Cllr Paul Carter is the Leader of Kent County Council and the Chairman of the County Councils Network.
When predicting how the English economy will cope with life after Brexit, one should not overlook the significance of county economies.
With a national economy that tends to gravitate towards a financial and professional service sector economy, the focus tends to fall on the major urban areas, to the exclusion of half the country; missing out the importance of county areas. We believe that this is in part down to a lack of understanding and detailed analysis of county economies.
Looking more closely, county areas collectively contain 26 million people, or 47 per cent of the population. They make a huge contribution to the wellbeing of the national economy, and that huge chunk of the population rightfully should be asking why the government does not make more of their economies.
A recent study by Oxford Economics commissioned by the County Councils Network illustrates without a doubt how crucial counties are to the country’s economic fortunes in the all-important post-Brexit period.
First, let’s take a look at the numbers. Counties represent 44 per cent of the nation’s jobs, contribute 41 per cent of the country’s GVA, and account for 40 per cent of England’s exports. This is larger than London, and a significantly bigger contribution than the recently set up mayoral combined authorities.
In addition, CCN areas account for over half of English manufacturing, and the majority of jobs in construction and vehicle production. These are the sectors pinpointed by the government as key to the country’s economic fortunes over the next few years.
The high prevalence of manufacturing in counties represents both a challenge and an opportunity. To compete going forward, particularly in a time when British business will need to seek new trade opportunities, manufacturing needs to become more productive and make use of emerging technology. This could however also lead to significant employment loss – Oxford Economics forecast job losses of 144,000 in the county manufacturing sector over the next 10 years.
Counties therefore need the powers to drive local industrial strategies – working with business to shape and support manufacturing, while simultaneously creating new opportunities for high value services. They must also be enabled to shape their skills profiles and invest in infrastructure which will support the economies of the (near) future, mitigating job loss and improving living standards.
This is why the government’s final industrial strategy must allow for a greater role for county areas, moving away from its overly-urban current focus. Oxford Economics argues that the success of the strategy is dependent on how well it embraces the potential of county areas, and addresses their weaknesses.
The conditions to foster economic growth are key here: the right investment in infrastructure can help raise productivity levels, particularly in manufacturing, which take on an extra importance in the context of exporting through and after Brexit.
Secondly, the industrial strategy also needs to focus on how to provide the right settings for the professional, technical, and scientific and communication service industries, to expand in counties alongside their traditional manufacturing base, with a fairer and more equitable infrastructure investment that allows our areas to grow.
Currently, London gets over half of the country’s total pot of cash from the National Infrastructure Pipeline despite covering less than five per cent of its roads. In contrast, counties maintain 70 per cent of the nation’s roads.
But building on a refreshed industrial strategy, the time has come to be ambitious and to be bold. Oxford Economics predicts the country’s economic growth is to slow down over the next decade. However, full county devolution could be the perfect tonic during this downturn.
In addition, with the Conservatives’ removal of the requirement of directly-elected mayors for devolution deals, the argument for driving down fiscal powers to local county areas has never been more compelling.
Oxford Economics estimates that if county areas were given responsibility for the public tax and spend in their areas, this could save up to £11.7bn each year for taxpayers over a five year period. Investing £5.8bn of these savings in growth could generate an extra £26bn in GVA and generate over 1bn extra jobs.
Together, these measures could boost the country’s economic growth to 2.7 per cent a year – a significant improvement on the current forecasts of 1.9 per cent each year and higher than economic growth before last June’s decision. These are eye-opening figures.
There is also a clear rationale for devolving power from a social perspective. County areas arguably saw the most consolidated Brexit vote, in part due to the feeling of Westminster being remote. Listening to these people and bringing decisions closer to the people they affect will be crucial for the success of the new Government.
The government should be ambitious, and seriously consider full fiscal devolution to county areas, empowering areas to take control of their economic destinies by leading local industrial strategies to shape and support healthy local markets.
Not only will this help rebalance an economy over-reliant on cities. Whitehall, which will naturally be immersed in Brexit over coming years, should realise the very real economic benefits that being radical can bring.
The time has come to awaken England’s sleeping economic giants.