Metro Dynamics supporting Local Industrial Strategies

With the publication of the Government’s Industrial Strategy late last year, there is now a clear impetus for LEPs and CAs to develop robust Local Economic Strategies for their areas. Metro Dynamics are currently working with places around the country to develop clear Industrial Strategies that support local sectoral growth. Compared to SEPs, Local Industrial Strategies must:

  • Be based on granular evidence about specific employment sectors, and the barriers to and opportunities for growth.
  • Develop convincing local deals based on clear investible propositions around physical and sectoral development.
  • Demonstrate clear governance and delivery mechanisms to ensure that programmes can be advanced swiftly.

More detail on our work on Local Industrial Strategies can be found here.

Metro Dynamics launch Inclusive Growth Toolkit

Metro Dynamics has recently developed an Inclusive Growth Toolkit to help places make informed investment decisions. This is an important step towards allowing places to assess the inclusive growth outcomes of interventions or investments, placing inclusivity at the heart of decision-making. The work is an open source contribution freely available to view and use.

Inclusive Growth is becoming an increasingly important issue in the UK. There has been a growing feeling in the country that economic growth does not benefit all places or groups equally. We believe that if future economic growth is to become more inclusive, robust and logical thinking is required.

As the new Mayoral Combined Authorities take control of new investment funds, and further spending is devolved, areas have more control over how money is spent locally. This is a real opportunity to change places for the better. However, if outcomes from spending are to improve, places need new tools to allow them to assess the potential of interventions and investments to foster Inclusive Growth.

The toolkit’s aim is to help establish a simple methodology to allow places to do this. The Toolkit can help Local Authorities, Combined Authorities, and Local Enterprise Partnerships determine whether and how an investment or intervention supports inclusive growth. This will enable decision makers to have a clearer understanding of the likely impact of particular investments on people who have been least likely to benefit from growth in the past.

This work was supported by the Joseph Rowntree Foundation, alongside Sheffield City Region and Cardiff City Council, who have helped develop the model. We are also grateful for the support we received from representatives of Greater Manchester and West Yorkshire Combined Authorities, along with D2N2 LEP, New Economy and Cardiff and Sheffield City Regions.

As it stands, the guidance in the document is broadly ready to use, though there may be some local research needed to allow the impact measures to be sufficiently tailored to local economic and labour market conditions.

The Toolkit can be accessed here

Metro mayors have key role in health and wealth

By Ben Lucas and Duncan Selbie

This article originally appeared in the Municipal Journal.

Metro mayors now cover 20% of the English population and they are changing the governance and policy landscape.

That is why we have teamed up to set out the opportunity that devolution has opened up to integrate health and wellbeing into an inclusive growth agenda.

Improving people’s health and promoting economic growth may not traditionally have been seen to have much in common.

But health and wealth are flip sides of the same coin.

Developing national and local understanding of the connection between better health and the potential for productivity growth is a key priority for Public Health England (PHE).

Without a healthy workforce, inclusive economic growth will not be possible.

We cannot have one without the other.

With this in mind, PHE commissioned advisory firm Metro Dynamics to produce a report to help achieve a deeper understanding of the complex links between health and wealth.

The role that the new metro mayors can play in this agenda is a particular focus, along with some of the opportunities that devolution presents to take action at scale to drive population health improvement.

There is a fundamental link between improving health and realising a community’s potential for economic growth and regeneration.

Poor health results in productivity losses of up to £33bn nationally every year and means public services like the NHS spend £17bn a year dealing with the consequences.

One in three current UK employees have a long-term health condition and one in eight current employees report having a mental health condition.

Some 42% of employees with a health condition felt their condition affected their work a ‘great deal’ or to ‘some extent’.

It is clear that improving health could, over time, significantly reduce costs for the local NHS and pressure on services while also improving local economic performance and spreading wealth more equitably – addressing some of the inequalities in health that blight some of our communities.

This means preventing illnesses and promoting good health.

While health services treat illness, local government has a central role to play in improving people’s health: helping people to stop smoking; encouraging exercise and healthy eating; the quality of residents’ housing and the area they live in; whether people can make social contacts; ensuring every child has the best start in life; and how clean or polluted the air is outside.

Above all, having a job is one of the most effective ways to stay healthy.

