Empower regions to play to their different strengths

Business can serve as a driving force behind the UK’s levelling-up aspirations, said the CBI's Director-General Tony Danker, kicking off the CBI's Urban Revival conference.

As a sneak preview of a new vision for the UK economy, to be published by the CBI in May, Danker explained that to do so they must get away from the cookie-cutter approach of the past and harness local strengths to propel regional economies through recovery towards enduring prosperity.

Transcript

Good morning. And welcome to the CBI’s first ever Urban Revival conference.

I’m joining you today from our actual office in London. Where the broadband runs free. The office furniture glistens like the stars. And the stationary cupboard overflows with treats galore.

You’ll also notice we’ve timed this conference perfectly.

Exactly one week after the big restart of perhaps the most important industry the country has to offer: our hairdressers.

I don’t know if we’ll be able to level up Britain this week. But we’ll look good trying.

Levelling up

Two years ago, the Prime Minister set out that ambition – to level up the UK. He was absolutely right.

Political slogans have short shelf lives. But not this one. Because it’s something that all of us recognise to be true.

Now, no-one yet has a perfect definition of what levelling up means. Or how you measure it.

The scholars and policy wonks among us will continue to debate that – and we should.

Because the data – on skills, employment, productivity are what turn levelling up from a new slogan. To a new reality.

But despite the debates on definition, I think most of us feel that to some degree, with Levelling Up, you know it when you see it.

That moment comes most when you witness urban revival. Towns and cities that are bristling with trade. Bustling with recreation. Brimming over with culture.

Where there is money to build again. Where there is innovation in urban living. Where there is resulting pride about a place and even swagger. Where people stay – rather than leave. Or better still, move in.

There’s a virtuous circle to urban revival. And often no-one quite knows what started it.

Economic vision

So we at the CBI care deeply about urban revival. We share the Prime Minister’s call to level up the United Kingdom.

And in our vision – of where the UK needs to go next, in the decade ahead – a core pillar will be the global competitiveness of every UK nation and region.

Levelling up will need partnering up if we’re going to get close to achieving it.

We know governments – national or local – can build the infrastructure of urban success. More trains. More broadband. New railway stations.

And they control the local budgets that are the essential bloodstream of a place. Buses, parks, healthcare, colleges.

But governments don’t create jobs. They don’t then give pay rises. They don’t build new firms or make the same firms bigger. They don’t train staff in new technologies. They don’t innovate new products and services.

They can, however, make these things easier or harder.

We are therefore bound together – in a place and for a place.

Both of us complement the other. We reach the parts the other can’t.

So next month, at the CBI, we will publish an economic strategy for the UK’s next decade. At its heart will be the places of the United Kingdom. All of them.

The challenge

Our audience today spans economists, business-people and policy people – and yet we all have one thing in common.

All of us are citizens, and citizens of places too.

For economists, the UK’s productivity gap – perhaps our most important driver of living standards is now at its widest in a century.

London’s productivity is almost a third higher than the UK average. And over 50% higher than in Yorkshire & Humber – hitting wages, and quality of life.

Meanwhile, compared to other advanced economies. In Europe, or America, our cities, outside London, aren’t reaching their full potential. Costing the economy around £50bn every year.

For citizens, the UK is a deeply unequal country.

For too many – where you’re born determines your health, wealth, life expectancy, and opportunities.

If we look at wages. In Kensington and Chelsea, disposable income per person is £48,000 higher than in Blackburn.

Or education. A child on free school meals in Hackney – one of London’s poorest boroughs is still three times more likely to go to university than an equally disadvantaged child in Hartlepool.

Not that all is well in our capital city. London is a massive asset in the story of UK levelling up. In London, we have a demonstration of the highs and lows of our greatest cities.

Unparalleled business success – across numerous and high value sectors. Hand in hand with cultural richness and diversity. Yet, the starkest levels of income inequality. And for many young people, punishing affordability.

A world class transport network yes. But straining; first from ever-growing demand and now the Covid impact.

Of course, during the pandemic, every region of the UK has faced unique challenges. Whether that’s due to sector mix, longstanding inequalities, or densely packed cities – with higher infection rates.

And without doubt, the pandemic has worsened inequalities within regions and has certainly exacerbated income disparities.

With low earners five times more likely to have been furloughed than high earners.

But starting behind only means the platform for change burns more fiercely.

The role of business

And that’s why we’re here. Urban Revival is a business issue.

It’s a tide that raises all boats. And all businesses too. So we’re here to do the bit we as business can do.

Thriving firms, bustling high streets, local jobs, better wages.

Not just diagnosing problems. Designing solutions. Getting them done.

And businesses are place proud.

At the CBI – we have over 500 leaders from more than 300 member companies, participating in our regional councils.

They’re an opportunity for local businesses to play a leading role in influencing the policy landscape at a local and national level. And are vital for levelling up. Giving the people who know their area best, a direct say in what we do and how we do it.

Like Mark Thompson, of Ryder Architecture - on our North East council. A man who began his career in Newcastle, in shipbuilding – and witnessed the industry’s decline first-hand. But who, ever since, has been a staunch defender of Newcastle - and the North East. And has been investing in amazing projects there for years. Pioneering everything from local hospitals to schools and research labs.

We business-people are well invested. We’re good at action. So what should we do next?

