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CBI: 50 YEARS OF BUSINESS INNOVATION | UK SPOTLIGHT


Similar examples of structural transformation


are visible in almost any major town and city in the UK. Former factories have been turned into headquarters of major services companies, derelict industrial areas are now homes to business parks and former dockside areas have become popular living quarters in such cities as Plymouth and Cardiff. All regions and cities have had to deal with the impact of deindustrialisation – some of the regional gaps are a reflection of how successful they have been in meeting that challenge. In a major 2012 report, The UK’s Growth


Landscape: Harnessing Private Sector Potential Across the Country, the CBI said successive governments had overlooked pockets of private- sector potential because economic policy focused on levelling out the gaps between regions, rather than realising and maximising the potential within them. It said that future policy should focus on identifying and nurturing hubs of private-sector growth.


DRIVING FORCE These hubs are more likely to be based in a city and its surrounding area rather than across the region as a whole. The success of the Nissan car factory near Sunderland in the North East is a good example, as is Honda’s facility in Swindon in the South West and Toyota at Burnaston in Derbyshire, East Midlands. Indeed the CBI has pointed out that private-sector employment in Sunderland grew by 10.5 per cent between 1998 and 2008, almost three times the wider North East rate of 3.6 per cent.


City regions are areas into which people


commute for work, around which benefits of what economists call agglomeration build up and, most importantly, are the places where private- sector activity takes place. Around three quarters of Britain’s private-sector workforce is located in cities and their hinterlands. This does not mean that cities are the only areas with potential for economic development – there is also huge business potential in smaller towns and rural areas – but cities are a useful organising geography around which to base a range of policy decisions. The current debate over devolution and


demands for greater regional autonomy in the wake of the Scottish referendum and the high profile that two mayors of London have given that post are only likely to increase. The CBI believes there is a strong need for LEPs to have greater powers and more responsibility for their funding while ensuring that they are better integrated with local further education bodies, Enterprise Zones and City Deals. Investment should be focused on improving regional transport connections. Policymakers should consider the case for localising public-sector pay over the long term, to improve public service delivery and create a more level playing field for the private sector. Based on those reforms, Britain can look forward not to a country divided in two but one made up of a jigsaw of regions with an equal amount of potential and ambition to succeed.


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Right: Cardiff Bay – one of the UK’s most successful examples of post-industrial regeneration


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