Councils already live and breathe the principle of health in all policies.

The latest wave of devolution offers a huge opportunity to go further.

Metro mayors have control over new long-term budgets from central government.

They have more control over roads and transport, housing, strategic planning and skills and training.

Their influence is also wider than just their formal responsibilities and they can set the focus for their whole region.

Mayoral combined authorities are already working on health and economic development.

The question is how we support mayors and lever in each region’s wider public sector’s assets in partnership with local business for this joint work to enable our most hard-pressed communities to thrive.

As the recently published White Paper on the industrial strategy makes clear, mayoral combined authorities will have a lead role in developing local industrial strategy deals that will foster higher productivity, advanced skills development, better in-work progression and greater economic progression.

Action to improve people’s health across their lives should be integrated into this economic and industrial strategy so that they feed and support each other.

PHE can help by offering its health intelligence capacity to help target action and monitor impact, and by bringing our understanding of effective practice that improves health.

Our locally-based centres know their patches so are able to tailor this support to each metro area and its priorities. 

But we would like to go further than this.

The report makes a number of recommendations for action, including making health and wellbeing a priority for the new single investment funds, adopting a health in all policies approach and using mayoral leadership to promote health and lever local expertise.

One of the recommendations is also the establishment of a health and wealth network of mayoral combined authorities to share emerging good practice, develop a common economic case for investing in wellbeing and to scope future policy options for further devolution.

The new year offers many opportunities for the metro mayors and their communities, and we look forward to helping them maximise the potential of this exciting health and wealth agenda.

Read the full report here.

Duncan Selbie is chief executive of Public Health England and Ben Lucas is Founding Director of Metro Dynamics.

Health and Wealth: The Inclusive Growth Opportunity for Mayoral Combined Authorities

Metro Dynamics were commissioned by Public Health England to produce a report on the relationship between health and wealth and the opportunity that devolution presents to promote prevention and early intervention across the life course.

The report argues that improving people's health and wellbeing is fundamentally about creating prosperous local economies that benefit everyone. Health and wellbeing are not only impacted by the quality of NHS care and health-related behaviours such as smoking, alcohol consumption, diet and exercise, but also by other factors, such as one's childhood or whether one lives in high quality housing in an area which has good air quality, encourages social contacts and encourages outdoor activity.

Therefore, inclusive growth, which ensures that everyone has a good level of income and partakes in the benefits of a thriving local economy, must be at the heart of any effort to improve health and wellbeing. Inclusive growth also addresses the considerable health inequalities existing within and between local communities

The report focuses on what Mayoral Combines Authorities can do, with their new powers and funding, to better integrate health and wellbeing concerns into their mainstream economic priorities. It identifies the following specific recommendations:

  1. Reflect wellbeing in economic plans and indicators: Reducing health inequalities should be measured and prioritised as an explicit focus of mayoral activities, rather than being seen merely as a consequence of economic growth.
  2. Make wellbeing a key priority for the mayoral single pot investment funds: Use the relatively unfettered single investment funds introduced by devolution deals to prioritise wellbeing.
  3. Adopt a Health in All Policies (HiAP) approach: Experience from around the world shows that re-shaping people's physical, social and service environments to support wellbeing, healthy behaviours and economic growth makes sound economic sense.
  4. Use mayoral leadership to promote wellbeing and leverage local expertise: Use the mandate and platform that mayors have to commission and trial new city region-wide initiatives. By way of example, they are ideally placed to upscale interventions linked to licensing and regulatory issues.
  5. Work across Mayoral Combined Authorities to develop a new economic framework case for investing in wellbeing: Creating a policy and investment environment within which officers feel that they have the 'permission' to invest in social as well as capital programmes.
  6. Seize the opportunity to discuss with central government the devolution of transformation funding and powers to ensure more priority is given to prevention and early intervention: Develop the case for wellbeing and preventative investment being included in future devolution deals.

The full report can be read here.

Duncan Selbie, Chief Executive of PHE, had the following to say about the report in his weekly blog: Duncan Selbie's Friday Message.

What does the Industrial Strategy mean for places?

Building the foundations

From late 2012 to early 2015, the Coalition Government released a series of Industrial Strategies covering 11 sectors. Whilst they contained some important analysis and some sensible proposals, they felt decidedly low-key – as though the Government at the time were still a little afraid of the stigma of being seen to ‘pick winners’. They were also very much national strategies. Places were mainly acknowledged insofar as they were the site for existing assets or future investments.

