05The role of central government

The Department for Business, Energy and Industrial Strategy should become the lead department for levelling up

In order for the policies set out in this report to be successful, not only would it be necessary to give more powers to the MCAs, it would also be necessary for the Government to co-ordinate its own actions more effectively. This will only happen if one department is made the lead department. In the past, no one government department took full responsibility for the Regional Development Agencies. This led to them being much less effective than they should have been.

As the main aim of the regional economic growth programme would be to level up the prosperity of the regions, and as it is important that the programme is closely connected with the other work of the Government on economic growth, the best department to lead this programme would appear to be the Department for Business, Energy and Industrial Strategy (BEIS).

If this route were taken, it would, however, be necessary to inject some more industrial and technological expertise into the Department. A way that this could be done is by appointing an experienced industrialist to be a Special Adviser in the Department, with a brief to strengthen the team of civil servants implementing the regional economic growth programme by bringing in industrialists, and experienced scientists, engineers and technologists.

Better co-ordination among national departments is required

If this initiative is to be successful its work will also need to be closely connected with the work of the Department for Education, the Ministry of Housing, Communities and Local Government, and the Department for Transport.

In order to achieve the necessary co-ordination, a National Council of Innovation could be set up to oversee the regional economic growth programme and the Government’s Industrial Strategy, and the Council could have on it the Ministers for BEIS, Education, Local Government and Transport.

It would also perhaps be desirable to have on the Council a number of industrialists and a representative of the venture capital industry, the Chair of UKRI and perhaps the Vice-Chancellor of one of our top science-based universities, to show that this is not just a government initiative but a national one. As such a Council would inevitably play a key role in the Government’s economic policies. There would also be a case for it being chaired by either the Prime Minister or the Chancellor of the Exchequer.

As well as taking forward forcefully the Government’s regional economic growth policies, the Council could also be given responsibility for the Shared Prosperity Fund which the Government is committed to setting up to replace the funding previously received from the ERDF. As the main purpose of the Shared Prosperity Fund would be to support regional economic growth, giving responsibility to the Innovation Council would make sense organisationally and financially.

The Innovation Council could also be used, if the Government wished, to drive forward the rate of innovation in the economy and the resulting increase in productivity. There are five areas which could very obviously benefit from concerted government action.

They are, firstly, the Small Business Research Initiative. Modelled on the American scheme, this has been successful in supporting innovation in small businesses but could be improved and expanded. Secondly, the use of government procurement to support innovation has never been effectively implemented by government departments and needs to be driven forward.

The third area is the development of our renewable energy industries, and the fourth is the Government’s support for the diffusion of the technology and methods of Industry 4. Almost all governments today have major Industry 4 initiatives, compared with which ours is totally inadequate.

Finally, the Government’s exciting and important R&D Roadmap. If the major benefits of this programme are going to be maximised it again needs the energetic and enthusiastic support of the whole government.

The creation of the Innovation Council would obviously be a significant change to the way that the machinery of government normally operates. But if the regional economic growth programme is to be successful such a major organisational change would be necessary, and it could be put in place quickly and with little disruption. It would also signify very clearly the Government’s determination to level up the economic growth of the regions.