The Independent Commission on Economic
Growth and the Future of Public Services in
NON-METROPOLITAN
ENGLAND
HOW THE OTHER
HALF GROWS
THE FUTURE OF PROSPERITY AND PUBLIC
SERVICES IN NON-METROPOLITAN ENGLAND
INTERIM REPORT | NOVEMBER 2014
FOREWORD
Non-metropolitan areas account
for roughly half of England‘s
economy and population,
meaning their economic
contribution and growth
potential is as significant for the
nation as for that of big cities.
I am therefore pleased to
present this interim report
which explores the unique
characteristics and drivers
of these non-metropolitan
economies, as well as discussing
what more could be done to
promote growth and improve
public services, delivering
a better economic and social
future for their residents.
This is the right time to do that:
the current English devolution
debate is top of mind, and
a range of moves towards a
more localised and devolved
approach to promoting growth
and delivering services has
been undertaken since the last
election. As the next General
Election approaches, now is
the time to review the role nonmetropolitan areas will play
in future growth, and set out
proposals for policy change
where it is needed.
The interim report, published
here, is only the start, and it is
important that we reflect on
what has been learned so far.
We hope that the many people
who have responded to our call
for evidence so far – and we are
hugely grateful to all of them –
will accept that we have made
an effort to reflect their
comments and input.
Important and challenging
themes are emerging, and it
will take time to properly work
through all of the dimensions
with the care and consideration
they require. But it is already
clear that it is time to think
about the reform that will make
a real difference to England’s
non-metropolitan communities,
and improve the quality of live
and public services for everyone
in the country.
The commission’s next phase
will be to make specific
recommendations for reform
to shape the way economic
growth and public service
transformation are supported
in the future. We aim to set out
these recommendations in our
final report at the start of 2015.
Finally, speaking personally,
I am very grateful to my
fellow commissioners for
their invaluable and committed
workso far, and the hard working
team of officials and support
staff at the Local Government
Association.
Sir John Peace
Chair, Independent Commission
on Economic Growth and the
Future of Public Services in
Non-Metropolitan England
Contents
02 Foreword
04 The Commission
05 What does “non-metropolitan” mean?
06 Executive summary
08
Growth
18
Public services
21 The issues
22 Decisions must get made more simply, clearly, and accountably
23 The public and business must get a
better return on their taxes
27 The shires must get powers to drive
their own places for the future
31
Commissioners
34 Evidence submitted
THE COMMISSION
The Independent Commission
on Economic Growth and Public
Services in Non-Metropolitan
England has been tasked by the
Local Government Association to
seek ways to stimulate economic
growth regionally, create new
jobs and help people live their
lives better.
The Commission has undertaken to:
• review the economic, social and demographic
trends facing non-metropolitan areas
• assess their strengths and challenges,
and identify in particular where their most
powerful potential for future economic
prosperity lies
• review steps taken so far by businesses and
the public sector to meet those challenges
and promote growth
• and make recommendations about the most
effective further steps which business and the
public sector could take to promote growth,
jobs, and improvements in people’s lives.
This interim report shares the Commission’s
early findings on the first three points, and
indicates the areas it will explore further in
a final report in early 2015.
4
WHAT DOES
“NON-METROPOLITAN” MEAN?
“Non-metropolitan” is a deliberately imprecise
term, embracing areas of deep rurality as well
as the suburban areas around great cities;
whole historic shires and emerging alliances
between places with economic links. It includes
some cities with a non-metropolitan setting –
Cambridge and Oxford fall within our scope,
as well as the city of Ely with its population of
20,000 people, but so also does Cornwall’s or
Shropshire’s mix of market towns, villages and
rural hinterland.
diversity is itself a competitive advantage. But
there are also particular challenges presented
by the non-metropolitan mix of businesses,
by areas of less dense population, of more
diffuse transport networks, of market towns,
green belts, and small cities, and of oftencomplex governance. The provision of housing
and infrastructure – from fixed and wireless
broadband to public transport – to facilitate
growth can be expensive and difficult.
Some have labelled these areas “countyregions”: areas that are not conurbations, and
where local government is expressed as county,
unitary and district councils working together.
While major metropolitan cities have important
common features, what distinguishes this other
half of the country is its extraordinary variety.
