The second change would be to give mayors the power to align the courses run by FE colleges within their boundaries with the needs of industry. Currently, FE funding rules mean that, to survive financially, many colleges must spend a great deal of time competing to attract students to courses that are cheap to run. By giving mayors the authority to co-ordinate the courses put on by FE, and by incentivising collaboration between colleges rather than competition, this could be stopped, and the courses delivered could be brought in line with the needs of industry.
Finally, for mainly historical reasons the government R&D spending is heavily concentrated on centres of excellence in Southern England – London, Oxford, Cambridge. However, if the high-value private sector is to grow outside these cities, the Chancellor must target more R&D funding at poorer regions. This should not be difficult to do as it can be achieved by strengthening and altering the recently introduced Strength In Places Fund.
Two projects it is currently supporting can be used to describe the contribution it is already making. The first is investing in South Wales in a co-ordinated package of technology, R&D and training to further integrate the region’s science and technology base with its growing strengths in advanced compound semiconductor manufacturing. The second is support for establishing a national centre of excellence in Liverpool focused on developing a progressive repository of methodologies and improved models for product development for infectious disease prevention and treatment, and validated platforms for early stage product testing and evaluations.
As well as devolving more power down, the Government will also need to co-ordinate its own actions more effectively, and make one government department the lead department for its levelling up agenda. Currently responsibility for it falls between several.
It should also establish a National Council for Innovation, drawing expertise from business, science and industry to ensure that the regional economic growth programme is closely connected with the other work of the government on economic growth.
The programme of reform proposed is a radical one but it should be remembered that regional inequality has proved an intractable problem in the past, and the prize for success is enormous. If the country’s under-performing cities closed their output gap, the UK’s economy would be nearly £70bn larger.
Lord Sainsbury of Turville is Chancellor of the University of Cambridge, a former Minister of Science and a former chairman of J Sainsbury
It has been more than a year since the Prime Minister won his majority on a pledge to level up the UK. Delivering this pledge has been understandably delayed by the pandemic but, now that we have a roadmap out of lockdown, the Chancellor should show us his roadmap for levelling up.
So far it seems that the focus of the plan, due to be announced in today’s Budget, is based on moving Government departments out of London – The Treasury to the North East and Housing, Communities and Local Government to Wolverhampton.
Moving civil servants around like this may have symbolic importance, but it won’t level up the country in the way that the Government needs to – by growing the number of high-wage, high-value added private sector jobs in the North and Midlands.
The UK has deep regional inequalities. Successive governments that have sought to improve poorer regions’ prosperity have achieved very little. Most plans reinforced support for low wage, low value-added jobs which are vulnerable to foreign competition and technological change – they replaced cotton mills with call centres and distribution sheds.
There are two reasons why these previous attempts to level up were ineffective. Firstly, they lacked a regional level of government to lead on regional regeneration. However, the creation of Mayoral Combined Authorities (MCAs) now provides an opportunity to develop a new set of regional economic development policies to be delivered locally by them, and the government should seize the opportunity.
Secondly, governments have failed to understand the reason why many cities in the North are poorer than many in the South: much of the Industrial Revolution took place in the North with many cities specialising in a single industry. As these industries faced competition from low-wage firms in the developing world, and their prosperity has declined, new high-wage, high value-added innovative firms grew up in the South.
The experiences of other countries should show the Government that the only way they can level up the UK is by supporting the growth of existing or potential clusters of high value-added businesses in the poorer regions of the country.
If, however, the Government is going to grow high value-added businesses outside London, some important changes need to be made.
The first change is to give the metro mayors the clear responsibility for spatial planning and transport policies in their cities, bringing their powers in line with those already held by the Mayor of London. This would be a significant change, but granting mayors these powers would improve the management of our cities and create a more favourable business environment.