Strategic Errors

The Modern Industrial Strategy, Local Growth Plans, Economic Development Strategies… who doesn’t love a strategy?  The trouble is, they can be both enormously helpful and enormously unhelpful. Let me explain.

Ideally, local, regional and national strategies would fit inside each other like Russian dolls.  In practice, trying to get them to do so is more like trying to force a wet tent back into its carrying case on a particularly windy day.  Nationally important sectors might not be that important regionally and certainly not locally.  This is especially the case in under-performing areas which, if they had those sectors as mainstays of their economy, would not be under-performing… 

So, trying to align sub-national strategies with national strategies can be problematic and even a little deflating.  Some combined/mayoral authorities have got round this tricky issue by publishing their Local Growth Plans in advance of the Modern Industrial Strategy. Clever.

But what should go into an economic development strategy/growth plan and, more particularly, how can the ambitions they set out be justified?

Recently, the estimable Tom Bridges posted (on LinkedIn) a reminder of the ODPM’s "Guide to Improving the Economic Evidence Base supporting Regional Economic and Spatial Strategies" first published in 2005 and which he and other Arup colleagues had put together.  It set out five areas for improving the economic evidence base:

-            Better understanding of causal factors and drivers of change.

-            Using longitudinal evidence to better understand long-run structural trends and future scenarios.

-            Better and more transparent interpretation of data analysis and modelling.

-            A more robust approach to market-testing, to improve understanding and questioning of the economic implications of adopting specific policy positions on the scale, type and location of development.

-            Better integration and synthesis of thematic, sector-based, and spatially-focused evidence to strengthen understanding of linkages and inter-relationships between policies.

Respectfully, I would add the following:

-            The need to consider the reliability/robustness of certain evidence. Some data lags are very unhelpful; some data are skewed by external events or shocks, such as the Covid pandemic; and some data are based on small sample sizes, especially at the local level.

-            The willingness to accept that some evidence might be telling you things you'd rather not hear (and confronting that).  You might be weak in areas in which you’d like to be strong; the terribly unsexy but terribly important Foundation Economy might account for a large percentage of jobs etc.

-            The need to balance optimism and pragmatism.  Not everywhere is going to be a world centre for AI, so don’t pretend that’s a realistic ambition where there is no evidence to back it up.

-            Just be yourself. That doesn't mean you can’t evolve into something different, but don’t pretend you’re something that you’re not. There’s a lot to be said for authenticity.

And if that isn’t sufficiently uncomfortable, try this for size: economic development strategies ought to more fully recognise social and environmental factors.  For example, I’ve written economic development strategies for areas where levels of economic inactivity are uncomfortably high, driven mainly by long-term sickness and people having caring responsibilities.  If you want those people to be available for work, you’ll need to make substantial investments in public health, the NHS, childcare and social care.  Putting on training courses and offering them help with their CVs isn’t really going to cut it. And do you really want to build along the Lincolnshire/Norfolk coast (and some other places besides) given expectations of rising sea levels within the next 25 years?

Joyz-n-the-Hood

In its report “The Anatomy of Mission Critical Neighbourhoods” (May 2025), the Independent Commission on Neighbourhoods outlined the key challenges facing some of the most disadvantaged places in England and the near 1 million people living in them.  In these ‘mission critical neighbourhoods’:

• Half of adults are economically inactive.

• 40% of working-age people have no qualifications – more than double the national average.

• Gross Value Added (GVA) per working age person is 40% lower than for all neighbourhoods.

• Means tested welfare spending is more than double the national average.

In response, the Commission called for a targeted programme of investment and support for these places. And so say all of me.

Indeed, many of those who have had the misfortune of being in the same room as me at some point over the past year, will likely have heard me reminiscing wistfully about area-based regeneration.  Under the last Labour Government, there was an awful lot of it: Deprived Area Fund, Housing Market Renewal Pathfinders, Local Enterprise Growth Initiative, Neighbourhood Management Pathfinders, Neighbourhood Renewal Fund, New Deal for Communities, Sure Start, Working Neighbourhoods Fund and probably others I’ve long since forgotten about.  Having been involved in the evaluation of examples of all of them, I am well aware that not every one was perfect – far from it in some cases – but the decision to pull back from all forms of area-based regeneration in 2010 was a wanton act of socio-economic vandalism. 

Since then, the third sector has done what the third sector does (tried desperately to fill gaps in service provision), with many local authorities also doing their best in the context of savage budget cuts.  The Regional Growth Fund and Local Growth Fund both seemed to have somewhat patchy records and neither had any interest in neighbourhoods.  More recently, some Police and Crime Commissioners have stepped in, recognising that prevention is far better than cure and investing in projects at local level that seek to address the root causes of violent crime. 

In a belated attempt to look like it was remotely interested in left behind places, Conservative Governments introduced the Levelling Up Fund and UK Shared Prosperity Fund; the former barely gave a nod towards socio-economic issues whilst resources for the latter were paltry in comparison with the European Structural and Investment Funds (ERDF and ESF) it notionally sought to replace.  And then a weird thing happened: the Long Term Plan for Towns was announced.  Out of the blue, 75 towns were each allocated £20 million they hadn’t asked for, to spend on projects they hadn’t thought of.  But before they could do anything very much, along came a General Election, prompting fears that these unexpected gifts might be snatched away.

By remarkable coincidence, the same 75 towns now feature in the Plan for Neighbourhoods. (Go to the website and you’ll see a rather crude copy and paste from some old New Deal for Communities documents, attempting to reframe the programme).  However, what hasn’t changed is the skewing of resources that demand three quarters of these budgets be spent on capital investments. And, as we all know, sustained service provision requires a long-term commitment to adequate revenue funding.

The concern was that this might be all there was to the current Labour Government’s approach to tackling the multiplicity of socio-economic challenges at neighbourhood level, especially given warnings about the dire state of the public finances. But no, much else has been brewing and we are about to get drunk on the prospect of significant and sustained investment in our most deprived communities.

The Chancellor’s Spending Review (June 2025) included some genuinely significant announcements:

• A commitment to improving 350 deprived communities, by investing in community cohesion, regeneration and improvements to the public realm.

• 25 ‘trailblazer neighbourhoods’ (20 in England, 1 in Northern Ireland, 2 in Scotland and 2 in Wales) will each receive up to £20 million over the next decade for investment in community-led projects to “support improvements people can see on their doorstep”.

• A £240 million capital investment in a Growth Mission Fund (2026‑27 to 2029‑30) in projects that facilitate job creation and the economic regeneration of local communities

Of course, the angel will be in the detail, but perhaps I might make one small request of those designing these initiatives?  Could you perhaps have a read of some of the evaluations of similar previous programmes? You might even have a chat with some old economic development professionals who may be able to offer some useful insights into ‘what works’ (and what doesn’t work).  Indeed, some are so passionate about this stuff that they’d happily do so voluntarily…