The Commission starts from an insight that
5
INTRODUCTION
Scotland’s independence referendum has
decisively changed the terms of political
debate about devolution of power to English
communities. This debate has come to
prominence while the Commission has been
holding its early discussions. We have taken
the view that it is a vital context for the
recommendations we plan to make early
next year.
of the Westminster Parliament; nor is it only
about major cities. The clamour for moving
government closer to the people is being heard
in the shires, too. We believe it is part of our role
to help respond to that.
Outside London, the UK’s only true global
city, non-metropolitan areas – shires, smaller
cities, rural and suburban areas – produce the
majority of England’s growth, have a betterskilled workforce, and are overwhelmingly
the places globally mobile capital and firms
choose to locate. Over half a million jobs have
been created in non-metropolitan areas in this
economic recovery.
A clear consensus is emerging that the
way we take decisions in England is holding
back our future growth potential. There is
also widespread agreement that decisions
and funding need to be brought closer to the
businesses and people they affect. What’s
missing is a real picture of where our future
growth potential lies.
While it is clearly vital that cities should be
empowered to catch up their deficit in growth,
skills and productivity after decades of relative
decline, it would be irresponsible to hold back
the shires’ success story. Future policy change
needs to build on the nation’s strengths as well
as correcting weaknesses.
The evidence we have seen has convinced us
that England’s shires are the crucial engine of
England’s economic growth: but government
policy is failing to maintain that engine and
putting the UK‘s future in jeopardy. The English
devolution issue is not only about the working
6
This interim report of the non-metropolitan
Commission sends three clear messages to
government, local and central:
• How to better bring together public land,
buildings, and other social infrastructure.
• How to better train people in the skills that
local businesses need.
• shire areas are today the spearhead of
England’s global competiveness and that
advantage needs to be enhanced with
devolved decision-making
• How to encourage decisions on transport
investment that join non-metropolitan areas
better to their urban neighbours and global
trade routes.
• shire areas have ground to make up in the
way they take decisions and organise their
public services
• How to understand and plan for the
future digital connectivity needs of nonmetropolitan areas.
• but a handful of shires are ready now for
devolved decision-making about public
services and tax; more will be in the future;
and the country will benefit hugely from
devolutionary deals for both cities and shires.
• How to better join up decisions on housing
and infrastructure.
• How to help non-metropolitan areas become
more fiscally self-sufficient.
The Commission is inviting further evidence
on eight key themes to inform its final report:
Our final report in January will make specific
recommendations for change under these
headings. Between now and then, we invite
reactions from businesses, charities and
churches, and public sector organisations of all
kinds to the questions we raise in this interim
report. As part of that we plan to hold a small
number of roundtable seminars with interested
parties who have sent us evidence.
• How to develop better, clearer, arrangements
for taking decisions so local businesses and
residents can understand how their lives are
being affected.
• How public sector organisations can work
better together, and how they can find better
ways to provide services using a holistic
approach to delivery.
Please send your views and comments to
[email protected].
7
NON-METROPOLITAN AREAS ARE…
...Where the majority of England’s economic output comes from
METROPOLITAN
27%
NON-METROPOLITAN
56%
LONDON
17%
Source: ONS, Experian Analysis
8
Non-metropolitan areas account for more than half
of England’s Gross Value Added (GVA), even when
London is included, and dominate in key sectors
Top five performing sectors:
GVA generated by
non-metropolitan England
Manufacturing
Wholesale and
retail trade
Real estate
Professional
services
Financial and
insurance
£36
£41
£67
£82
£83
BILLION
BILLION
BILLION
BILLION
BILLION
Source: ONS, Experian Analysis
9
NON-METROPOLITAN AREAS ARE…
...Productive
GVA per FTE employee (England, 2012)
GVA per FTE employee (England
London and former metropolitan county areas (outlined), counties and unitaries
London and former metropolitan county areas (outlined), countie
Non-metropolitan labour productivity
is above the average for metropolitan
areas
A per FTE employee
(£)in England
29,000 - 38,000
38,001 - 46,000
46,001 - 54,000
GVA per FTE employee (£)
29,000 - 38,000
54,001 - 63,000
63,001 - 78,000
38,001 - 46,000
Metropolitan boundary
46,001 - 54,000
54,001 - 63,000
r
63,001 - 78,000
Metropolitan boundary
r
GVA per FTE employee
(England, 2012)
Source: ONS
…and is forecast to maintain that lead into the future
10
“Within some non-metropolitan areas there are towns, or groupings of towns, that
demonstrate the characteristics of cities and compete not just with cities in the UK, but
on an international level. For example Woking and Guildford form part of the 14th largest
labour market in the UK and are home to a considerable number of large high technology
companies, such as Electronic Arts, Allianz, McLaren and SAB Millar.“ Surrey County Council
...Creating jobs
From 2009-2013, non-metropolitan areas created a net
increase of over half a million jobs in the private sector.