The publication of the Industrial Strategy yesterday was very different. The message was that Government - and local governments and LEPs – have a key role to play in supporting the development and growth of new industries and addressing the challenges the UK faces in the 21st Century. In concentrating on five ‘foundations’, the Industrial Strategy has articulated the key elements needed to drive economic growth and has set out to address each of these.

Crucially, one of the five foundations is place, which amongst other things acknowledges that we can’t understand economic activity and growth properly without an understanding of place. The Industrial Strategy recognises the importance of local government and LEPs in ensuring that places function well and provide supportive environments for growth. Specific investments in the Transforming Cities Fund and the announcement in last week’s Budget of the increase in the Housing Infrastructure Fund (HIF) are welcome in this regard.

There remains a lot to be worked out. The Industrial Strategy acknowledges the contribution of over 2,000 responses to the Green Paper earlier in the year, and the influence of many viewpoints shows in the White Paper. There are an awful lot of ideas, and how the Industrial Strategy will work in practice will depend on a stronger articulation of many of these.

 

Institutions, Councils and Panels

Most obviously the Industrial Strategy makes reference to a plethora of new organisations, councils and advisers. To oversee the Industrial Strategy there will be an independent Industrial Strategy Council, modelled on the example of the Office for Budgetary Responsibility (OBR), which will ‘commission specific evaluation projects as appropriate’ and ‘develop measures to assess and evaluate our Industrial Strategy and make recommendations to the government’. This is welcome news, as a national strategy deserves the resources to ensure that progress is being made. But it begs the question as to how the new Council will work with local government and LEPs who are making these investments.

New Skills Advisory Panels are to be ‘integrated into’ Mayoral Combined Authorities and LEPs. The task of these new Panels will be to ‘produce rigorous analysis of the current and future supply and demand for skills and help areas form a clearer understanding of their skills requirements…[and]…they will have real, meaningful influence over the provision of education and training for those over the age of 16’.

The underlying idea – to ensure that local education and skills provision meets the needs of the economy – is a good one. But the Industrial Strategy leaves to one side how exactly these new bodies are to be integrated into existing Combined Authorities and LEPs, and how much money and influence they will wield. Combined Authorities and LEPs are already keenly aware of the skills challenges in their areas, so it is important that the new Panels bring additional powers and tools for addressing these challenges if they are to have a meaningful impact on outcomes. And it is important that they are genuinely local groups and not simply local outposts of central Government.

Other institutions / organisations referenced in the Industrial Strategy include a new AI Council and a supporting Government Office for AI, a Business Champion for each of the Grand Challenges, and nine regional UK Trade Commissioners, not to mention UK Research & Innovation (UKRI) who will oversee the investments in R&D which feature prominently in the Industrial Strategy.

 

What role for Local Government and LEPs?

Given all of these new organisations, local government and LEPs could be forgiven for wondering where this leaves them in regards to the Industrial Strategy. Mayoral Combined Authorities have probably fared best in the past week, getting a big chunk of the new Transforming Cities Fund straight off the bat, being well placed to secure further investments in HIF, and with adult education budgets to be devolved to them in 2019.

LEPs also have reason to be pleased with the Industrial Strategy. The Industrial Strategy reaffirms the Government’s commitment to LEPs, puts in place biannual meetings with the Prime Minister and LEP Chairs, and holds out the promise of additional financial support. However, the Industrial Strategy also states that performance between LEPs has been variable, that the geography of some LEPs needs to be reviewed, and that the appropriate structures for ‘holding LEPs to account’ need to be implemented. The Industrial Strategy states that the Government will work with LEPs to ‘set out a more clearly defined set of activities and objectives in early 2018’.

Local authorities outside of Combined Authority areas probably have the most reason to feel slightly neglected, with the place elements of the Industrial Strategy mostly focussed on Mayoral Combined Authorities and LEPs. There are some interesting points in the Industrial Strategy about Town Deals. And it would be wrong to ignore the importance of local authorities within Combined Authorities and LEPs. It is also worth noting that one of the most important local announcements concerned the Cambridge / Milton Keynes / Oxford corridor. Although the Cambridgeshire end of the corridor does have a Mayoral Combined Authority, the rest of the corridor does not. Yet, by agreeing a strong local commitment to housing the corridor authorities have secured significant transport infrastructure investment.

