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Universities

Reshaping UK regions post-COVID: research and industrial capacity

Yesterday Nesta published a report arguing that some parts of the UK have missed out on £4 billion of public research and development (R&D) funding each year, plus a further £8 billion of private sector investment. Some of these regions never fully recovered from the 2008 Great Recession, and COVID-19 threatens to deepen these divisions.

The Government’s target – set before the pandemic – called for the UK to increase investment in R&D to 2.4% of GDP by 2027, and by 3% in the future. The importance of this target is now greater than before. To meet it means empowering those regions with the lowest R&D intensity and recognising and supporting the vital role of universities and other partners in these regions.

Proposals in the report include devolving a substantial portion (25%) of the promised uplift in the R&D budget to nations, cities and regions, delivered through ‘Innovation Deals’.

The report also recognises how historic policy decisions have led to path dependency for regions, entrenching a set of ‘winners’ and ‘losers’. (This factor is missing in some – otherwise reasonable – recent reports which instead advocate building on existing centres of excellence). As the Nesta authors put it:

The current situation is the result of a combination of deliberate policy decisions and a natural dynamic in which these small preferences combined with initial advantages are reinforced with time.

Industrial capacity

Decisions made by previous generations of policymakers and politicians also play an outsized role in the UK’s industrial policy.

This excellent piece on efficiency and redundancy in the UK, and how we need more of the latter at the expense of the former to ensure resilience, is taken forwards nicely by Andy Westwood in this discussion of building industrial capacity in the UK. Building in redundant capacity is seen as a signature trait of a ‘resilient’ city or region. Andy sets out the case for starting with ‘national self sufficiency’ in health and manufacturing but then rapidly broadening out to other sectors, with a focus on impact at the local level. Movement towards autarky is a balancing act needing careful trade-offs, but there is a strong case for securing – or at least diversifying – supply chains in key industries and sectors.

The pandemic has drastically curtailed trade and investment; a return to previous patterns of international cooperation (which differ across UK regions) following COVID-19, and when trade picks up, is unlikely. More emphasis will be given to secure and resilient supply chains within the UK and near neighbours. This means strengthening industrial capacity and domestic manufacturing in the UK, and ensuring the provision of critical goods and services across the country – with clear implications for spatially-aware policymaking and an opportunity for rebuilding local economies.

These discussions neatly fit with a few themes I have touched on in recent posts – on how discussions over the smart city have morphed into ones about self-sufficient cities, on the risks of poor policymaking for resilience, and why popular narratives around ‘resilient communities’ are dangerous. See also this piece by Yorkshire Universities on The Coronavirus Pandemic: Universities and the Economic Recovery of Place.

(Image credit)

Categories
Universities

When a local economy collapses, we can’t just rely on the grit of communities

This post originally appeared on the Yorkshire Universities website.

I’m a little late in reading Janesville: An American Story, Amy Goldstein’s tale of an industrial Wisconsin town in the depths of the Great Recession. The book received wide praise when published in 2017, telling the story of a community trying to pick itself up in the years following the closure of a major General Motors assembly plant. But the story has particular resonance now, as we stand on the cusp of another wave of economic upheaval. Here are three reflections.

A tale of two towns

Five years after the General Motors plant closed, the shock of vanished jobs has faded. But ‘the ways that time and economic misfortune can rend even a resilient community – a community determined not to lie down and give up – are plain to see’. Goldstein describes the emergence of two Janesvilles: one of business owners that emerged relatively unscathed, and another large group of struggling families. For this group, part of a ‘broad tumbling downhill’, the future is uncertain, incomes have halved, mortgages outstrip house values, food stamps have replaced eating out, and health insurance stops.

Inequality is at the heart of recent work by Yorkshire Universities on health and wealth, including a forthcoming report with NHS Confederation and the Yorkshire & Humber Academic Health Science Network (AHSN). Just before the pandemic struck, Sir Michael Marmot published a report showing widening regional disparities in life expectancy, including falling life expectancy for the poorest. In Yorkshire and the Humber, healthy life expectancy at birth is lower than the national average – with stark variations within the region too. Absence from work because of sickness is greater than the national average. Mortality rates are uniformly higher.