This is a stronger performance than London, and three
times the private sector job creation of metropolitan areas.
Growth in total employees,
2009-2013 (000s)
543.6
NONMETROPOLITAN
525.5
LONDON
185.8
METROPOLITAN
Source: ONS, LGA analysis
11
GROWTH
NON-METROPOLITAN AREAS ARE…
...Globally competitive locations
Persimmon – York
(£2,086m)
United Utilities – Warrington
(£1,705m)
Sports Direct – Bolsover
(£2,186m)
Location of FTSE 100
company headquarters
in non-metropolitan
local authorities
(England, 2014)
Experian – Nottingham
(£2,999m)
Aggreko – Cannock Chase
(£1,573m)
National Grid – Warwick
(£14,359m)
GKN – Redditch
(£7.136m)
St James’s Place – Cotswold
(£6,853m)
Imperial Tobacco
(£28.269m)
Hargreaves Lansdown
(£358m)
Bristol
Next – Leicester
(£3,548m)
-
Travis Perkins – Northampton
(£5,149m)
TUI Travel
(£15,051m)
ARM Holdings – Cambridge
easyJet
Whitbread –
(£715m)
(£4,258m)
Central Bedfordshire
Luton
(£7,136m)
InterContinental Group Hotels – South Bucks
(£1,179m)
Centrica –
Windsor & Maidenhead
(£26,571m)
)
Tesco – Broxbourne
(£70,894m)
!
BG Group – Reading
(£11,900m)
G4S – Crawley
BAE Systems – Rushmoor
(£7,428m)
(£18,180m)
Meggitt – Christchurch
(£1,637m)
Carnival – Southampton
(£9.576m)
Figures in brackets are 2013 revenue.
12
“As a global company, we are proud to connect consumers around the
world to the unique British heritage that defines our brand...our activities
and relationships outside the major cities of England have long played an
important part in this, and will continue to do so into the future.”
Burberry plc
Internationally mobile firms overwhelmingly choose
non-metropolitan areas, not conurbations, as their
base if they don’t choose London
60
% of companies
50
40
30
20
10
0
London
NonMetropolitan
Source: FTSE 100
13
Metropolitan
Outside
England
NON-METROPOLITAN AREAS ARE…
Skills level (England, 2011)
London and former metropolitan county areas (outlined), counties and unitaries
...Rich in skilled workers
Skills level (England, 2011
% with intermediate or high skills
London and former metropolitan county areas (outlined), count
56% - 61%
62% - 67%
68% - 70%
71% - 74%
75% - 80%
% with intermediate or high skills
Metropolitan boundary
56% - 61%
62% - 67%
68% - 70%
r
71% - 74%
75% - 80%
Metropolitan boundary
Skills level (England, 2011)
r
Source: 2011 Census
14
The non-metropolitan workforce is higher-skilled
than the England average
LOW
SKILLED
31%
INTERMEDIATE
SKILLED
39%
HIGHLY
SKILLED
30%
NONMETROPOLITAN
36%
27%
37%
28%
45%
26%
LONDON
METROPOLITAN
Source: 2011 Census
15
BUT
The evidence to the Commission shows that
non-metropolitan areas face a challenge…
…despite these areas’ high skills base, firms still face skills shortages
“Some 40% of the employers interviewed in the Marches Business Survey reported
that they were facing skills shortages. Employers need greater support to access
apprenticeships and to reduce onerous paperwork which discourages take up.“
The Marches LEP
“The lack of a suitably skilled workforce is a key issue for many employers in the
Borough, and skills gaps are linked to poor economic performance and lack of
growth opportunities.“
Allerdale Borough Council
…transport infrastructure is stretched and underinvested
“while employment growth is reasonably strong within Warwickshire, we do
struggle with public transport accessibility. This is a particular problem for
young people and those on low incomes, where transport costs can take
a disproportionately high. We have numerous examples of areas of high
unemployment just 10 miles away from business parks with large numbers of
vacancies, but which are effectively inaccessible because of transport issues.