 

Signalling further devolution

Reinforcing the place-based approach, the Industrial Strategy also signals continued support for devolution. Specifically, it states: ‘we will continue to support locally driven partnerships, proposals and reforms, with the aim of ensuring that economic powers are exercised at the most appropriate level and that decision-making is effective and clear’. This is backed up by continued support for City and Growth deals outside of England, reinforcing the progress which was noted in the Budget around city deals in Stirling, and the Tay cities, and the desire to develop growth / city deals for North Wales, mid-Wales, and Belfast.

As well as local devolution, the Industrial Strategy also continues the Government’s support for regional bodies, powerhouses and corridors. Alongside specific mentions of the Northern Powerhouse and Midlands Engine, there are also references to a strategic corridor spanning North Wales and Cheshire and Warrington, and also to the Great Western Cities of Cardiff, Newport and Bristol. In the South East, the Government is committing to working with the Thames Estuary 2050 Commission to develop a future vision and exploring options for housing deals with local authorities in the Thames Estuary region.

 

What should places be doing on Local Industrial Strategies?

The White Paper states that the Government will work in partnership with places to develop Local Industrial Strategies that are aligned to the national Strategy. The first of these Local Industrial Strategies will be in place by March 2019, which is a longer time-lag than had been mooted earlier in the year. The fact that these Strategies will be prioritised according to the ‘potential to drive wider regional growth, focusing on clusters of expertise and centres of economic activity’ suggests that there will be waves of ‘deals’. It also suggests that Combined Authorities and LEPs should focus their efforts over the next 12 months on ensuring that they have a strong evidence base on their sectors and growth prospects, in order to be well placed to benefit from the Local Industrial Strategy process (and the UK Shared Prosperity Fund).

 

Summary: continued opportunity for ambitious places

So, to summarise, there remains a lot of ambiguity as to how all of these proposals will play out in practice, but also a lot of opportunity for local government and LEPs. Fundamentally the Government remains committed to working with places that show an ambitious approach to dealing with the economic and social challenges the UK faces. So, the challenge for local government and LEPs remains the same: to identify the barriers to growth in local areas based on sound evidence, to develop sustainable policy responses, and to work with Government to develop deals based around ambitious but practical approaches to these issues. 

 

We've put together a handy guide to the key points from the Industrial Strategy which you can download here.

Taking stock of the Autumn Budget 2017

Yesterday’s Budget comes at a challenging time for the Government, local government, LEPs and the UK economy. The Office for Budget Responsibility (OBR) has reduced its forecast of GDP growth for 2017 by 0.5%, with growth expected to weaken further through to 2020. In large part this reflects poor growth in productivity since the recession. And, of course, all of this is before we factor in the possible impacts of Brexit.

 

A strong focus on place

Nonetheless, for cities, local authorities and LEPs, yesterday’s Budget mostly felt like a positive step forward, making specific investments in key infrastructure and initiatives, and taking further steps towards devolution of powers to our key cities and places. The Budget announced the intention to agree a devolution deal with the North of Tyne, which would put in place £600m of funding over 30 years and see a new mayor elected in 2019. This would be the first new devolution deal agreed since Theresa May became Prime Minister, and as such an important milestone in re-establishing the good progress towards city and regional devolution that had occurred prior to the EU Referendum.

In the Midlands, the Government announced that it has agreed a second devolution deal in principle with the West Midlands Mayor and Combined Authority which includes £6m for a Housing Delivery Taskforce, £5m for a Construction Skills Training Scheme, and a £250m allocation for the Wednesbury to Brierley Hill Metro. The Government is also continuing Housing Deal negotiations with the West Midlands. The broader Midlands Engine will benefit from investments in Midlands Connect, and the Budget announced a pilot project for a manufacturing zone in the East Midlands which will use planning powers to reduce uncertainty for private investment.

Following on from the work undertaken by the National Infrastructure Commission (NIC) on the Cambridge-Milton Keynes-Oxford Corridor, the Budget set out plans for housing and transport improvements underpinned by land value capture and a new Joint Statutory Plan. The Budget also noted progress towards city deals in Stirling, the Tay cities, and the desire to develop growth / city deals for North Wales, mid-Wales, and Belfast.

