The House of Lords is due to debate the following motion on 7 March 2024:

Baroness Armstrong of Hill Top (Labour) to move that this House takes note of the case for local regeneration of former industrial areas across the whole United Kingdom, and the challenges constraining such regeneration, including in relation to local government.

1. Former industrial areas: Definition and overview

1.1 What are former industrial areas and where are they?

‘Former industrial areas’ are cities, towns and communities mostly located across the Midlands, North of England, Wales and Scotland whose local economies were traditionally centred around industries such as coal, steel, shipbuilding, textiles, and heavy engineering. Over the past approximately four decades they have suffered widespread job losses as the UK economy moved away from heavy industries and manufacturing and reoriented towards services industries.[1] This has had long-lasting socio-economic consequences in these areas.

There is no formal definition of former industrial areas for official statistics.[2] An influential definition developed by researchers at the Centre for Regional Economic and Social Research at Sheffield Hallam University encompasses three overlapping areas, which they collectively describe as “older industrial Britain”.[3] These are:

  • older industrial towns (specifically, “91 local authorities in the Midlands, North, Scotland and Wales where industries such as coal, steel, chemicals, engineering and textiles have shed large numbers of jobs over the years”)
  • former coalfields
  • 10 main regional cities in the Midlands, North, Scotland and Wales

The researchers calculate around 23 million people (one third of the population of Great Britain), live in older industrial Britain.[4]

The following map, taken from a 2017 paper by the above researchers, shows the geographic areas of the industrial job losses since the early 1980s across Great Britain, broken down by type of industry:

Figure 1. Major industrial job losses since the early 1980s
Figure 1. Major industrial job losses since the early 1980s
(Christina Beatty and Steve Fothergill, ‘The impact on welfare and public finances of job loss in industrial Britain’, Regional Studies, Regional Science, 2017, vol 4, issue 1, pp 161–80)

1.2 What issues do they face?

Research commissioned in 2019 by the Coalfields Regeneration Trust (an independent charity established to support coalfield communities) found the former coalfields were behind the national average and the best-performing parts of the country in three respects: strength of the local economy, extent of social and economic disadvantage, and extent of ill-health and disability.[5]

Key findings included:

  • The coalfield population was older than average, had fewer people of working age, and was growing more slowly in most places than the overall population of Britain.
  • Average life expectancy in the former coalfields was around a year less than the national average.
  • The proportion of people claiming certain benefits, such as disability living allowance or personal independence payment, was much higher than the average for Great Britain. The numbers of people of working age claiming incapacity or out-of-work benefits were well above the national averages.
  • The coalfield areas had relatively few jobs in relation to their working age population and many people commuted to work in surrounding areas.
  • On average the hourly earnings for men living in coalfield areas were 8 percent below the GB average, and 10 percent lower for women.
  • Just over half of all employed residents were in manual jobs (more than the national average), and the proportion of residents with degree-level qualifications was well below average.
  • 42 percent of coalfield neighbourhoods were in the most deprived 30 percent in Britain.

The authors found mixed evidence on the extent to which coalfields were catching up with other areas and concluded that there was a need for continued “action and funding across a broad front […] for some years to come”.[6] A standalone report on the Scottish coalfields in 2020 made similar findings, observing that Scottish coalfield areas “continue to experience multiple forms of disadvantage” and that “conditions in some other parts of Scotland are improving at a faster rate”.[7]

Similar issues have been identified in older industrial towns. Issues highlighted by the Industrial Communities Alliance (a local authority association that campaigns on behalf of councils in industrial parts of the UK) include slow job growth, low pay rates, a prevalence of low-skilled work and worklessness, and a reliance on jobs in neighbouring cities.[8]

Analysis by the Centre for Regional Economic and Social Research, commissioned by the Coalfields Regeneration Trust and the Industrial Communities Alliance, considered the effects of the Covid-19 pandemic on older industrial areas.[9] It concluded that in many respects the pandemic had not changed very much, explaining that “older industrial Britain entered the pandemic lagging badly on a range of indicators, it was hit hard by the pandemic in terms of health and prosperity, and it leaves the pandemic still adrift of most of the rest of the country in terms of economic well-being”.[10]

The characteristics and needs of coastal towns and communities overlap with older industrial areas in some respects.[11] The challenges faced by older industrial areas reflect a broader picture of deep and longstanding regional disparities across the UK, chiefly a gap between London and the south east and the rest of the country.[12] This briefing was written with the definition of older industrial Britain in mind. Some of the material referred to is wider in scope and uses broader terms such as “left behind” or “forgotten” areas.