Initiatives we run either directly (supporting apprenticeships) or through partners
(graduate placement programmes) to help young people into local businesses are
struggling because of the accessibility problems.“
Warwickshire County Council
16
…housing the workers firms need is becoming harder
“A survey conducted for the National Housing Federation found that nearly four
in five employers say the lack of affordable housing is stalling economic growth
in local communities, with 70% warning it would affect their ability to attract and
keep workers. Four in five (79%) managers say building more homes will stimulate
the local economy, three in four (73%) say it will bring business to the area and
72% say that it will bring more customers to the area. It appears clear that there is
a link between house prices and the demographic make-up in rural areas. In 2013
the National Housing Federation revealed a 9% drop in the number of people aged
between 30 and 44 in rural areas in the preceding decade. In the same period house
prices almost doubled but wages have failed to keep pace, rising 17% slower than in
urban areas. In the ten rural areas with the highest house price rise only three saw an
increase in under 45s.“
National Housing Federation
…and rural broadband has illustrated ways the market struggles to
price future economic growth generated by rural networks.
“Digital connectivity has become essential to growth in modern economies, with
businesses across the economy depending on broadband to communicate with
customers, suppliers and partners. Key growth sectors such as ICT and the creative
industries are particularly dependent on high speed connections. Yet poor broadband
connectivity has become a major obstacle to economic growth in Suffolk, identified
by Suffolk’s businesses as their most important infrastructure issue, and a key factor
deterring expansion.“
17
Suffolk County Council
PUBLIC SERVICES
NON-METROPOLITAN AREAS…
...Face severe spending cuts
35
Net expenditure
30
Funding
Councils alone in nonmetropolitan areas are
forecast to face a funding
gap of £6 billion by 201920 (although the projected
percentage and per-head
cuts are slightly less severe
than metropolitan areas).
20
15
10
5
2019/20
2018/19
2017/18
2016/17
2015/16
2014/15
2013/14
2012/13
2011/12
0
2010/11
£ (billion)
25
Source: LGA analysis
“Our rural areas face a disproportionate challenge arising from an aging population,
compared to our urban counterparts, not least as nearly a quarter of all older people
live in rural areas. As people age their requirements for access to services such as
Health, Transport, and Social Services are likely to increase. Difficulties with access,
low levels of service provision, isolation, higher costs and lack of choice or quality all
contribute to health and social care problems.“
Babergh and Mid-Suffolk District Councils
18
“The need for councils to engage the public in the tough choices that need to be made, to meet the
financial challenges they face in the next few years, is more critical than ever.
As councils make an honest appraisal of what the future holds, many are redefining their purpose
and role and finding new ways of working. A strong theme that emerges in our survey is a shift
in the role of the council away from delivering services and towards facilitating outcomes in
collaboration with private and public partners, and citizens themselves, across a place.“
PwC, The Local State We‘re In, 2014
LEPs (red outline), authorities
...Have complicated overlapping
governance arrangements
in more than one LEP (blue),
and FEAs (green outline)
– Local Enterprise Partnership (LEP)
– Functional Economic Areas (FEAs)
– Authorities in more than one LEP
19
“One of the challenges facing many non-metropolitan areas is the increasingly
complex picture of local and sub-regional economic development both in terms
of geography and administrative arrangements. Not only do Local Enterprise area
boundaries overlap, with across England 37 local authorities (11%) covered by two
LEPs and in some areas, a significant degree of overlap, the complexity has been
added to with the introduction of City Deals and Local Transport Bodies. […] The
situation is further complicated in some county areas where there are two-tier local
government structures, which despite the best efforts locally, can lead to competing
agendas, duplication of effort and slow down the decision making process.“
Chief Economic Development Officers Society/Association of Directors of
Environment, Economy, Planning and Transport
and face particular demand pressures because of their more
dispersed geography
“Rural areas face a range of costs for service delivery – including lower economies
of scale, higher per-capita costs, and increased costs of travel. This can make it very
difficult for service providers to meet the need of the rural population generally, and
the needs of older users specifically.