More broadly, the Budget has also set out a new £12m capacity fund to support Mayors over the next two financial years. This will be essential to helping Combined Authorities and Mayors deliver on their promises to voters, but it is also important to ensure that Government does not force local government to get bogged down in cycles of bidding for funding. Instead, local government must be empowered to prioritise and invest based on evidence and local need rather than central mandates.

 

Addressing the productivity challenge through evidence-based policy and investment

The Budget did not shy away from the economic challenges – particularly the productivity challenge – that the country faces. Although economic growth was surprisingly strong in 2016, uncertainty over Brexit remains a significant challenge for the economy, and for local government and LEPs trying to promote growth.

There have been some welcome good news stories recently, such as BMW’s decision to make the new Mini-electric in Oxford, and in our work around the country we know that many local exporters have benefitted from cheap Sterling. But there have also been warnings from industry. Microsoft have hinted that they wish to move data centre activity abroad, ADS has warned of an additional £1.5bn of costs for the country’s aerospace exporters, and the automotive sector has voiced similar concerns with 56% of British car exports going to Europe.

All of which means there has never been a more important time for local government and LEPs to have a strong understanding of the businesses and sectors in their areas, and what they need to grow. We’ll have to wait till Monday to see the full Industrial Strategy White Paper, but it is clear that as part of the Government’s proposals they will want LEPs and local authorities to be far more knowledgeable about their business base, the barriers it faces, and the key interventions that are needed to unlock growth.

This isn’t an easy challenge. Business and sectoral data at a local level is often frustratingly high level, and muddied by concerns over excessive disclosure and outdated sectoral definitions. This makes it hard for economic policymakers to clearly understand their key businesses. That’s why the announcement on setting up a Geospatial Commission to open up access to important sources of data, although a lot less glamorous than some of the big-money announcements, is so important. Our new mayors, and local authority and LEP leaders around the country, must have the data needed to make objective decisions about policy and investment. Indeed, we are currently working with metro areas around the country to develop better intelligence to support policy, and we welcome the opportunity to engage with the Commission in due course.

 

Investing in growth, infrastructure and housing

The big centrepiece of the Budget, from the perspective of Industrial Policy, was the announcement of the increase in the National Productivity Investment Fund (NPIF) to £31bn up from £23bn, with this funding explicitly targeted at raising national productivity through investment in R&D, supporting businesses, housing, and infrastructure. This increase includes a further £2.3bn in R&D in 2021/22, raising the R&D credit, and a series of proposals aimed at unlocking £20bn of patient capital.

Within the NPIF, the Transforming Cities Fund is particularly welcome. The UK has a longstanding infrastructure deficit, particularly outside of London and the South East, and ensuring better connections between and within cities is essential to productivity growth. Half of the new fund has already been allocated to important investments in our Combined Authority areas with elected metro mayors, leaving the remainder open for competitive bidding. However, the size of the fund is cause for concern, at just £1.7bn, equivalent to 11% of the budget for Crossrail.

So, whilst the intentions are positive, we must question the ambition of such schemes. Our great cities deserve forward-thinking plans to transform inter- and intra-city connectivity, not piecemeal investment. This is an area where our regional powerhouse structures – the Northern Powerhouse and the Midlands Engine – as well as our new mayoral Combined Authorities, can play a vital role in thinking strategically at a city-region and regional level.

On housing, the Government is showing the right kind of ambition, proposing a national target that if met would begin to address the long-term underinvestment in housebuilding in the UK. However, there are many questions unanswered. The 300,000 homes a year target carries conscious echoes of MacMillan in the 1950s, but it should be remembered that in the 1950s this pledge was principally fulfilled by local authority housebuilding, and only later supported by recovery in the private sector. In contrast, the Budget placed a continuing strong emphasis on home-ownership as the preferred tenure.

