WILL INDUSTRIAL STRATEGY HELP PRODUCTIVITY ?

 

 

 

WILL IT LAST ?

The latest government industrial strategy was launched this week. Let’s hope it lasts. History tells us it won’t. Business is certainly sceptical having made investment decisions in the past based on Whitehall plans which ministers lose interest in after the first sound bites have gone away or a new set of young advisers have come up with a new plan for a new minister.

The other reason past initiatives to boost productivity, wages and the Northern economy have disappeared is because of changes in government. The use of state control during the war led to the Attlee government’s confidence in a nationalisation programme. The Thatcher government reversed this and until 2008 it was generally accepted that capitalism and the private sector would guarantee economic success. All that changed after the crash and ten years on we are reaping the whirlwind of people’s distrust in markets, experts and globalisation.

This Industrial Strategy shows that the Conservatives are now committed to the state having a real role in intervening in the economy. To a considerable extent this has been driven by the success the Labour leader Jeremy Corbyn has had in identifying people’s distaste for rampant capitalism.

That brings me back to the question businesses are asking, will it last? Possibly if Greg Clarke, one of the abler members of the Cabinet stays in post and if Jeremy Corbyn doesn’t get into Downing Street. His industrial strategy based on nostalgia for the Attlee days would look very different.

PRODUCTIVITY.

The industrial strategy is targeted at the construction industry, life sciences, driverless cars and artificial intelligence. So, there is an emphasis on high tech jobs. The question is will this help with our chronic lack of productivity. Most companies in the North operating at the cutting edge of research are productive but 60% of jobs are in retail and manufacturing which is where the productivity problem really lies. There are 40% more jobs in retail than pharmaceutical. The industrial strategy is too narrow to address this widespread problem.

It is also in danger of being southern focused. Currently only 10% of research spending is in the North. The investment by healthcare giant MSD in Manchester is to be welcomed but confidence in the Northern Powerhouse is shaky at the moment. There is a growing sense outside the Manchester and Liverpool conurbations that the whole project is city based. Of course, one answer to that is for counties like Lancashire and Yorkshire to stop squabbling and get their act together. But the piecemeal approach of governments since 2010 to devolution has not helped. Transport for the North (TfN) is a big step forward but in outlining its new powers recently, the government document contained weasel words about “formally considering” TfN’s statutory transport strategy and TfN’s right to be “consulted” on rail franchises. It does not have the same powers as transport for London.

Finally, there has been a bitter reaction from local government. Whilst mayoral areas will have full control over their local industrial strategies, other councils feel they have been excluded from playing a role at the expense of the Local Economic Partnerships (LEPs). This despite the fact that ministers are calling on LEPs to address problems relating to their leadership, governance and accountability.

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“EDUCATION DEPARTMENT NEEDS A KICKING”.

 

 

EDUCATION MINISTRY HINDRANCE TO SKILLS TRAINING.

As the skills and productivity crisis deepens, the Department for Education has come under savage attack from the mayors of Greater Manchester and the Liverpool City region.

Andy Burnham and Steve Rotheram are getting into their stride in speaking for the North on a range of issues as was evidenced at a packed Downtown meeting this week. There wasn’t a single reference to strained relations between the core cities of Liverpool and Manchester, just a demonstration of the easy relationship that the two politicians share. This is important for the northern voice. Oh, that it was replicated in Yorkshire where rival councils are knocking nine bells out of each other over devolution models. Or in Lancashire, Cheshire and Cumbria where to describe progress on devolution as glacial would be to insult those magnificent features of the natural world.

After their election in May both men had very different starts. Burnham acquired a large staff at his Oxford Street headquarters in Manchester, although he said he envied Rotheram’s ability to shape his own team. That was a reference to the “Mary Celeste” situation faced by the Liverpool City Region mayor when he took office. Rotheram inherited no staff and a difficult relationship with Liverpool city mayor Joe Anderson.

Both men were just back from visits to Paris and New York and have realised that they need to impress the world, not just the government, that the North is a great place to invest in.

Raising skill levels is one of their main aims and you’d think the Department for Education would be an ally. Not so apparently. Rotheram said it was the least responsive department in Whitehall and needed a good kicking. The mayors wanted to control skills spending locally and show young people that there are routes to success other than through university by boosting vocational training. Burnham had been to his kid’s Year 9 options meeting where the ICT teacher had no takers while the pupils queued for humanities subjects.

Now in office the mayors want to tone down the politics to appeal to business. They feel firms in the two sub regions would feel more comfortable dealing with them than the highly politically charged Westminster village. They are working with other elected mayors including West Midlands Tory Mayor Andy Street.

Transport is another area where the mayors have given a voice to the North. With Downtown providing the launch pad they had launched a salvo of criticism over the government’s broken promises in the summer. They claimed it had born fruit to some extent with Liverpool City Region getting two “touch points” with HS2 and the Chancellor announcing a £400m cash boost for northern transport at the party conference. All well and good but still small potatoes compared with transport spending in London.

While stressing that their door was open to business, the mayors fired a shot across the bows of house builders saying the emphasis on developers needs had to change to provide the affordable housing that is in short supply. Andy Burnham made a striking remark that may meet with a mixed reception in his outer boroughs. He said they needed to shrink their retail offer and increase the space for housing.

Finally, on Brexit, the mayors had recently met with Brexit Minister David Davis. Burnham had told him that Greater Manchester exported 58% of its exports to the EU compared with the national average of 44%. No deal would be a very bad deal for him. Rotheram, also a Remainer, nevertheless said the port of Liverpool stood ready to welcome global opportunities post Brexit.