Rural service providers also face a difficult challenge in trying to meet the needs
of older populations alongside those of other vulnerable groups, as well as the
community at large. This is particularly true at a time of ‘making do with less’, due
to tight and shrinking budgets, and a shrinking volunteer base“
Department for Environment Food and Rural Affairs1
1
Impact of an ageing population on service design and delivery in rural areas, a report to Defra
by TNS BMRB and ILC, 2013
20
THE ISSUES
We believe non-metropolitan areas’ destiny lies
in devolution. They must be given the tools they
need to enhance their powerful competitive position – the freedom to invest in infrastructure
and homes in the way local priorities dictate,
and to back local businesses’ appraisal of where
important future opportunities lie; the power to
influence how skills provision serves local firms
and local jobseekers; a real local taxbase to pay
for investment, of the kind that is normal in the
Western world.
Our final report in January will make specific
recommendations for change. Between now
and then, we invite reactions from businesses,
charities and churches, and public sector
organisations of all kinds to the questions we raise
in this interim report. As part of that we plan to
hold a small number of roundtable seminars with
interested parties who have sent us evidence.
Please send your views and comments to
[email protected].
Devolution to non-metropolitan areas involves
a three way deal:
decisions must get made more simply,
clearly, and accountably;
the public and businesses must get a better
return on their taxes;
the shires must get powers to drive their own
places for the future.
21
DECISIONS MUST GET MADE MORE
SIMPLY, CLEARLY, AND ACCOUNTABLY
Governance
There are three elements to this. First, it makes
no sense that decisions about similar things are
made over very different geographical areas. The
map needs tidying up: if elected councils, Local
Enterprise Partnerships, the NHS and central
government agencies are going to work together
better, they should be able to agree to relate to
similar areas. Those areas should be anchored
in how people live and how the economy works:
the evidence we have seen tells us that there is
enough understanding of so-called “functional
economic areas” to allow such a debate to happen
easily. Secondly, lines of democratic accountability
need to be clear, so that local electors know just
what they are rewarding or punishing candidates
for when they go to vote. And thirdly, governance
needs to be cost-effective: taxpayers cannot
afford and will not tolerate arrangements that
are perceived as needless extra bureaucracy.
As the national political debate focuses on what
a devolution deal with Scotland might look like,
the discussion must also move government in
England closer to the people. That means better,
clearer, arrangements for taking decisions so local
businesses and voters can understand how their
lives are being affected. We believe that getting
the decision-making right can not only improve
accountability and save taxpayers money, but that
it is a vital gateway to exercising greater power.
Only areas with fit-for-purpose governance
arrangements will be able to handle greater
decision-making responsibilities. Two-tier areas in
particular need to seriously consider whether they
have effective enough governance arrangements
in place to make a success of taking on more
devolved responsibility.
The Commission believes councils, central
government, and businesses should attempt
to agree better local working and governance
arrangements with their public service partners,
that are fit to be accountable to taxpayers for
the exercise of greater devolved responsibilities.
In the next phase of our work, we would like
to take further evidence from places which
are developing improved accountability
arrangements that work.
‘Our strategic role is to help create the right
climate for growth and to put in place the right
conditions to generate economic wealth. We
can use our assets and resources, leadership,
influence and intelligence to do this, supporting
the private sector to do what they do best,
creating wealth and jobs. Central to this
strategic role is being able to work effectively
at the right level, this can only happen by
Government allowing the flexibility for us to be
able to design and provide solutions to meet
local needs.’
Cheshire West and Chester Council
22
THE PUBLIC AND BUSINESSES
MUST GET A BETTER RETURN
ON THEIR TAXES
Transforming public services
Secondly, all organisations have further to go in
developing an understanding of the difference
between their role as providers of services,
and the strategic body that enables and pays
for services. It stands to reason that there are
smarter ways to make savings than simply
running down in-house services until they
begin to fail. Rather, savings and improvements
in outcomes can be achieved by more
intelligently taking advantage of the capacity
that exists in the private and voluntary sectors,
as well as working better with and through
communities themselves.
Public services – from health to schools to
sporting facilities – are a crucial part of the
quality of life that makes non-metropolitan
areas special. But the reality is that the nation
lived beyond its means for too long and public
budgets are likely to continue to be cut in cash
for the rest of the decade. The way public
services and organisations work together
will need to change.
The Commission has been helped in its
discussions by the invaluable assistance
of a panel of council chief executives from
non-metropolitan councils of all types. Two
major challenges to the status quo have
emerged from our discussions.
“A sustainable UK economy must deliver
growth in all sectors and all regions.