Whilst acknowledging that home-ownership has decreased in recent years, the Budget set out proposals to meet the 300,000 home target, through:

- A further £2.7bn for the (already heavily oversubscribed) Housing Infrastructure Fund (HIF)

- £1.1bn for a new Land Assembly Fund

- An additional £1.5bn for the Home Building Fund providing loans for SMEs

- £630m to accelerate smaller stalled sites through funding for infrastructure and remediation

- £204 million of funding for innovation and skills in the construction sector

- Building five new garden towns, including in the South East

The Budget also proposes to respond to the CIL Review through launching a consultation on greater freedoms and flexibilities for the use of CIL by local planning authorities. And there is to be a review of the gap between planning permissions and housing completions.

This is therefore a strong and important set of policies, but it is important that there is consistency between the commitment to devolution shown by the Government in many areas of investment and the desire to hold local planning authorities to account. Particularly in areas with elected Metro Mayors it is important to ensure that local government is empowered to develop housing in a way that best suits the needs of local areas. This might involve more intervention and direct development, it might involve building on Green Belt land where this allows for sensible urban extensions and it will almost certainly require taking on additional borrowing and fiscal powers, as well as greater regional / sub-regional planning. It is vital that local places are empowered in these ways if the Government’s well-intentioned targets are to lead to high quality homes in the numbers that the country needs.

Investments in productivity and infrastructure are vital, but places also need to support more inclusive growth. For too many people around the country there is a gulf between working and making a living, many of our poorest citizens squeezed by low and irregular wages, and high and rising costs of housing, childcare and amenities.

Although inclusive growth wasn’t mentioned explicitly in the budget, there were some important announcements on skills, including greater investments in STEM education, and a new National Retraining Scheme supported by online learning, as well as an increase in the Living Wage and Minimum Wage.

It is essential that LEPs and local authorities act to ensure better kinds of work, supporting people to gain skills and supporting businesses to invest in their workforce. This will involve consistent approaches to measuring economic growth and monitoring improvements. It will also involve prioritising investment so as to support inclusive growth. Our recent work with JRF, in partnership with Cardiff and Sheffield, sets out a new framework for considering inclusive growth as part of project prioritisation processes.

 

How Metro Dynamics can help your organisation

At Metro Dynamics, we are continuing to support cities, local authorities and LEPs to build successful places that support inclusive growth. We are supporting places through:

·         Building a comprehensive evidence base that draws on innovative sources of data on businesses, the economy, people, property, and places.

·         Developing devolution deals with Government founded on strong evidence and robust local partnerships and governance.

·         Helping cities to develop attractive, prioritised investment propositions that appeal to private sector investors and developers.

·         Working with LEPs to develop Local Industrial Strategies informed by insights about local businesses and sectors.

For more information about how we can help your organisation, please contact us: ben.lucas@metrodynamics.co.uk / mike.emmerich@metrodynamics.co.uk

A Derby-Nottingham metro area would boost growth

By Ben Lucas

This article originally appeared in the Local Government Chronicle

In the last couple of weeks both the president of the Confederation of British Industry and the Industrial Strategy Commission have noted that the East Midlands is one of the most significant areas of the country not to have its own clear voice on industrial strategy.

The success of the Midlands Engine and the imminence of the white paper on industrial strategy brings this into even starker focus.

It’s a large region that comprises several overlapping types of economy including urban/metro, former coalfields, market towns and rural areas. Each of these has distinctive as well as interconnected challenges and opportunities. They are represented by every tier of local government, from districts, through cities to counties.

Recently Metro Dynamics has had the opportunity to look at one aspect of this: the metro economy of Derby and Nottingham. Readers of the LGC will have read Jon Collins (Lab), leader of Nottingham City Council, talking about working with his counterparts in Derby City Council to build a “coalition of the willing” around metro strategy. The two councils have started by developing some reciprocal citizen services, where local people who live in one city but work in the other can use their library and leisure cards in both cities.

Building on this, we were asked to scope the economic opportunity that metro collaboration could present, the fruits of which can be read here. As someone who grew up in Beeston on the outskirts of Nottingham, and still an avid Forest fan, this has been a fascinating piece of work from a personal perspective.

Of course, I’m well aware of the rivalry between my home city and its near neighbour. But it’s also impossible to get away from their interdependence, which becomes more apparent the closer you look. An old friend of mine summed it up as we walked away from a Forest game once: “Everyone in Nottingham hates Derby. Mind you, half my mates work there!”

