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Cities And The New Industrial Strategy

31/10/2016 14:14

One of Teresa May's first actions as Prime Minister, was the promise of a new industrial strategy. What does this mean for cities and how can they help deliver it?

This industrial strategy, more than its predecessors, will recognise the importance of place in the context of economic policy. Greg Clark, Secretary of State for Business, Energy and Industrial Strategy (BEIS), has already said '...the truth is economic growth does not exist in the abstract. It happens in particular places...'

A consideration of 'place' in the economic geography of the UK takes us very quickly to importance of cities. This is, in part, because of the benefits of dense co-location or 'agglomeration'. The enterprise and innovation that this generates increasingly makes cities the melting pots for the industries of the future.

Downtown San Francisco now has more high-tech startups than suburban Silicon Valley. Google put its European HQ not in a home-counties campus, but in the Kings Cross development in central London.

In his new book 'The Emergence of the Urban Entrepreneur' Boyd Cohen stresses how the combination of lower-cost innovation and less need for physical space enable 'collision density' in cities, aided by the fact that creatives, tech entrepreneurs and their staff prefer to live and work in dense, diverse urban areas with excellent public transit, cultural amenities, food, and nightlife.

But looking at the economic geography of our country it is clear that some cities are better placed than others to enable this 'collision density'. Some will be more likely to attract and retain the entrepreneurs of the future. And here, the Government faces conundrums.

If the industrial strategy is about world-class companies, sectors and places, Government resources will have to get behind success. When I sat on the board of a Regional Development Agency, we faced this dilemma: do you back the winners or help the losers? It already seems likely that the industrial strategy will focus on cities outside London. But will these city-region powerhouses - like Birmingham, Bristol, Cardiff, Leeds or Manchester - concentrate or spread economic growth?

The other conundrum is about what to back. Government shouldn't try to pick winners. But it does have to make choices about the races in which the UK wishes to run.

Of course it can do more on provision of enabling technologies and supporting infrastructure across all cities. At a time when borrowing is cheap, capital is searching for a decent return, and investors are looking for certainty post Brexit, now is a good time to put money into infrastructure. A priority should be transport, both between UK cities, but also improving transport systems within those cities. Skills are obviously vital, and cities need to ensure that they are liveable, attractive locations to attract and retain talent (a point made in the recent UK Government foresight for cities report on future cities).

For me, a no-brainer for investment is in digital connectivity. There aren't so many photo opportunities or ribbons to snip with new digital investments, but without these the cities of the future will forgo efficiencies, become less appealing and, crucially, hold back Britain's chance of creating, and leading the world, in the industries of tomorrow.

But Government will also have to decide where to target resources, and this requires a realistic assessment of strengths. There will be a limited number of sectors and places that can compete in a globalised economy. Not everywhere can be a Boston biotech cluster or Silicon Valley digital cluster. The BEIS funded Science and Innovation Audits may help answer some questions, but there is a clear requirement for more and better data on which to make decisions.

An industrial strategy should support sectors where the UK has genuine expertise and a strong competitive edge. Of course the sectors that are recognised today can become industries of yesterday. So the strategy should make room for new sectors, especially those industries in which the UK will be internationally competitive going forward. These future growth businesses should be supported by targeted and long-term assistance for research and innovation. Smart, cities is clearly one such sector as the research from BEIS, the Department for International Trade (DIT), Arup and others has demonstrated.

Once written, how will the industrial strategy actually be delivered? The civil service has a shortage of the specialised skills, and is facing a tidal wave of post-Brexit work which will sweep-up many of the staff who understand economics, trade and investment.
Agencies like Innovate UK and arms-length bodies like the Catapults will put our shoulders to the wheel, but we will also need strong leaders and networks in the cities themselves.

City administrations and Local Enterprise Partnerships will provide direction and should have more control of resources and autonomy in decision making. Still though, the question remains over expertise. For example, some Local Authorities lack staff qualified in economic geography, and so rather than promote growth through clusters, tend to prefer to push transport infrastructure, property development or retail-based regeneration. Manchester is leading in having a place-based economic strategy. And Future Cities Catapult work with Nesta and Accenture on the CITIE framework is helping cities shape the strategies to promote technology, entrepreneurship and innovation.

Universities too will be crucial. They don't just have the knowledge that can be shared and the talent that industry needs, but they also have the power to act as anchor institutions, getting alongside places. Newcastle University is a good example of this; it is probably now the biggest business, employer, and developer in the city, and is working closely with the local authority to improve the city. Other Universities, such as Bristol and Leeds, are increasingly seeing themselves as part of the public infrastructure for growth in their area.

One thing I am sure of, is that 'smart cities' approaches should be a central plank of the Industrial Strategy. The smart cities business sector is a UK strength with huge export potential - city services and infrastructure are a big growth sector globally. And by supporting this sector the industrial strategy will not only promote business growth, it will also simultaneously help make our cities better places to live and work, and thereby be more able to support business growth right across the economy.

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