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London Councils’ Response to the Industrial Strategy Green Paper

  • By Jenny Gulliford

The Green Paper ‘Building our Industrial Strategy’ was published in January 2017, and sets out the government’s vision for a UK Industrial Strategy. This briefing provides an overview of London Councils’ response to the Green Paper, and explains some of the key next steps.

Background

Following the EU referendum, the Prime Minister established a new government department – the Department for Business, Energy and Industrial Strategy (BEIS). BEIS, led by Greg Clarke MP, was given the task of producing a ‘modern Industrial Strategy’, designed to build on the UK’s strengths and tackle its weaknesses. Proposals to do this were launched during January 2017 in ‘Building our Industrial Strategy: Green  Paper’.

The strategy sets out proposals to improve living standards and the economy by increasing productivity and driving growth across the UK. Devolution deals and streamlined decentralised governance are referenced as methods to achieve this and to close the productivity gap between  regions.

London Councils built upon contributions made by boroughs and sub-regional groups of boroughs to regarding the essential elements of a place-based industrial strategy for their areas within its consultation response. We also aimed to align our response to the Mayor’s, where appropriate.

Analysis

London Councils’ response to the Green Paper consultation comprised the following documents:

  • A description of London’s overarching ambition towards the Industrial Strategy.
  • Responses to the individual questions posed by the Industrial Strategy Green Paper consultation.
  • A summary of the London boroughs’ ambitions for devolution.

London Councils made a number of detailed recommendations to the government on how to strengthen London and the UK’s economy and create fairer and more inclusive growth. The overarching  recommendations were:

London’s relationship with the UK and global  economies

London Councils’ response expressed support for the government’s focus on rebalancing the economy and strengthening economic growth across  the  UK.  However,  we  warned that this should not happen by squeezing London’s growth – arguing this is ultimately a counterproductive and harmful move. We argued that the government must work to ensure that the relationship between London and the rest of the UK is a mutually beneficial one.

This should build on London’s relationship with international markets and the capital’s role as one of the most important global cities in the world. This global success is built on and supported by the relationship between London and the rest of UK. London should not be viewed as being in competition with the rest of the UK – London is a UK-wide asset that supports the country’s competition at an international  level.

The decision to leave the European Union has created an uncertain economic environment for the capital, and the government must act to provide stability and support growth. The Industrial Strategy must ensure that London is open to business and continues to thrive in an uncertain economic  environment.

Reducing regional inequalities through a place-based approach

London Councils welcomed the focus in the Green Paper on reducing economic inequalities between regions, but argued that it must recognise the economic inequalities within regions as well. While London continues to experience a picture of overall economic success, this is not experienced evenly across the capital.

To address this, we argued that a place-based, regional approach will be essential to tackle the complexities of local economies and labour market and build a model of inclusive growth.

Only a place-based Industrial Strategy will be able  to  effectively engage  with the size and complexity of London’s economy. A place-based approach to the Industrial Strategy would create a greater sense of buy in and ownership from local partners including smaller businesses and communities. This would also allow a more nuanced and tailored approach to creating economic  growth.

The Industrial Strategy should build on the work of the RSA Inclusive Growth Commission1 and consider how it will work to reduce inequalities within, as well as between regions. The government must not take a ‘grow now, redistribute later’ approach to the Industrial Strategy, or assume that people who are currently locked out of contributing to or benefiting from economic growth will be able to without changes to the economy and labour market. A regional, place-based approach allows a greater focus on areas in the round, understanding the relationship between local economies and the people that live and work within these geographies.

Committing to genuine fiscal and service devolution

In the Green Paper, Greg Clarke MP noted that UK is one of the most centralised countries in the world. London Councils supported this statement, and argued that the Industrial Strategy could form the basis for the next wave of devolution to the nation’s localities. London has the size, capacity and power to implement significant service and fiscal devolution and reform.

The Industrial Strategy focuses on building equitable growth, but this cannot be achieved without a genuine commitment to fiscal and service  devolution.

The response highlighted two areas where we felt that devolution and public service reform could have tangible benefits for the government’s Industrial Strategy – fiscal and skills devolution.

Fiscal devolution

We argued that London government should have permissive powers to set new (generally smaller) additional or alternative taxes and levies, as exist for cities in other countries. The aim is not to increase or reduce the overall tax burden but to have a wider set of tax raising powers to underpin expenditure and investment, to support economic growth and thus to increase the overall tax yield for London and the rest of the country. London Councils urged the government to consider the recommendations made in the London Finance Commission’s final report.

Skills devolution

London Councils continues to believe a more ambitious package of skills devolution is needed to create the effective skills system the capital needs in order to respond effectively and swiftly to the skills challenges and opportunities that will be brought about by   Brexit.

London government wants to take a whole systems approach to skills training, with the ability to set outcomes and incentives for the system that reflect London’s progression and economic priorities. This should include commissioning of 16-18 provision, so that all young people have access to an excellent education whether vocational or academic and regardless of the setting. This should be coupled with the opportunity to review the apprenticeship levy in London within its first year of operation. We would also like to see a proportion of the apprenticeship levy generated in London ring-fenced for use by London government.

London government is keen to finalise with government the detail of the devolution of the Adult Education Budget to the capital by 2019/20. To deliver skills provision that reflects local labour markets and economies, London needs policy and commissioning freedom over adult provision, informed by direct engagement on employer need.

Commentary

London government is proud of the strong working relationship we have developed with national government, working together to build a global, successful city. We want to build on this relationship to deliver an Industrial Strategy that works for all Londoners as well as the rest of the UK.

The capital will face a number of challenges and opportunities over the coming years, from exiting the European Union to tackling the productivity puzzle. The government’s Industrial Strategy should therefore provide for ambitious devolution and public service reform in order to support London’s economic growth and shape it to work for the country as a whole.

In our response London Councils strongly argued that it was only through a place based approach that worked with the grain of local area strengths and weaknesses would the Industrial Strategy have the impact that the government  wants.In our response to the Green Paper London Councils emphasised that this was the start of a conversation between London boroughs, the Mayor and national government on London and the Industrial Strategy. We hope to meet with Ministers over the next few months to discuss this further.

The General Election in June may change the government’s position on the Industrial Strategy but, whatever the outcome, we will continue to make the case for inclusive growth in the capital, and the powers and responsibilities London boroughs need to deliver it.

1https://www.thersa.org/action-and-research/rsa-projects/public-services-and-communities-folder/inclusive-growth-commission 

Links:

Building an Industrial Strategy (closed consultation)

London Councils’ reponse to Green Paper

Member Briefing 512: Building an Industrial Strategy for London? 

 

Jenny Gulliford, Principal Policy and Project Officer