Report says long-term inequalities must end if region is to enjoy sustainable rebound

Targeted action to boost skills and develop physical and digital infrastructure is vital if the North West is to attract the inward investment needed to build back better from coronavirus, says a new CBI report.

The CBI’s Reviving Regions paper, sponsored by Lloyds Banking Group, highlights long-standing regional inequalities across England which inhibit growth, opportunity and productivity.

It says the disparities in economic performance are large, both across England and within regions, and warns they are at risk of widening further if government levelling-up ambitions falter in the wake of COVID-19.

The paper calls for a long-term strategic vision to guide the country through a vital post-COVID recovery and towards long-term prosperity.

For the North West, job creation and access to skills training will be a key priority.

The region boasts one of England’s strongest economies, but the pandemic has bitten especially deeply, shutting down whole sectors and leading to a surge in unemployment. Action to equip people with new skills can safeguard livelihoods and protect communities.

Improvements to infrastructure – including the long-awaited and keenly-anticipated HS2 and its link-up with Northern Powerhouse Rail – also have the potential to be transformational. New 5G connectivity, while strong in North West cities, needs to be rolled out to more rural parts of the region, too.

Underpinning all of this is a call to empower the North West’s local and regional leaders to create a culture where businesses can operate, invest and grow with confidence.

The report’s recommendations include:

• Building vibrant local labour markets​ – including increasing local capacity to deliver back-to-work programmes alongside a long-term focus on the devolution of adult skills to meet our growing skills and retraining gap.
• Transforming local infrastructure to facilitate new ways of working​ – including a focus on the future of towns and cities, improving digital connectivity, and a wholesale reform of regional funding to ensure a strategic approach to future investment.
• Inspiring world-class, innovative businesses to invest in the regions​ – including short term interventions to help businesses grow, locally designed and delivered business support with a focus on access to exporting opportunities, and interventions to close the gap in regional R&D funding.

Damian Waters, CBI North West director, said: “The North West is a region with many examples of excellence, ranging from technology-rich economies like Manchester and Liverpool to outstanding strength in sectors like fintech, life sciences, AI and data.

“Yet these successes are not spread evenly, even within the region.

“Pockets of low productivity restrict opportunity and prosperity in parts of the North West, and devolving adult education budgets in line with the positive examples seen in Manchester and Liverpool can be an important step in addressing skills gaps.

“Challenges around connectivity – both physical and digital – need to see swift progress, too.

“Action on these issues is vital if the region is to enjoy a fair and sustainable recovery. We must attract the investment needed to enable North West businesses to succeed, not just regionally or nationally, but globally, too.”

The CBI believes the actions outlined in Reviving Regions can mitigate the regional impact of the pandemic and ensure no towns or cities are left behind as the nation looks to rebuild.

However, it stresses that a ‘one size fits all’ approach cannot succeed in combating issues which are unevenly spread, and advocates actions being locally and regionally led to ensure they are appropriately targeted.

Matthew Fell, CBI chief UK policy director, said: “The twin threats of COVID-19 and a potential no-deal Brexit have created a devastating and unprecedented economic challenge.

“Building back quickly and effectively is essential, but a recovery driven only by limited pockets of productivity is far from a real recovery, and hardly the basis for a brighter future.

“Businesses in every corner of England stand ready and willing to play their part in the economic rebound, but too often see their efforts hampered by inadequate infrastructure and limited access to skilled workers.

“The Government must, therefore, prioritise long-term investment in the critical structures, training, and innovation needed to support jobs and quality of life around the UK. This long-overdue levelling up can lay the foundation for a better, greener and fairer economy for all.”

Elyn Corfield, Lloyds Banking Group’s ambassador for the North of England said: “The regions and nations of the UK have a huge role to play in the country’s recovery from the effects of the pandemic.

“In the North West, improving the infrastructure, both physical and digital, will be hugely important in helping this region fulfil its potential. Giving people the skills they need will also be crucial if we are to ensure the recovery here is long-lasting and sustainable.

“Lloyds Banking Group is committed to helping every part of the UK build back from the effects of the pandemic and many of the themes highlighted in this CBI report echo what we have heard through The Big Conversation, our own programme which brings together political leaders, businesses and policy experts to explore the best road to recovery across the UK.”