As a regional strategy consultancy with six offices across England, we have increasingly become involved with projects with English devolution and regional development at their core. In this blog, Richard Coates, Managing Director, outlines our perspectives on what lies ahead for England and the “levelling up” agenda.
With the arrival last year of a global pandemic and the re-alignment of government priorities to steering the country through it, Boris Johnson’s promise to “level up” the country has been – understandably – pushed to the side. However, as we are approaching a more positive position in the country, it is appropriate to revisit this topic and look ahead again.
Before the pandemic, English Devolution and the march of the Combined Authorities was very much in progress. Greater Manchester, Liverpool, Sheffield, West Yorkshire, the North East and North of Tyne, Tees Valley, the West Midlands, Cambridgeshire, Peterborough and the West of England had all either achieved or were moving towards a devolved status, with their own mayors and varying degrees of control over their own regional budgets.
And with further devolution agreements under consultation for Cheshire and Warrington, Heart of the South West, Dorset and Leicester and Leicestershire, already this form of de-centralised governance has become a major force in regional development, giving the regions the independence to develop their own social, economic, commercial aims as well as developing and delivering their own Local Industrial Strategies.
Each devolution deal is a bespoke agreement which includes a capital investment fund of between £450 million and £1.095 billion, paid in yearly instalments over three decades. Powers devolved are a mix of transport, skills, housing, planning and general economic development programmes; only Greater Manchester has control over its health and social care budget.
Post pandemic, the importance and the progression of English Devolution – with the establishment of more Mayoral Combined Authorities (MCAs) and support for their autonomy – cannot be understated. Regional efforts will be integral to the recovery across the country in the most sustainable and ‘level’ way possible
Whitecap is a regional strategy consultancy, and over the years has played an important part in driving the growth of established SMEs and mid-sized organisations in the regions. Below, we have identified four ways that English devolution can focus growth efforts and drive development to maximise the potential of areas outside London
1. Devolved budgets and the ‘single pot’ of funding provides the foresight to make better strategic, evidence-based investments
English Devolution has allowed a freedom of spending by Combined Authorities that didn’t previously exist. MCAs are provided with a ‘single pot’ of funding over which they have complete control, and into which more specific funds are directed. The MCA can then shift money between these funds to serve their Local Industrial Strategy, under the brackets of business growth, transport, and the Adult Education Budget. Within these broader categories, Combined Authorities can use their own discretion to distribute funds according to their own strategic aims.
Having control over their own budgets and relative freedom within the targets and time frames they have to deliver on gives Combined Authorities a foresight on cash flow and spending which allows for better strategic planning. Already, Combined Authorities are using their discretion to drive the growth agenda. Sheffield, who have a serious deficit in private sector companies, are focussing specifically on driving the number of start-ups in their region; West Yorkshire, alongside the Leeds City Region LEP, offer a wealth of grants for Digital Businesses in pursuit of becoming the UK’s first Digital City. The North East is funnelling money into driving up Apprenticeship numbers.
Post pandemic, allowing each region to fund recovery based on the areas that are most in need will ensure a stronger and more specialised recovery.
2. Devolved ‘Local Industrial Strategies’ bring a tighter focus to developing clusters and investing in sectoral strengths
Regional Local Industrial Strategies highlight key growth sectors for respective regions and set out how those sectors will be invested in, nurtured, and developed. Identifying and targeting key clusters are imperative to fostering a region’s industrial “identity”.
As devolved institutions, MCAs can more effectively drive growth and productivity in these sectors specifically. Firstly, MCAs are better able to build closer relationships with the local business community; this could and should be a tight-functioning capability. Effective communication with these business networks, as well as a greater understanding of their wants and needs will lead to better tailored business services and ultimately better results.
Secondly, these relationships are key to delivering on a second post-Covid priority for regional development, local procurement. Shifting the supply chains of regional businesses from international to local will work twofold to fuel local employment levels, production output, and overall prosperity. MCAs can better support and are more invested in the re-orientation of supply chains to support local industry and increase resilience to post-Covid measures.