Derby’s strengths in advanced manufacturing are complemented by Nottingham’s specialisms in finance, business services and emerging digital and bioscience sectors. So much so that 40,000 people commute between the two cities daily, while over 80% of the residents of the wider metro area, covering neighbouring districts of Nottinghamshire and Derbyshire such as Broxtowe and Erewash, with a population of 1.4 million, also work there. The data confirms that these areas already function as a metro area economically.

Our conclusion is that if the area started to collaborate more like a metro then the scale of the economic prize would be significant. For instance, we believe it’s realistic for the metro area to raise its productivity to match the English average by 2030, providing an additional £11bn of gross value-added.

But to get there, some serious challenges need to be confronted. Local leaders are only too aware that there are pockets of severe deprivation in both cities, low school attainment and skills levels and a high proportion of low-wage jobs. In short, there’s a need for truly inclusive growth that spreads opportunity and prosperity. That’s hampered, in part, by the fact that currently the areas covered by the metro receive £800 less in public funding per head than Greater Manchester, a problem of underfunding that characterises the East Midlands as a whole.

Moreover, the big opportunities we identify lie in sectoral and locational intersections between Derby and Nottingham, for example bringing together advanced manufacturing specialisms with digital skills and capability, and realising the full potential of HS2 at Toton, midway between the two cities. Seizing these will require collaboration between all of the partners that have a stake in these developments.

The challenge in the complicated local government geography of the area is to create new shared economic priorities and the structures that can drive these. This cannot be about the creation of a super-council, or the domination of one place by another, and its focus should be economic, not on local services. It will have to be a voluntary process and all tiers of local government will need to be in the mix.

That’s why we have suggested a partnership approach to driving the metro industrial strategy in the shape of a metro growth board. Bringing together local politicians, businesses and anchor institutions such as universities, with an independent chair, this would be a modern equivalent of the 19th century municipal corporations that drove the growth of our great Victorian towns and cities. It could provide an effective voice for the area, as well as being tasked with developing joint approaches to inclusive growth, skills, and infrastructure investment.

Our local government structure is one of the oldest and most varied in the world. Getting industrial strategy and governance right for each place requires creativity, compromise and collaboration. We believe that operating as an economic metro area is the right way forward for the Derby-Nottingham area. To paraphrase the late local hero Brian Clough, we are not saying it’s the best idea for driving growth across the area, but it’s in the top one.

Press Release for Derby-Nottingham Metro Economic Case Report

Derby and Nottingham urged to accelerate collaboration to secure £11bn prize

·         Derby and Nottingham should operate as a ‘metro’ region economically to spur growth, report says

·         Historic rivals have complementary economies and should focus on shared priorities and combat government underfunding

·         Successful collaboration on industrial strategy could generate additional £11bn GVA by 2030

Full report by Metro Dynamics can be downloaded here.

 

Their football teams may both have been managed by the legendary Brian Clough, but until recently the idea that Derby and Nottingham had much in common would have been anathema to many of their citizens.

But a detailed study prepared for Derby and Nottingham’s City Councils hails progress by the two cities to develop joint services and recommends extending this into a combined industrial strategy that will enable them to operate as a ‘metro’ unit economically.

By developing a shared industrial strategy that draws on each other’s unique strengths, the cities could boost their output to match average English productivity, reaping an £11bn gross value-added (GVA) dividend by 2030, according to a report from city growth consultancy Metro Dynamics. New joint institutions and a focus on skills and education could encourage more inclusive growth that spreads prosperity, the report adds.

The findings are being considered ahead of the much-anticipated publication of the Government’s Industrial Strategy White Paper. Earlier this year, the green paper consultation stressed the importance of locally-led industrial strategy ‘deals’ based around economic and sectoral clusters as a way of spurring regional growth.

The report by Metro Dynamics, entitled The Economic Case for the Derby-Nottingham Metro, points out that the two cities and surrounding districts already have many of the characteristics of a metro economy, with a population of 1.4 m. Closer together than London’s Olympic and Wembley stadiums, over 80% of residents live and work locally, with 40,000 people commuting daily between the two. Average output-per-head is almost identical [Nottingham’s GVA per head is £27,645, compared to Derby’s £27,259], despite their very different economic structures.