Despite a commitment to devolution,
central government controls up to 60% of
local authority budgets, specifying how and
where it can be spent. The Government also
sets limits on how the monies they raise,
whether through parking tickets or local
business rates, can be spent. This makes
little sense; local authorities are best placed
to understand the needs of their economies,
whose challenges and opportunities often cut
across traditional administrative boundaries.
Having control over the whole budget would
enable local authorities to prioritise spending
according to their needs.”
ASDA Stores limited
First, public sector organisations need to find
better ways of working together so they can
exploit synergies, cut transaction costs, use their
estate more efficiently, and focus better on the
needs of residents. The public sector ought to be
capable of identifying where early action by one
organisation can reduce future costs of failure
for another. Some Commissioners identified
particular inefficiencies in the way two-tier local
government – county and district councils currently operates.
23
If places were able to adopt more effective,
joined-up working, our analysis, based on the
recent community budgets work, suggests at
least £12 billion could be saved in shire areas
over five years.
The Commission’s preliminary view is that
• central government should consider setting a
single public budget for a place and allowing
local organisations to work out between
themselves the best way of spending it;
• councils especially, but also all local public
services, need to develop radical new models
for improving the way they work together
• all local public services need to move beyond
the rhetoric of “commissioning services” and
take a more wholesale approach to using
other providers in the public, private and
third sectors to achieve outcomes for their
residents.
We would like to explore these issues in more
detail in our final report.
24
Taxation
built a few small marginal incentives into the
local government finance system.
The UK’s tax system is by international
standards extremely centralised and profoundly
redistributive between taxpayers and places.
Treasury doctrine resists hypothecation or
attribution which might create a transparent
chain of accountability. Even the business rates
and council tax are complex and un-transparent.
LEPs, councils and others are still wasting too
much effort bidding to Whitehall when their
resources would be better spent locally.
The Commission’s emerging view is that
England should move progressively towards a
more devolved fiscal system, of the kind that is
normal around the world. This might include:
• the restoration of genuine local decisionmaking about existing local taxes
• a bolder arrangement for retaining business
rates revenue growth locally
• a rebalancing of revenue management
from national to local for other existing
taxes where the tax base is geographically
identifiable (for example Vehicle Excise Duty
or Stamp Duty) and using it to fund devolved
responsibilities such as transport or skills.
“[A] greater proportion of the proceeds of
growth need to be retained at the local level.
Some tentative progress has been made on
this over recent years, with Business Rates
local share, the New Homes Bonus, and the
Community Infrastructure Levy. However
these are predominantly temporary and
partial funding streams, which are relatively
opaque to local people.“
Oxfordshire County Council
This makes it very hard to justify tax levels to
taxpayers who do not know what their money
is to be used for. So local decision-makers – in
business and in the public sector – are poorly
incentivised to invest in economically productive
infrastructure and grow the tax base. The current
Government has recognised this principle and
25
Social infrastructure
We consider that meeting this challenge
could involve:
The public sector has a vast range of assets
and infrastructure to support communities and
enable service delivery. The public estate has
so far lagged behind public services in joining
up and reducing duplication and wastage. The
dispersed nature of many communities in nonmetropolitan areas increases the unit costs of
service delivery and makes it even more difficult
to justify multiple service outlets in remote
locations. The challenges discussed above with
regard to transport provision also affect the
accessibility of public services, especially for
those with limited mobility or who are reliant
on public transport.
• a mechanism for pooling land and assets
at a sub-regional level
• co-locating more services based in
remote locations
• considering those services that can be
provided digitally in order to reduce the
demand on bricks and mortar outlets.
The challenge is therefore to make better use
of social infrastructure that uses customer
insight and knowledge of travel patterns to
make decisions according to the needs of
communities. It should also take a commercial
approach to surplus land and assets so that
it generates an income that can support the
delivery of frontline public services. There
is huge potential to free up public land and
buildings to build much-needed homes.
26
THE SHIRES MUST GET POWERS
TO DRIVE THEIR OWN PLACES
FOR THE FUTURE
Skills
Our preliminary view is that more needs to be
done to make local skills providers – further
education colleges and sixth forms in particular
– responsive to the needs of employers.
A relatively highly-skilled workforce is one
of the distinctive comparative advantages of
non-metropolitan areas. Nevertheless, their
businesses continue to suffer from national skills
shortages. Businesses highlight both the need for
“work ready” young jobseekers, and a supply of
globally competitive, high-end skills. At the same
time, young people have been hit worst by the
economic downturn and are losing faith in the
centralised system.
