Member Article

Industrial Strategy: How will the North East and Tees Valley help shape the economy to come?

The government released a revised long-term vision for building a more prosperous and productive Britain yesterday, with the unveiling of its Industrial Strategy: Building a Britain fit for the future white paper.

But what does the announcement mean for the North East and Tees Valley and how will each region evolve as part of Britain’s wider economic makeup moving forward?

Key headlines

Before we look at the North East and Tees Valley in greater detail, let’s explore the key headlines featured in the report.

With the aim of making the UK the world’s most innovative nation by 2030, the government has committed to investing a further £725m over the next 3 years in the Industrial Strategy Challenge Fund (ISCF).

This will include £170m to transform the construction sector and help create affordable places to live. Moreover, £210m has been committed to improve early diagnosis of illnesses and develop precision medicine for patients across the UK.

The government has also previously committed £1bn to the first wave of Industrial Strategy Challenge Fund projects, including investing £246m in next generation battery technology and £86m in robotics hubs across the UK. Both the North East and Tees Valley have emerged in recent years as UK hotspots leading on innovative, technological change.

Elsewhere, the Prime Minister last week announced an ambition to increase the level of investment in research and development (R&D), rising from 1.7% to 2.4% of GDP by 2027.

This could mean around £80bn of additional investment in advanced technology in the next decade, helping to transform whole sectors, create new industries, and support innovation across the country.

The white paper also confirms government will be pressing ahead with a series of Sector Deals, with construction, life sciences, automotive and AI the first to benefit from these new strategic and long-term partnerships with government, backed by private sector co-investment.

North East

The measures outlined in the white paper, coupled with the well-documented recent announcements from government regarding skills, transport and new technology, should be well-received in the region. There is, however, the need to take revelations ‘with a pinch of salt’.

As ever, the worry is that measures - while sounding good at a glance - may not be enough for the region.

Rachel Anderson, head of policy and representation, North East England Chamber of Commerce expands on the feeling of caution held by large parts of the region’s business community.

She explained: “If implemented thoroughly, it will go some way to closing the gap in investment and economic activity between regions. But we believe the Government still has more work to do if it is to achieve what it boldly and correctly described in its manifesto as ‘the biggest prize in Britain today’. This strategy is good but not good enough.

“The fact that a percentage of GDP will now go towards R & D is good news but we now need to make sure the investment is spread around the country and not the South East’s ‘golden triangle’.

“It is very good news that this strategy represents a vote of confidence in our industrial catapults with recognition in the document that organisations like the Centre for Process Innovation have led the way in closing the gap between high level research and bringing products to market. The work done by them is an outstanding benchmark on the national stage.

“There are a number of aspects of the strategy which show the Government has listened to our responses to the Green Paper including more R & D expenditure for large businesses and recognition that the ‘place’ agenda in terms of housing and infrastructure are equally part of an industrial strategy.

“We expect the distribution of resources and investment to be fairly spread throughout the UK. It is crucial that the potential of our towns, cities and counties is effectively harnessed, to make the whole country more competitive and prosperous. It is imperative the focus on places to boost productivity in local economies builds on the LEP’s work rather than new delivery models reinvented.”

Rachel also believes that the North East’s role to play host to two national industry audits for Chemicals and Advanced Manufacturing is good news for the North East.

She continued: “While we welcome a renewed focus on technical education, there was very little on careers advice or development. The lack of reference to energy generation capacity is disappointing and needs to be addressed to avoid a future energy gap and support industrial development.

“However this strategy is a starting point and we are pleased to see recognition of the importance of businesses working closer with Universities, something we have long championed.”

Tees Valley

It would seem that the cautious optimism held in the North East may not be as prevalent in the Tees Valley. Rather the growing voice in the North could well play a vital role at the heart of plans for industrial growth. Certainly, this is the view of Ben Houchen, Tees Valley Mayor.

To be fair to Mr Houchen the Tees Valley, like the North East, is already playing a role in each of the five areas highlighted in the Strategy.

Ideas / innovation – Tees Valley is developing new approaches to Carbon Capture and storage, leading a grouping of multi-national companies known as the Teesside Collective and are specifically recognised within the strategy.

People – The Combined Authority is currently consulting on a skills strategy to ensure the areas skills needs are aligned to the requirements of local business.

Infrastructure – A number of bold proposals have been put forward to transform the local transport network and the Combined Authority have just received over £59 million to develop them.

Places – The South Tees Development Corporation is highlighted in the strategy as a flagship initiative for local leadership of industrial regeneration, demonstrating the importance of the powers devolved to local mayors. Last week it received £123m to kick start the locally led development corporation and start to remediate the land ready for investment.

Business – An extended commitment to the Growth Hubs, which join up national and local business support, have been confirmed in the Strategy. Known locally as the Tees Valley Business Compass Service, Tees Valley has a body, as the North East does, which is playing an important role in the area.

Mr. Houchen welcomed the white paper, believing there to be much opportunity for Tees Valley to assume a commanding position as the Strategy unfolds.

He said: “I am proud that Tees Valley will once again be able to play a leading role and provide such an important contribution. We are very proud of our rich industrial heritage but we can also be very proud of our industrial future with our competitive private-sector led economy.

“Last week government made a massive commitment to our local Industrial Strategy with a £123m boost to help get things moving. This is a huge vote of confidence in our area and it is very encouraging to see the government’s strong commitment to devolution. The tide is turning and power is beginning to shift from Whitehall.”

We want to hear from you. Can the UK to be the world’s most innovative nation by 2030? If so, how much can the North East and Tees Valley contribute to this vision? Is the Strategy, along with recent political announcements, inclusive enough of both regions?

Share your views in the comments section below.