Derby is by far and away England’s most industrial city, with over 30% of its economic output from advanced manufacturing, including big-name firms like Rolls Royce, Toyota and Bombardier. Nottingham has strengths in finance, business and data services and bioscience, with major employers including Boots, Experian and Capital One. These economies, supported by three major universities, are seen as complementary to each other by the report authors.

But both cities face challenges to their economic potential, including low skill levels, below-average school attainment, high proportions of low-wage jobs and pockets of severe deprivation.

Furthermore, the two cities, along with the wider East Midlands, have historically suffered relative underfunding from central government which the report suggests could be due to the lack of a united voice compared to competitor cities and areas in other regions. The report notes that if the area received the same level of government spending per head as Greater Manchester, per person spend would rise by £800, generating an additional £1.1bn for the metro

The report sets out a 10-point plan to turbo-charge the economy of the metro region, including:

·         Establish a new Metro Growth Board to bring local government and businesses together, in a modern version of the 19th century ‘municipal corporations’ that led the cities’ growth in their industrial heydays.

·         Prioritise delivery of the Toton HS2 station development and surrounding infrastructure as a key transport connectivity and economic driver for the metro region, generating 75,000 new jobs and much needed new housing.

·         Work together for a proportionate share of the proposed UK Shared Prosperity Fund - a post-Brexit replacement for European Structural and Investment Funds proposed by the UK Government. 

·         Establish a strategic approach to inclusive growth, bringing in national agencies such as the Education and Skills Funding Agency (ESFA) and Jobcentre Plus (JCP) to work on local priorities.

·         Create a globally significant metro presence by aligning the work of Marketing Derby and Marketing Nottingham to attract foreign direct investment (FDI) and tourism.

 

Ben Lucas, Managing Director of Metro Dynamics, said:

“The more you look at Derby and Nottingham, the more apparent their underlying economic interdependence becomes. But whilst the area already has many of the characteristics of an urban metro, it doesn’t operate like one, and it loses out as a result.

“We have identified some huge opportunities from a more joined-up approach. The most significant of these is HS2 at Toton. The potential here is enormous: It could be an innovation campus that links Derby’s advanced manufacturing and engineering strengths with Nottingham’s burgeoning digital sector, building on the Midlands Engine Innovation Accelerator plans.

“The big growth opportunities of the future lie in sectoral and locational crossovers between the two cities, such as combining advanced manufacturing with digital skills.  No one organisation or place can make this happen on their own.

“If all of the key organisations, City and County councils, Districts, LEPs, businesses, education institutions and local communities can work together in a real spirit of collaboration, then there is a big economic prize to be grasped.”

 

David Williams, Chair of the Metro Strategic Advisory Group, which has members of the business community from Derby and Nottingham, and Chair of Geldards LLP, said:

“What really stood out for me in this report is the economic parity of Derby and Nottingham.  The two cities have businesses and services which complement one another, with a high level of local residents who work in local companies. It is clear we have much more to gain in common than in competition. 

“Metro Dynamics tell us maximum economic benefit will come through formal collaboration between organisations covering an area beyond the two cities. They suggest a potential additional economic growth in GVA of £11bn is achievable long term. 

“I found myself asking two fundamental questions – firstly, why the perceived rivalry between Derby and Nottingham has been so dominant in the past and, secondly, what has our whole region missed out on as a result?

“This study feels fresh to me. Looking at a ‘metro’ economy is still new, our relationships are still forming; Metro Dynamics’ independent evidence shows that we are already on the right track. 

“To progress together and realise our potential we need an approach that is inclusive and pragmatic. We must form a partnership of equals, focus on areas of mutual economic interest, leaving our organisational interests behind. This will be a challenge, I don’t doubt, though what we achieve will be both exciting and rewarding.

“I am genuinely enthused by the idea of a Metro Growth Board and I will talk to business colleagues over the next few weeks about their response to the report and what we can do next, together.”

 

ENDS

 

Notes to editors

 

1.    About Metro Dynamics

Metro Dynamics provides strategic advice to those who lead, grow or invest in cities. Our mission is to help cities be places where all people can prosper, innovation can thrive and businesses can grow. We work with city governments, national governments, local authorities, real estate and investment funds, technology firms, engineering companies and retailers to understand city-based opportunities for growth. 

 

Contact

For further information and interview opportunities, please contact James Tout at Journalista on 07989 610 276 or email james@journalista.co.uk