Don’t just rely on the usual suspects for growth

The CBI today (Thursday) published a growth strategy for each geographical part of Britain, emphasising that every area, and cities in particular, need their own bespoke growth plan.

The CBI believes that a successful re-balancing of the economy requires the private sector to grow across the whole country, not just in London and the South-East. This is more challenging further north and west, but the CBI’s research shows that it is achievable.

In its new report The UK’s growth landscape – Harnessing private sector potential across the country, the CBI says that for too long, successive governments have overlooked pockets of private sector potential because economic policy focused on closing the gap between regions, rather than realising and maximising the potential within them.

There are real success stories from every part of the country, particularly within towns and cities, where three quarters of business activity takes place. Private sector employment grew almost three times faster in Sunderland than in the wider North-East between 1998 and 2008.

So, the Government should take a flexible approach to policy deployment, targeting it on a case-by-case basis at a local, regional or national level, taking functioning economic areas across the UK, particularly towns and cities, as the starting point. While Local Enterprise Partnerships (LEPs) better reflect local business geography than the Regional Development Agencies they replaced, some issues require a more strategic approach than is offered by localism alone.

John Cridland, CBI Director-General, said: “In the rebalancing of our economy, every part of Britain needs to grow, and it is harder the further we go from London for the private sector to pick up the slack left by a retreating public sector. In some parts of the country the public sector is simply too big and the private sector has much heavy lifting still to do.

“But we mustn’t just rely on the usual suspects – London and the South-East.

“It is possible, if the Government avoids a ‘one-size-fits-all’ approach to regional growth across the UK, and instead concentrates on boosting the private sector wherever pockets of potential are found in towns and cities within regions.

“Where there are advantages to local policymaking, the message from businesses to the Government is ‘be bolder’. Businesses want to see LEPs given statutory status, and incentivised to work together on strategic issues such as transport policy, foreign investment, economic analysis, innovation, and industrial policy. Not doing so risks fragmenting the existing business and economic landscape.