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Media centre home > Feature and comment > Industrial Strategy must address regional disparity

Published: 22/11/17

Here is a simple enough question: how will we earn our living as a nation in the next thirty years? Simple, but full of complexity.

The world is changing as new technologies rip through old economies. The prospect of life outside the European Union throws up fundamental questions about how we trade, move goods and people around, make our way in the world. For a long time, these questions about the future have been neglected by national governments – left to the market, to globalisation, to Brussels. None of that washes now.

In response the Government are trailing their Industrial Strategy White Paper, which will be published next Monday and heavily trailed during this week's Budget. In a welcome move, the Prime Minister has already outlined how the Government plans to increase public and private R&D investment by up to £80bn over the next 10 years. Mrs May also announced £1.7 billion to improve transport links within city regions.

This comes as the UK is in serious need of new thinking to address fundamental long-term economic challenges: poor productivity, unbalanced regional growth and a weak track record in translating knowledge creation into inclusive wealth creation. The impact of the financial collapse in 2008 and the recent decision to leave the European Union have only exacerbated these deep-seated national problems.

So a long-term industrial strategy for the UK which includes proper investment in R&D and connectivity is overdue. However, it needs to focus on that overriding goal of any Government strategy, an ambition that isn't always fulfilled when they are drawn up in the bowls of Whitehall. It has to make a genuine positive difference to people's lives.

For this reason, an industrial strategy needs to be a comprehensive regional strategy. Simply investing in potentially successful industrial sectors – such as digital, advanced manufacturing, health technologies will not deliver inclusive growth on their own. A narrow sectoral focus would only widen regional divides – embedding inequalities.

This isn't just about being equitable. Performance of the UK economy is held back by our intense regional imbalance as variations in productivity are particularly stark. The overheated London and the South East perform well above the national average, on a par with the most successful parts of Europe, whilst productivity everywhere else lags well behind. Sheffield and other former industrial powerhouses are amongst the least productive in the UK.

You could argue that this is down to a long term failure to address the industrial decline many areas outside the South East faced in the 1970s and 1980s. Since that time tax revenues from a supercharged financial industries sector in the City of London have fuelled public spending.  Governments have been able to ignore regional inequality. However, the economic crash and Brexit makes it critical that this fundamental flaw is addressed.

Investing in successful and emerging sectors is part of any solution, but it isn't enough.  If the Industrial Strategy is to secure long-term prosperity, places matter too. It should be the over-arching framework on which the strategy is based if we are to rebalance the UK economy and deliver inclusive growth.

This is not about an old-fashioned, post-war regional strategy. It means looking at the drivers for growth in cities and regions – and that means universities. In a knowledge-economy, high skill depends on closing the innovation-implementation gaps. That’s what good universities do.

My own university, Sheffield Hallam contributes half a billion pounds to its regional economy, working with more than 2,000 employers every year, through research, innovation and graduate recruitment. We are already investing £14m in building the Advanced Wellbeing Research Centre (AWRC) to deliver health innovation, bringing together academics, industry, and the medical profession to create the most advanced research and development centre for physical activity in the world - attracting jobs and investment.  

This is not exceptional: it’s what engaged universities do.  With targeted Government support through the Industrial Strategy, we could achieve even more to help redress the productivity imbalance within our region.

Our health innovations will generate health benefits for the entire population, through increasing levels of physical activity, helping those who are already active to exercise more effectively, and learning from the way we have improved elite athletes’ performance.

The world is changing.  It calls for imaginative responses which build success around innovation, using research which focuses on real world problems to stimulate new developments that have a real impact. We know universities can drive prosperity, building successful economies based around teaching and research. The next step is to build on their potential to drive inclusive growth. 

Professor Chris Husbands, Vice-Chancellor of Sheffield Hallam University

The author:

Professor Sir Chris Husbands, Vice-Chancellor

Professor Husbands is Vice-Chancellor of Sheffield Hallam University.

"The government can’t ignore regional inequality any longer. Its industrial strategy should provide support for universities to boost local productivity. "