07Place-based policy interventions to attract knowledge exporters: a broad menu of options

Place-based policies can be used to strengthen the benefits cities offer to exporters concentrating within them. While the mix of policy priorities will differ between individual cities, the typology set out in this report highlights a menu of policy options for the four groups of cities:

• Group A: Increasing the supply of housing and affordable business premises is likely to be a priority for many of these cities, as is tackling the costs of congestion through planning and investment in public transport.
• Group B: Investment in skills and education will form a crucial part of these cities’ strategies to grow and increase the value of existing export activity. The provision of high-quality, affordable business space and efficient public transport systems will also form an important part of supporting the continued attractiveness of their city centres to high-skill exporters.
• Group C: Encouraging investment within the city centres through strategic planning, public realm improvements and improvements to public transport will be important for these cities, whilst also playing to the strengths offered by these cities’ suburbs, to support growth over the longer term.
• Group D: Investment in education and skills, accompanied by support to better match firms and workers, will be particular priorities in these cities. Many of these cities also need to create an attractive business environment in their city centres that can attract higher-value, knowledge-export activity.

1.Investment in skills and education

The industrial strategy must prioritise skills and work closely with education-focused institutions to raise levels of educational attainment across all cities.

For all cities, the shift towards knowledge-exporting activities means that policy makers must increase the educational attainment of residents to make it easier for businesses to recruit workers with the right set of skills. This means improving attainment at all stages of education – from early-years learning and primary schools through to lifelong learning. This is likely to be a particular priority in cities in group D which tend to have lower levels of educational attainment.

Government needs to work closely with business in different ways – at the national, sectoral and local levels – to understand specific skills needs and raise business demand for skills.

All cities must also work closely with employers, employment support organisations, FE (Further Education) colleges and local training providers to ensure that adult residents have access to training opportunities that equip them with the skills demanded by employers in the changing economy. In particular, efforts should be made to raise the level of STEM (science, technology, engineering and maths) skills, digital skills and numeracy – and this applies to all cities, given that STEM skills shortage is a national issue. Attempts should also be made to boost vocational and on-the-job training, including internships and apprenticeships.

Cities in group D in particular should also work closely with firms to improve the quality of matches between firms and workers, as businesses are likely to find it more difficult to find workers with the right skills in smaller, lower-skilled labour markets. This means working with local employers, schools and universities to improve careers advice and ensure that quality careers advice is included as part of the employment support offer.

2.Investment in housing

Cities with high and rising housing costs need to focus on increasing the supply of housing so that they are able to continue to attract and retain workers that businesses need.

For cities in group A, housing policy is likely to play an integral role as an enabler (or inhibitor) of economic growth. There is a political consensus that Britain needs to build more homes – the lack of supply has been a long-term and systemic problem, and is most acute in cities that have been highly successful at attracting high-knowledge exporters.

These cities need to work pro-actively with partners to identify sites for new housing development and plan strategically to ensure that new housing developments are appropriately served by public and private transport infrastructure.

Cities in groups B, C and D, however, tend to have less acute shortages of housing. Housing in these areas tends to be less of a priority as a means of attracting and retaining high skilled workers, although it may be appropriate to address the undersupply of housing in popular neighbourhoods within a city.

3. Investment in city-centre development

Cities should target development in ways that encourage city-centre investment and densification

For cities in groups C and D, encouraging the clustering of economic activity through investment in city centre development should be a particular policy priority. These cities should improve the functioning of their city centres as business locations by looking at ways to reduce the regulatory costs on businesses looking to bring forward development, removing long term vacant office and retail stock through change of use or demolition if necessary, offering business rate incentives and supporting the introduction of Business Improvement Districts (BIDs) in cities that do not have one.

For cities in groups A and B, the reform of national permitted development rights policy – which currently permits developers to convert office space to residential use without a full planning permission – would play an important role in better managing the conversion of offices to flats and apartments. Competition for space is often intense in these cities and residential uses will nearly always be more profitable than other uses. Without these controls, the supply of office space will be reduced in the areas where demand for office space is likely to be highest. In cities with the least affordable housing, there are significant opportunities to build more homes by re-designating small areas of green belt land.

4. Investment in public transport systems

Cities need to work with government to provide more efficient public transport

Public transport is likely to play an increasingly important role in the economic performance of cities as the national economy continues to shift towards knowledge exporting activities, which are more likely to be concentrated in dense city centres. The role of public transport in strengthening the benefits of cities offer is twofold, both helping cities to increase density and to manage the costs of growth.

For cities in groups A and B, with dense economic activity, an efficient public transport system helps to reduce congestion. In this way, public transport minimises the costs of growth, and helps cities with a large, high-knowledge export base maintain their existing strengths.

For cities in groups C and D, public transport also helps to increase the effective density of cities. An efficient public transport system increases the size of the labour pool that businesses can recruit from by increasing the number of workers that can quickly access the main employment sites in a city.

Creating an efficient city-region transport system requires coordination across different transport modes, different transport institutions (including Network Rail and local transport authorities) and cooperation across administrative boundaries. An important part of this approach means giving more powers to local transport authorities to enable them to do this.