The danger is that the long-term economic impact of coronavirus exacerbates these inequalities. A briefing paper from the Institute for Fiscal Studies makes uncomfortable reading, referencing a study that showed a 1% fall in employment leads to a 2% increase in the prevalence of chronic illness:

To put this in context, if employment were to fall by the same amount as it fell in the 12 months after the 2008 crisis, around 900,000 more people of working age would be predicted to suffer from a chronic health condition. Only about half this effect will be immediate: the full effect will not be felt for two years. The shock to employment from the coronavirus pandemic is likely to be much larger than this and so we may expect a larger rise in poor health.

The poorest in society are hit hardest by recessions, driving wider inequalities in health and wealth, and splitting towns and cities into two.

The challenges of retraining

‘It isn’t simple to take someone with a high school degree and a factory job and help lead them into new work’, reflects Bob Borremans. Bob is a community leader and head of Janesville’s job centre, and faces an uphill battle despite enthusiastic trainees and injections of federal cash.

Retraining and re-skilling are obvious responses to job losses and economic restructuring. But promised jobs at the end of retraining do not always materialise, and the path to graduation is tough. In Janesville, many former factory workers turned to courses at Blackhawk Technical College funded by federal grant programmes. Despite the laudable work of the college, the average pay of those who graduate is a shadow of their pre-recession wages.

The UK’s What Works Centre for Local Economic Growth concludes that employment training programmes for adults can have a positive, although modest, impact on earnings and employment. The key to success is designing appropriate programmes. A review of the evidence by the Centre found shorter programmes (below six months) are more effective for less formal training activity, and that longer programmes generate employment gains when the content is skill-intensive. On the job training programmes tend to outperform classroom-based ones. Further and higher education providers should bear this in mind in the months and years to come.

Phoenixes vs. Planting Seeds

Janesville is proud of its ‘can-do spirit’, a trait that can be traced back generation to generation, to the industrious and hard-working communities that first attracted the likes of General Motors to the town. The problem is that a can-do spirit is, by itself, rarely enough to save a town struck by economic upheaval.

In another project, I have been exploring how world-leading research clusters have emerged in certain places – from advanced manufacturing in Pittsburgh, to life sciences in the Stockholm-Uppsala region, to the high-tech industry in Israel. Many of these have a popular ‘origin story’, often spun by an enthusiastic local press. The story usually goes something like this. The town has a proud past rooted in a particular industry. Economic calamity strikes due to wider structural forces. The proud industry is obliterated. There’s mass unemployment, and, temporarily, hope is lost. But the community is resilient and bounces back through sheer determination and hard work, attracting a new industry and forging a new, bright future – a high-tech phoenix rising from industrial ashes.

The reality is often messier, and the roots of any revival go back much further than the economic calamity. Take Pittsburgh. The steel industry in the city collapsed in the 1980s and the unemployment rate hit 18 percent. The city’s revitalisation is often explained by the grit and character of Pittsburghers, whereas the seeds of revival were planted decades before when the steel industry was at its height. Philanthropic investment led to specialist expertise being developed at the University of Pittsburgh and Carnegie Mellon University, including a new medical school, forming the foundation of Pittsburgh’s research and innovation clusters today.

There is a similar story in Sweden. When Pharmacia, then one of the largest pharmaceutical companies in Europe, merged with the US company Upjohn in 1995, around 200 research and managerial positions were moved out of Uppsala; the move was initially seen as striking a huge blow to the region. The popular narrative is that the vacuum left by the company’s withdrawal led to a frenzy of entrepreneurial start-ups and innovative ideas. But the emergence of the Uppsala cluster is the result of industrial and academic collaboration over at least 70 years.

The message here is not that people and communities are not important. Specialisation builds on rich legacies, and new clusters form around old industries. Some people – especially the highly-skilled – will thrive; employment in automation and industrial machinery in Pittsburgh is more than twice the national average. But people need to be empowered by structures and institutions that support them. Some places are fortunate to have seeds planted long ago, such as a strong university. Despite the challenges such institutions will be facing themselves, they will need to step up. For places those without, relying on grit will not be enough.

(Photo by Science in HD on Unsplash)