So far, seven of an expected 36 Local Industrial Strategies have been published, and those MCAs that haven’t have indicated sectors for attention. For the West Midlands, that’s environmental technology, medical and life sciences, automotive and rail; in the West of England, it’s Advanced Engineering and Aerospace; Creative, Cultural and Digital Industries (CDIs); Financial, Business and Legal ‘Tech’ Services, and Low Carbon. Sheffield’s Strategic Economic Plan (they are yet to publish a Local Industrial Strategies) will focus on knowledge intensive sectors with export potential: i.e. professional services, low carbon, and particularly advanced manufacturing, healthcare technologies, and CDI.
3. Mayors with a public and political presence can put pressure on Government
Most of the Combined Authorities in England have directly elected mayors. Mayors bring presence and status; they chair the Combined Authority Board and lead the strategy for growing the city region economy, and these powers are expected to increase with time.
Mayors with a strong public profile can use the media engagement to build influence; passing comment on government white papers and legislation that doesn’t serve, hinders, or may be perceived to be out of touch with their region.
Building the mayoral profile and using it to put pressure on government to act in the interest of the regions is a key advantage that comes with creating Combined Authorities. Instead of being passive receivers and distributors of central policy, Combined Authorities have their own agency, power and influence to develop their own identity and to fight for what works for them.
4. A focused bottom-up approach has been proven to deliver faster results than top down
In one of last year’s Covid-19 weekly briefings, Andy Burnham, Mayor of Greater Manchester, drew attention to the success of recently and locally administered Employment Support programme. The Greater Manchester Combined Authority were able to make real connections with real people and deliver services that catered to their circumstances. Communicating on a more personal level meant a higher engagement rate in the programme and a higher success rate, indicating that delivery on a smaller scale at local level – rather than from a central, London based office – is more likely to achieve results.
Local Industrial Strategies based on grass-roots evidence, collected on a smaller scale, and developed by experts who know the area well and are committed to targeting the specific root causes that lead to the regional-specific problems are, inevitably, better strategies. They are more likely to be a direct product of the area they deliver for; more in tune with local issues and more likely to go the right way about solving them.
Giving strategic independence to Combined Authorities allows them to initiate a bottom up evidence-gathering approach that wouldn’t and couldn’t be achieved if centrally administered. Local Industrial Strategies will therefore be more closely tied to “place” and “people”, and less to objectively fixed numbers and targets.
Regional devolution is an important development for the future of this country, but it has to be implemented effectively. Devolution deals are bespoke and deliberately flexible because they have to be; there are sharp differences in the quality of local governance. If powers devolved don’t match infrastructural capabilities, devolution could exacerbate rather than eradicate these regional differences.
If economic recovery from Covid-19 is to be an inclusive and collective effort benefits all parts of England, then it has to be driven and shaped from the regions themselves. MCAs are better placed to work on and improve a regional understanding that will allow them to better direct funds and services to the areas that count most towards regional recovery and long-term growth.
Growth in the regions looks considerably different to growth in London; it’s a topic that Whitecap have direct and extensive experience in. We have a strong local and regional network in each of the cities where we have offices; Leeds, Manchester, Milton Keynes, Newcastle, Birmingham and Bristol.
The Industrial Strategy Council is currently assessing how each MCA is approaching the development of their Local Industrial Strategy and at Whitecap we are here to support regions and help organisations ensure that this recovery is as thorough and sustainable as possible by helping shape their commercial and growth strategies.
Established in 2012, Whitecap Consulting is a regional strategy consultancy headquartered in Leeds, with offices in Manchester, Milton Keynes, Birmingham, Bristol and Newcastle. We typically work with boards, executives and investors of predominantly mid-sized organisations with a turnover of c£10m-£300m, helping clients analyse, develop and implement growth strategies. Also, we work with clients across a range of sectors including Financial Services, Technology, FinTech, Outsourcing, Consumer and Retail, Property, Healthcare, Higher Education, Manufacturing and Professional Services, including Corporate Finance and PE.