities CAMKOX Corridor

Mission is possible Reforms intend to prepare local institutions for future funding plans There are good case studies of modular changes leading to radical transformation Coventry and Warwickshire Lancashire At least limit acceleration of dispersion, at best reduce regional disparity