May’s ‘National Plan’ – the Key Missing Peices

Teresa May in Forward to Industrial Strategy Green Paper.

our modern industrial strategy  is a critical part of our plan for post-Brexit Britain. It will help to deliver a stronger economy and a fairer society – where wealth and opportunity are spread across every community in our United Kingdom, not just the most prosperous places in London and the South East.

A Plan for Britain – a National Plan – of which the Housing White paper will also be a crucial component.

This is a move towards Japenese, German or French style Indicative planning of sectors and places.  What is less clear is the spatial component.

The Industrial startegy is clear there is a spatial productivity gap

The … challenge is to ensure that every place meets its potential by working to close the gap between our best performing companies, industries, places and people and those which are less productive.
Britain is one of the most centralised countries in the world, but this has not led to places being uniformly prosperous. For all the global excellence of the UK’s best companies, industries and places we have too many who lie far behind the leaders. That is why, on average, workers in France, Germany and the United States produce around as much in four days as UK workers do in five. It is also why despite having the most prosperous local economy in Northern Europe – in central London – we also have twelve of the twenty poorest among our closest neighbours.

The first task that most ‘national plans’ do when looking at spatial productivity gaps is to determine what the best comparative advantage of each strategically important place is and could be and focus investment on closing those gaps.  This approach has been influenced by advances in growth theory – especially the New Economic Geography. For reasons I cant go into I have been working working closely with experts for several month who drafted National Plans in several countries.

The Industrial Strategy does very briefly deal with the issue of regional comparative advantage.

Every part of the UK has strong clusters and particular strengths. From the oil and gas industry of Aberdeen and the digital clusters in northern cities, to advanced engineering networks in the Midlands or cyber security industry in the South West and South Wales, there are world leading businesses in each part of the UK.

But there is no comprehensive analysis – such has been done for the Northern Powerhouse by my friends at Cambridge Econometrics looking comprehensively where the best prospects lie for each place.

The paper is right that the key lesson from industrial strategy in other countries is being patient and building local institutions.

The issue though for places like Barrow-in-Furness, Rotherham, Stoke on Trent or Luton is just what their comparative advantage is now, or for places like Northampton and Bradford how they can close the gap to overcome their current positions of undershooting their potential.  Each of these has a population size that was driven by declined industries and the sectors in which they have now comparative advantage (like Luton’s Airport) is not sufficient to support that population.  With a lack of growth industries young people leave creating a low skilled population and a comparative advantage only in low skilled low wage areas like call centres and fulfillment centres.

Of course the greatest mistake that a National Plan can make is to offer as the Irish Planning Minister has said ‘something for everyone in the room’ something for every town however small and not prioritizing growth areas and investments.

As written however the Industrial Strategy offers nothing to second tier cities, and even Leeds and Hull are complaining that  Greater Manchester is getting all the action.

So is this the first step towards a National Plan as planner’s would recognise it – maybe – the logic is there and the understanding that non place based purely sectoral strategies wont work, as well as the need for central and local bodies to work together rather than national government pretending to loftily stand above it all.  But how can that logic apply to any attempt in the Housing White Paper to perpetuate the Pickles Myth that ‘everthing can be done locally’ and when local bodies are left to plan housing they will work harmoniously rather than what they have done in most cases fight like rats in a sack.

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