Options for making that happen include:
• giving Local Enterprise Partnerships or
councils responsibility for managing the local
skills landscape, including managing college
mergers or closures, and facilitating market
entry by new providers such as University
Technical Colleges
• developing much better local evidence on
the value of courses to help learners decide
on the option that gives them the best
chance of a job
“Sustainable growth needs a strongly
business influenced flexible skills and attitude
pipeline able to respond to the needs of
employers local to the labour pool. The
current skills system is not fit for economic
purpose. A fully devolved approach is
needed not just local tinkering to nationally
prescribed and pre-contracted policies.“
Buckinghamshire Business First
• developing an evidence base on “what
works” in post-16 education that is
comparable with the best practice culture
for pre-16 education.
Despite repeated reforms emphasising
demand – for example by putting buying
power in the hands of learners and employers
– evidence shows the supply side has not
responded adequately.
If these issues were addressed, we estimate nearly
a million people could be found work or helped into
better jobs, delivering an £8.7 billion annual boost
to the economy.
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Transport
goods. At the same time, we have discussed
the way connectivity between urban areas and
their hinterlands is vital to the success of cities
such as Oxford and Cambridge. Future transport
investment decisions will be informed by local
and global connectivity, including the role of
regional airports in accessing global markets.
Almost all the evidence received by the
Commission raised transport. Non-metropolitan
areas face their own particular transport issues:
maintaining networks is costlier and harder
in areas of dispersed settlement. Transport
is crucial to maintaining areas’ links with
their urban neighbours, and with global trade
routes. It is not right for the health of the British
economy for inter-metropolitan mega-projects
to monopolise policy debate, and would be even
more regrettable if they were to monopolise
available transport infrastructure funding.
Transport links are of vital importance to those
living in non-metropolitan areas who travel to
work and access public services. The challenge
is to ensure that the right transport investments
are made to maintain urban-rural connectivity,
but also to ensure that businesses located
in these areas can continue to access global
markets.
Our emerging view is that government needs
to continue with its current direction of travel
and devolve more transport funding decisions
to LEPs and councils. But this needs to be
accompanied by:
• investment appraisal rules that properly
consider the impact on global connectivity
and developments at the urban periphery
• reflecting the policy debate on the role
of regional airports in global trade and
tourism in the light of the emerging findings
of the Airports Commission and others
• an openness to innovative funding, for
example through the use of local bond
financing by councils and LEPs.
In our discussions, we have tried to see transport
against a background of global competitiveness.
Non-metropolitan areas’ high skills base
positions them well for a world where trade is
increasingly blurring the line between goods
and services. They have an edge in knowledge
intensive sectors, where getting people around
the globe easily can be as important as moving
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Digital infrastructure
Our view is that government and business
need to work together on the next generation of
digital connectivity while there is time to do so.
Elements of a solution may include:
Digital infrastructure is now a basic utility. Its
value to non-metropolitan areas is particularly
high, from enabling tourism businesses to
communicate with customers worldwide, to
maintaining these areas’ edge in advanced
manufacturing. It will also become an
increasingly vital tool in delivering public
services in dispersed areas at acceptable cost.
Additionally, many businesses rely on online
custom and increasing the number of people
who are online will open up new markets.
• a forward look in partnership between
industry and government at the likely
developments in communications
technology of the next 25 years leading to
the development of a long-term national plan
• a role for councils and LEPs in ensuring
digital infrastructure provision, with an
element of competition, in their areas
• the development of a pan-public service
vision for the digital provision of public
services, with an eye both to reducing costs
and improving access in rural areas
Where once private money was willing to take
great risks in pursuit of the economic potential
of networks – from Victorian branch railways to
3G mobile – the broadband story has required
the taxpayer to step in because business has not
envisaged a market return from investing in rural
areas. At the same time, the model adopted is
reinventing a monopolistic model of telecoms
provision that a generation of regulation had just
succeeded in removing.
• recognition in planning rules that digital
infrastructure needs to be treated as a basic
utility for all new homes and funded as part
of basic development costs.
Now is the time to look ahead.
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Housing
“The lack of access to affordable housing
to meet local need will have a significant
economic impact in low paid service sectors
like social care where it will become difficult to
secure labour outside larger towns and cities to
support people living at home.“
Hampshire County Council
Non-metropolitan areas have a large land supply
to accommodate the demand for housing
without adversely affecting their character
and attractiveness, yet it is important for their
competitiveness that housing be kept affordable for
workers attracted to the area by high-productivity
businesses. Those homes also need to be
supported by adequate infrastructure. However,
the planning system makes it difficult to take
strategic decisions across local council boundaries
and hinders investment.
