Open for business

Think tank: Centre for Progressive Policy

Author(s): Ross Mudie

May 10, 2023

This report from UK think tank the Centre for Progressive Policy looks at unlocking investment in low-earning economies.

Analysis by CPP in its new report, Open for Business, identifies 95 ‘pockets of potential’ – hotspots of highly productive local industry across eight sectors based in 72 underperforming local economies. CPP estimates that if the areas identified secured levels of business investment in line with their potential, it would attract £70.2bn into the UK economy – around 3.8% of national GVA. CPP’s analysis shows many towns, small cities and rural and coastal areas with underperforming local economies contain pockets of high-potential industries, that have demonstrated impressive productivity growth in recent years. Over 80% are based in the North and Midlands, with manufacturing the largest sector among them. Examples include manufacturing in Boston, Scarborough, Stroud, Newport and Burnley; professional scientific, and technical activities in the Scottish Borders; and information and communication in Stoke-on-Trent. All the sectors make up at least 5% of output in the local economy, with a similar share of local employment, meaning they are a sufficient size that their development would have a meaningful impact. The thinktank recommends that the government adopts a new Manufacturing Mission as part of a long-term strategy to attract more business investment into these ‘pockets of potential’. This mission would aim to grow the manufacturing sector as a share of GDP and employment. Recommendations include driving up the adoption of digital technology and other productivity-enhancing products, and supporting decarbonisation and the adoption of green products, processes and practices by manufacturing firms. CPP proposes the establishment of regional co-investment funds to support this mission, improving access to private capital by manufacturing firms as well as other high potential industries at the local level. CPP also recommends establishing a formal Prime Ministerial target to address the UK’s long-term lagging performance on adult education, raising participation to 30% by the end of the next parliament, including introducing a new Learners’ Living Allowance, and a new human capital allowance scheme specifically for those without a university-level qualification.