Zoned-out: Why we need to look beyond micro-initiatives to boost the northern economy
In the rush of budget announcements it can be all too easy to miss the wood for the trees, but persistent enthusiasm about Enterprise Zones and business start-ups masks the lack of a bigger vision for economic growth and rebalancing the economy.
Although some lessons have been learned from their 1980s predecessors, new Enterprise Zones still fail to address the risks of displacing existing jobs and investment from elsewhere, but more serious than that, they risk displacing the valuable time and energy of Local Enterprise Partnerships as they focus on the bigger task of creating new jobs and increasing productivity. Similarly, Start-up Britain has been launched with the best of intentions but overlooks the fact that research shows that most start-ups struggle and 60% of jobs growth comes from just 6% of firms, mostly those well-established.
So where should the focus be? First, if high growth firms are the key drivers of jobs growth, we need to better understand the ‘innovation ecosystem’. High growth does not necessarily mean high tech or in particularly niche sectors. Investments such as those announced at the Daresbury Science and Innovation Campus in Cheshire are just the tip of the innovation iceberg and can easily distract from the need to ensure innovation happens throughout the economy. The relationship between private sector, state and citizens/consumers is vital in making sure that innovation is at the heart of all areas of economic and social development. Innovation needs to be embedded in all economic activity and not treated as a bespoke sectoral interest.
Secondly, we need to recognise the importance of focusing on place. Enterprise Zones provide tacit support for the idea that targeted investment can – in some situations – be beneficial. But with old-style area-based regeneration apparently off the table, Local Enterprise Partnerships risk overlooking the importance of spatial planning and integrating neighbourhood plans with their wider strategic vision. If economic growth is going to drive genuine local improvement, we need to make sure we connect people living in deprived neighbourhoods with areas of opportunity. Our previous research shows that to do this we need targeted housing interventions, personalised welfare to work provision and a vibrant community and voluntary sector – these should be key areas for investment not cuts. They must be driven by LEPs.
Whilst we should avoid attempting to pick winners on a micro-scale, there is an important need to better understand the comparative advantages of key industry sectors as they develop in different economic areas. Taking this up a level, LEPs need to avoid competition and work together to build on relative strengths and connections. In the North we need a pan-Northern approach and some form over-arching spatial strategy that can guide investment and build on the relative strengths of each LEP.
Finally, LEPs – and groups of LEPs – need to have a vision for the kind of economy they want. This is particularly true in the North of England. For example, focusing only on high value-added investment and high end jobs is likely to result in soaring levels of inequality, with huge consequences for long-term prosperity and well-being. However, if we seek to build a resilient economy with a greater emphasis on jobs growth and environmental sustainability through investment in low carbon industries, growing productivity and a strong economic infrastructure, then longer-term we might finally emerge from our post-industrial legacy.Whilst the North-South divide might highlight some important inequities in investment and approach, we need to move away from crude comparisons with London and the City and instead look further afield for more meaningful comparators. We can learn from similar ‘lagging regions’ in the OECD – in particular, we need to recognise the importance of stable sub-national institutions and investment frameworks.
In May 2011, ippr north will launch a Northern Economic Futures Commission which will explore these issues in more depth and attempt to chart a long-term plan for growth from Liverpool to Lindisfarne. For more details email@example.com.