It is too early to say whether these politicians will actually deliver their visions, but people can begin to see how City Region mayors might make a difference in the absence of what we really need, which is powerful regional government.

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SIGNIFICANT BATTLE OVER GAMES

 

GOLDEN GAMES.

Next week business and council chiefs from across the North will meet to demand a fair transport deal for our region. The summit, backed by Downtown in Business, comes in the wake of a watering down of government pledges on connectivity for the Northern Powerhouse (NP) and the simultaneous approval of Crossrail 2 for London.

We’ll see what the response is from ministers. They’ll need to bear in mind that the Conservative conference is in Manchester this autumn and the issue could be an embarrassing one, if not resolved.

But there is another decision to be taken shortly which will indicate whether the NP is still a priority for the government or if the Midlands Engine is to be favoured in the future. The question before ministers is whether to back Birmingham or Liverpool as the UK’s nominee to host the 2022 Commonwealth Games.

The Liverpool bid has brought rivals together like never before. Everton’s proposed new ground at Bramley Moore Dock would host the athletics, Anfield would stage the rugby sevens. Manchester’s velodrome would be the venue for the cycling. Wayne Rooney, who has played in both cities, has just announced his support for the bid which it is hoped will accelerate a billion pounds of investment in the north docks area and 12,000 jobs.

Liverpool would be a great venue for the Games with other venues like St George’s Hall and the ACC Arena also being used. The North West has already staged one of the most successful Commonwealth Games in Manchester in 2002 and ministers should show confidence in our region again.

This is especially the case as bid chairman Brian Barwick and Mayor Joe Anderson have responded to a crisis following the withdrawal of Durban earlier this year. Liverpool originally intended to bid for 2026. Let’s hope doubts over the city’s ability to deliver to the shorter deadline won’t scupper the bid. Particular focus will be on the ability to deliver Everton’s new stadium. That saga has been dragging on for most of this century.

Birmingham already has a stadium which is the home of UK athletics and claims it is 95% ready to host the games although it does not have an Olympic size swimming pool.

Certainty about facilities being ready on time are important, but so are politics. Conservative Andy Street was recently elected as Mayor of the Birmingham City Region and will be expecting the backing of his government in this important decision.

But as the Liverpool Echo said recently “Birmingham? As the Capital of HS2 and so close to the gold-paved streets of London, they don’t need any further help.”

TRUMP’S WINK TO THE NAZIS.

I wrote a couple of weeks ago that the Trump family could rule America till 2033. Now I wonder if Donald Trump will last the year. The laughable clown has now become sinister. There is a difference between fully armed Nazis and Anti-Nazi protesters reacting unwisely to provocation. Trump either doesn’t understand this or regards the far right as part of his blue-collar coalition.

He is alienating the business community although the turmoil doesn’t seem to be affecting the markets. If it does, the cry for Vice President Pence to steady the ship will grow, although such a transition would be fraught with danger particularly after the scenes in Charlottesville.

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THE UNACCOUNTABLE GOVERNMENT

 

RAIL BETRAYAL.

Since Parliament has gone into recess, hardly a day has passed without a significant policy announcement by ministers. They’ve ranged from banning petrol driven cars by 2040, to transport announcements that have the potential to drain the Northern Powerhouse (NP) of any meaning.

With MPs, away from Westminster and unable to call the government immediately to account, elected mayors and council leaders across the North have had to promise a summit in late August. Let’s hope that the current angry mood will not have turned to dull resignation.

The betrayal by Transport Secretary Chris Grayling is breath-taking. He has rowed back on plans for new platforms at Manchester Piccadilly station, said “bi-mode” trains will do on the Manchester-Leeds line rather than full electrification and downgraded rail schemes in Cumbria. At the same time the government announced their support for a £30bn Crossrail 2 project in London.

A few weeks ago, I challenged the chair of Transport for the North (TFN) John Cridland at a major conference on transport about the Treasury rules that will always mean that London schemes meet investment criteria because of the millions of commuters compared to the needs of the North. Cridland remained optimistic and TFN were urged by Manchester City Region mayor Andy Burnham to persuade the government to look at other criteria for justifying transport spending like economic return.

I said in a blog a few weeks ago that the acid test of the government’s commitment to the Northern Powerhouse would be whether Crossrail 2 or Trans Pennine investment would come first. Well now we know.

The whole Northern Powerhouse project is in serious trouble. Good connectivity between northern cities is the bedrock of the whole scheme. The new NP Minister, Rossendale MP Jake Berry is nowhere to be seen. Meanwhile Business Secretary Greg Clarke made his industrial strategy speech on investment in battery power in Birmingham this week. Ever since Theresa May came to power there has been a pivot from the North to the Midlands.

Let’s hope the summit backed by all the northern cities at the end of next month gets some answers from ministers.

EMPLOYMENT TRIBUNAL BLOW FOR BIZ.

 

It is always a shame when people abuse employment rights. But that was why the Coalition government brought in fees to deter vexatious employees and chancers who were taking employers to tribunals in droves. In 2012/13 191,541 cases were lodged before fees were levied. The latest figure is 88,000 which is high enough and by the way, fees were often reimbursed if the grievance was genuine.

Small businesses are set to be hardest hit as claims from aggrieved employees soar again. With Brexit uncertainty as well, it is not a good time to be in business.

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