Economics and Business Exchange Supported by Deloitte. 15/01/2019

UK Regional Economic Productivity David Silk 15/01/2019

Regional growth target PSA target: “to make sustainable improvements in the economic performance of all the English regions by 2008 and over the long term reduce the persistent gap in growth rates between the regions, demonstrating progress by 2006.” 15/01/2019

Rationale Growth constrained if overheating in some regions but excess capacity in others Result of large-scale market & coordination failures Disparities have persisted for 70-80 years 15/01/2019

Disparities: persistent but not inevitable Some evidence that current disparities were established in 1920s, reversing the previous picture: Regional Rates of Unemployment as a Percentage of the UK rate (Source: Matthews, Feinstean and Odling-Smee. (a) South East & East Anglia; (b) North East; (c) North West & North East 15/01/2019

Scale of challenge Regional and sub regional disparities: Inter-regional: Region GVA/head R&D spend/head Start-ups/1,000 people North East £10,024 £46.9 19.6 South East £15,098 £461.6 43.8 Intra-regional: Region GVA/head Start-ups/1,000 people Darlington in NE £11,000 27.4 East Sussex in SE £8,000 38.0 15/01/2019

Economic growth Economic Prosperity GVA Productivity Employment Skills Innovation Enterprise Investment Competition 15/01/2019

Employment 15/01/2019

Productivity 15/01/2019

Skills 15/01/2019

Innovation 15/01/2019

Enterprise 15/01/2019

Investment 15/01/2019

Modern regional agenda Flexible institutions Innovative and responsive policy design to tackle market failure Robust evidence base 15/01/2019

Flexible institutions RDA £2.3bn single pot; Additional responsibilities for: business support business-university collaboration rural socio-economic objectives inward investment Improved performance management 15/01/2019

Innovative policy design: Regional Economic Strategies RESs sought to improve policy design based on: robust analytical framework a clear set of priorities realistic levels of future funding good use of evidence-base consistency with other regional strategies 15/01/2019

Northern Way Pan-regional growth strategy focused on skills, enterprise and employment Goal is closing £30bn Northern output gap 3 year costed business plan for £100m Growth Fund City-regions at core of approach 15/01/2019

Cities Cities play an important role in promoting regional economic development 90% of economic activity in the North concentrated in 8 city-regions But outside London, cities under-perform relative to international competitors CSR07 provides an opportunity to look at economic development interventions at regional, city and local levels 15/01/2019

Local Authorities Local authorities have a key role in improving productivity at the local (and hence regional) level. Existing initiatives- LABGI, BIDs. Fourth block of LAAs- key opportunity to establish economic development role of LAs. Already have LEGI - now thinking about how to bring other initiatives/funding streams together. 15/01/2019

Robust evidence base Improving evidence base and regional statistics is key RDAs building evidence base for RESs ONS committed to delivering full regional statistical presence with RDA support Improved regional spending data 15/01/2019

Devolved Administrations All have lower than the UK average GVA per head Economic policy is part devolved -partnership working is essential Growing the economy the top objective for the Scottish Executive Welsh prioritise increasing employment and increasing average earnings NI economic strategy is being drawn up be consortium of local partners 15/01/2019

Key messages addressing regional disparities is extremely challenging Govt believes focus should be on driving policy from the bottom up continuing developing agenda – RDAs, Northern Way, cities strengthening evidence base is key 15/01/2019

Questions / comments? David Silk Regional Policy HM Treasury David.Silk@hm-treasury.gov.uk 020 7270 5717 15/01/2019

Economics and Business Exchange Supported by Deloitte. 15/01/2019