Industrial clusters

Well, at the CBI, we’ve been doing some research. Some proper number-crunching. We wanted to figure out exactly how businesses can lead and make a real difference to the UK economy post-covid.

As I mentioned – we’ll publish our full vision next month. But let me give you a sneak preview. Because a big part of that work was trying to understand what’s at the heart of urban revival. And the role of business in levelling up.

Of course, we know it’s incredibly complex. But one of the biggest things we found was just how much a region can gain by building clusters of expertise, investment, and collaboration.

And that the best way – perhaps the only way to level up is through local comparative advantage. Not a one-size-fits all approach. But building distinctive local strengths. With a clear and unique proposition for investment.

It’s a simple point. But a powerful one.

We have to liberate ourselves from the ‘cookie cutter’ thinking of the past. And empower different regions to find different solutions – figuring out what works for them.

We’ve already seen where these clusters work. Think auto, in the West Midlands. Aerospace, in the South West. The catchily-named ‘Holyhead Hydrogen Hub’. Or the ‘Golden Triangle’ of research and innovation, in the South East.

Many of them are globally competitive, in their own right. And these clusters are some of the most productive parts of the country. Though they make up only 6% of UK employment.

They punch well above their weight when it comes to output per worker at about 11% of GVA.

It’s a model that builds local momentum.

And put simply, true levelling up will not be achieved by regions working towards identikit strategies.

Instead, it will come from areas knowing their strengths. Recognising their opportunities. And capitalising on them – forging their own path to long-term prosperity.

Three features

So what are the key ingredients for a globally-competitive cluster?

Three things. First, anchor institutions. The epicentres of local economies. These can be universities – like Cranfield, in East Anglia. They can be research centres – like the AMRC in Sheffield. Or they can be keystone businesses – that, in turn, spur growth in local suppliers and adjacent sectors.

One of my favourite examples is another Geordie - Legal & General, in Newcastle. They have a long history in the North East. Starting way back, in the 19^th century, with a small group of lawyers investing £20,000 in the Stockton and Hartlepool Railway. More than 150 years later, they are still investing and collaborating in the area.

Most recently, on a project to convert an old Newcastle Brown Ale brewery, and a former coal mine into the ‘Newcastle Helix’. A new, 24-acre site – in the heart of the city. Complete with offices, research labs, new homes, study space. A £350m project.

Right next to St James’ Park – home of the magpies. Together with local government – Newcastle City Council – and Newcastle University.

But these keystone businesses are not predetermined.

As we saw with the Channel 4 move to Leeds, HSBC’s move to Birmingham, or the recent BBC announcements. Which we hope will unlock more creative clustering after the success of Salford Quay. A real vote of confidence in a region.

Second, is building a rich sector mix, to create more value added in economic terms.

Including high-value, exporting industries that bring money to the region, and act as a multiplier for the local economy. Life sciences, tech, services. And increasingly watch out for renewable energy and supporting services. Destined for nationwide distribution.

In some places, this concentrated expertise can even be a source of economic value for entire cities. Like financial services in Edinburgh. Which contributes a quarter of the city’s GVA.  A huge strength for the city and its surrounding area.

And crucially, these internationally-traded sectors demand local university and college supply of skills.

Third and finally is business leadership - ‘at the service of the region’.

Employers who put profits back into places and people. Creating opportunities for training or building skills in the local workforce.

Like Northumbrian Water – who aim to spend 60p of every £1 they make, investing in local suppliers.

Or companies working to improve the space and the environment around them – collaborating towards net zero. Like ‘Project Acorn’ in Aberdeen – using existing oil and gas pipelines – to store CO2, safely, in sandstone and porous rocks – deep under the North Sea. Totally ingenious. And creating jobs and opportunities across large swathes of North Eastern Scotland.

So those are just three ingredients – anchor institutions, sector mix, and business leadership that can help clusters - and their wider regions – thrive.

Conclusion

We’ve seen so many examples of this ‘urban revival in action’.

Cities becoming hubs for unique experimentation and disruption. Building distinctive local identity, and helping us figure out what works.

And for me the greatest proof of what business can achieve lies in the stories of changed lives, changed communities, changed towns and cities.

The way that Belfast – my town – has become a hub for cyber security and fintech companies. A city in which today 10,000 people work in digital jobs – something that could hardly be imagined 15 years ago.

The way that, in Cardiff, the city centre and the old docks have been regenerated through private investment. Turning Cardiff, rightly, into one of the great European capitals.

Or the rebirth of Hull – from one of the UK’s poorest cities, following the twin loss of its fishing and shipping industries in the ‘80s – to becoming the UK’s ‘energy estuary’, having attracted more than £3bn of investment over the last decade.

There is no greater agent for this revival than business.

We now need to turn these examples into a national movement – an urban revival revolution.

Showing that any levelling up agenda – without jobs, without industrial clusters, without business sector regeneration is not levelling up at all.

And that rebalancing the UK economy can’t be done by government alone but with enterprise, as a driving force.

This conference can be a space to share ideas. Sparking action and change.

Over the next two days, we’ll explore all the ingredients of an urban revival.

From the technology we create to the buildings we live and work in, and the transport we use to get there.

With expert speakers and leading companies – coming together, finding solutions. And I hope our discussions will inspire you.

As US anthropologist Margaret Mead said: “A city must be a place where groups of women and men are seeking and developing the highest things they know.”

This conference deserves no less. Let’s get started.

Thank you.