Re-imagining the UK’s local industrial strategy after the coronavirus pandemic

This article was originally posted on Discover Society on 24 August 2020.

In his poem mourning Shelley, Byron said: “Nothing has happened, he has only undergone a sea change”.

In a recent interview, the UK prime minister mentioned that the Coronavirus has been a disaster for the UK. Indeed it has; with a high death rate of 40,000 deaths, the country’s death rate was way above several countries such as Germany, South Korea and Singapore. The lack of a coherent strategy was evident in the handling of the spread of the pandemic in care homes, the capacity to accelerate the testing and tracing regime, the availability of personal protective equipment (PPE) during the pandemic and the supply of sufficient ventilators to deal with the magnitude of the crisis; more recently, this has included the confusion associated with the sudden shift from the development of a home-grown contact-tracing application by the NHSX (the innovation arm of the NHS) to Apple and Google application programming interface technology.

The explanation of this predicament reveals much about the response to the current pandemic and the months to follow as the UK economy continues to open. To put it simply, what we really need is ‘business unusual’ to address the scale of the health, climate and job crisis that lies ahead. In 2017, the government launched an industrial strategy to re-establish the foundations of the economy and to address the long-standing productivity issues post-Brexit. The strategy focused on five strategic areas, which were: ideas, people, infrastructure, places and the business environment. However, the humbling reality of the current crisis and the on-going preparations for Brexit pose fundamental questions pertaining to the urgent need to reimagine Britain’s local industrial strategy after the pandemic.

This is important because the past decade has provided sufficient evidence that treating a currency issuer such as the UK government as a household and instituting austerity as an economic choice have proven to be ill-advised policies. This was evident in the relative lack of having a fully prepared health-care system to confront a health crisis such as the Coronavirus pandemic, which has hindered the role of local governments in delivering various local services, and might set the stage for a slow recovery that could harm local communities in the months to come, and which may have contributed to the current backlash against liberal democracy.

A reversal of these policies is vital, and introducing a place-based strategy that is tailored to the needs of Britain’s ‘left-behind’ cities and towns is essential given the fact that a ‘one-size fits all’ strategy does not necessarily address the current challenges of the twenty-first century ranging from automation to in-work poverty, nor the nature of the local economy in different de-industrialised towns. These strategies should be anchored in clear interventions and strongly public-led projects that aim to provide some solutions to the challenges faced by this particular place and pave the way to rebalancing the UK’s economy. In addition, this approach might increase the capacity of the country to be a leader in key strategic areas, such as life science, clean energy, space, computer science and artificial intelligence.

The second point that needs to be highlighted is the shortage of PPEs, as this sheds light on the fragility of global supply chains. The supply of equipment via essential medical supply chains has been disrupted due to the lockdowns imposed by several countries, which has also revealed the complete dependency on Chinese manufacturers for strategic supplies, including medicine and PPEs such as facemasks and gowns. This is important because medical supplies must be treated as pillars of national security, and different scenarios should be examined in depth in view of a global pandemic or frictions in global trade. Secondly, a revival of key manufacturing industries (beginning with the manufacture of PPEs) and supply chains in the Midlands and the north of England will pave the way for creating new job opportunities and will boost economic growth.

A new ‘green deal’ should be also integrated into the mental orbit of the local industrial strategy. The question that will be posed by mainstream pundits and economists will be how we will pay for it. Nonetheless, the question should be how we can create efficient resources to implement this plan and create legitimate tools to control inflation using robust taxation mechanisms. As recent research has indicated, the use of crowdfunding for public services can play a role in generating the necessary finance to fund green infrastructure and create new green jobs to pave the way for an economic transition to meet the zero carbon targets. An example is Community Municipal Bonds (CMB), whereby local councils raise the necessary finance for vital strategic projects via crowdfunding campaigns by engaging directly with citizens to deliver social and environmental value.

The second pandemic is unemployment, as the current out-of-work benefits increased to 2.8 million in May 2020; according to the Office for National Statistics (ONS), this was an increase of 528,000. Unemployment can be as dangerous as a pandemic because of the increasing levels of suicide and mental health issues associated with unemployment. This is why creating future jobs and extending the furlough scheme (if necessary) will be essential for mitigating the effects of this pandemic. A key point that needs to be highlighted is that this does not pertain to the quantity of jobs, but to the quality of jobs, given the fact that in-work poverty has increased dramatically in the past decade, and one in eight workers now lives in poverty. Hence, the recent increase in the national living wage will not replace a robust social security system.

Ultimately, the current health crisis and exiting the European Union pose the greatest challenges for the UK statecraft since the Second World War. Weathering such challenges requires dynamic, bold and decentralised policies to accelerate decision making and to speed up the economic recovery in the months to come.