The Commission recognises that the planning
system has undergone many reforms and do
not want to cause further uncertainty in this
area. However, elements of a solution include:
In our discussions, we have developed the view
that something is missing from the way decisions
are taken about housing. Under the current system,
it is not possible – or at least it seems very hard
– for councils to take a joined-up view about how
housing in one area might fit with developments
in another, or to join up decisions about housing
with plans for the roads, railways, or reservoirs that
will be needed. Businesses are frustrated that they
cannot influence those decisions more, even with
LEP arrangements in place.
• a formal mechanism for joining up councils’
strategies for new homes, roads, and other
infrastructure across economic areas,
and for ensuring that they are taken in
partnership with business through LEPs
• giving these groupings the power to pool
public land and assets and make decisions
about its disposal or use
• planning to be carried out at a similar
scale to decisions taken on transport and
infrastructure and integrated with those
decisions, including by bringing utility
providers more closely into the process.
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COMMISSIONERS
Sir John Peace
Sir John Peace chairs the Non-Metropolitan Commission. He is
Chairman of Standard Chartered plc and Burberry Group plc.
Penelope, Viscountess Cobham CBE
Lady Cobham became Chairman of VisitEngland in April 2009 and
was reappointed by the Government to continue her role until 2017.
Stephen Gifford
Stephen sits on the Commission as an independent economic
adviser. Stephen is Head of Economic Regulation at the Civil Aviation
Authority, the former CBI Director of Economics and the Chief
Economist at Grant Thornton.
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Sir Tony Hawkhead
Sir Tony is Chief Executive of Action for Children, a national charity
that supports and speaks out on behalf of the most vulnerable and
neglected children and young people throughout the UK.
Grainia Long
Grainia Long is Chief Executive of the Chartered Institute of Housing
– the independent voice for housing and the home of professional
standards.
Professor Henry Overman
Henry Overman is Professor of Economic Geography in the
department of Geography and Environment at the London School
of Economics and Director of the What Works Centre for Local
Economic Growth.
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Jane Ramsey
Jane has been Chair of Cambridge University Hospitals NHS
Foundation Trust since November 2012.
Lord Teverson
Robin Teverson is Liberal Democrat spokesman for energy and
climate change and chair of the Rural Coalition.
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EVIDENCE SUBMITTED
The Commission is grateful to the following organisations and
individuals for their contributions to the first phase of their inquiry.
Allerdale Borough Council
Hertfordshire County Council
ASDA Stores Ltd
Hertfordshire LEP
Ashford Borough Council
Kent County Council
Babergh and Mid Suffolk District Councils
Lancashire County Council
Basingstoke and Deane Borough Council
National Parks England
Bedford Borough Council
National Housing Federation
Buckinghamshire Business First
Nottinghamshire County Council
Buckinghamshire Thames Valley LEP
Oxfordshire County Council
Burberry plc
PwC
Cambridgeshire County Council
Rushcliffe District Council
Cancer UK
Sarah Stannage
CEDOS/ADEPT
South Cambridgeshire District Council
Cheshire West and Chester Council
Core Cities
South East England Councils with
South East Strategic Leaders
District Councils Network
St Albans City and District Council
De Montfort University
Suffolk County Council
Defra Rural Communities Policy Unit
Surrey County Council
Derbyshire Dales District Council
Test Valley Borough Council
Diageo plc
Tesco plc
Diocese of Middlesbrough
The Marches LEP
Dorset LEP
Trowbridge Town Council
Durham County Council
TUC
East Sussex County Council
Warwick District Council
Essex County Council
Warwickshire County Council
Exeter City Council
West Sussex County Council
Gloucestershire County Council
Wm Morrisons Supermarkets plc
Hampshire County Council
Worcester City Council
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35
The Independent Commission on Economic Growth and
the Future of Public Services in Non-Metropolitan England
Local Government House
Smith Square
London
SW1P 3HZ
T: 020 7664 3000
E: [email protected]
W:www.local.gov.uk/non-met-commission
For a copy in Braille, larger print or audio, please contact us on 020 7664 3000.
We consider requests on an individual basis.
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