Further detail on some of the issues in older industrial Britain and the challenges they pose for regeneration is set out below.

1.3 Challenges to regeneration

1.3.1 Weaknesses in the local economies and labour markets

Research commissioned by the Coalfields Regeneration Trust and the Industrial Communities Alliance identified “more jobs and better jobs” as the “primary requirement” for most of older industrial Britain.[13] It highlighted many indicators of weakness in older industrial areas’ economies, including low employment rates, low earnings, low ‘job density’ (the ratio between the number of jobs in an area and the local population of working age), and below-average productivity. For example, between 2012 and 2019, job growth in older industrial towns and former coalfields relative to the working age population was around a third of the equivalent rate in London and half the equivalent rate in the main regional cities (around four percent compared to around 12 percent).[14]

In 2019, older industrial towns had 66 jobs for every 100 adults of working age and the former coalfields had 57 per 100, compared to a ratio of 89 to 100 in London and 86 to 100 in the main regional cities. The researchers said this is partly explained by the prevalence of commuting in older industrial Britain.[15] Commuting also affects statistics on local areas’ recorded productivity (measured by gross value added, their contribution to the economy), because productivity is recorded where people work. This can have wider ramifications, for example on infrastructure spending in less productive regions (discussed further below).

Median earnings in older industrial towns are eight percent lower than the national average.[16] Many of the newer jobs created are in sectors such as retail, warehousing and call centres and have been criticised for offering inferior pay, conditions, security, and opportunities.[17] The concentration of jobs in a few sectors has been identified as a vulnerability, particularly when the jobs are vulnerable to automation.[18]

1.3.2 Skills shortages and high numbers of economically inactive people

Old industrial areas have been found to have higher than average numbers of people of working age on out-of-work benefits; 15.5% in older industrial towns and 14.6% in former coalfields, compared to 12.4% in London and 9.2% in South East England.[19]

Disparities between cities and old industrial towns are considered to have contributed to polarisation of communities and demographic imbalances. Younger and better qualified people move away from old industrial communities as they are attracted to work and study opportunities elsewhere.[20] Ensuring there is an appropriately skilled workforce is another challenge for old industrial areas. Linked to this are concerns about educational attainment, access to post-16 education and training, and long-term prospects for people who are not looking to enter higher education.[21] Employers and local stakeholders have also identified the lack of joined-up industrial, education and skills strategies that reflect local conditions as obstacles to economic growth and as undermining opportunities for local people.[22]

1.3.3 Poor connectivity

Greater investment in transport infrastructure is a frequently identified need of ‘left-behind’ areas.[23] Researchers have highlighted imbalances in transport spending which have favoured London and inter-city connections, and also overlooked less-productive regions’ needs for increased local connections and capacity across rail, road and bus networks.[24] The effects of a lack of investment are said to be reflected in over-crowded and unreliable services across public transport and road networks.

Pressures on capacity are exacerbated by the proliferation of commuting between smaller towns and more prosperous city centres. In some areas commuting to neighbouring areas by public transport might not be feasible, for example due to the costs and complexities of travelling across fragmented networks.[25] This further reduces job opportunities, particularly for people who do not have access to a car. Analysis by the Resolution Foundation and the Centre for Economic Performance found that for people living in small towns, being able to travel by car provided access to 28 times more jobs within a 30-minute journey compared to public transport.[26] This is considerably greater than in core cities (seven times higher) and London (three times higher).

1.3.4 Lack of development of brownfield sites and physical infrastructure

There have been various programmes to reclaim and decontaminate former coalfields and large brownfield sites over the years, such as through the national coalfields programme, land stabilisation programme, and Welsh Development Agency.[27]

There has been less coordinated support for developing smaller brownfield sites. One of the identified consequences is that many areas lack the type of industrial and commercial property needed to attract new businesses.[28] Weak industrial and commercial property markets in older industrial towns give few incentives to the private sector to bring assets into use. Low land values and property rents do not offer commercial returns and the costs of developing brownfield sites are deemed commercially unviable. The All-Party Parliamentary Group on Coalfield Communities described this as a “catch 22” situation whereby “the private sector won’t invest on a speculative basis because the local economy is too weak, but the shortage of good quality premises constrains local business growth”.[29] Stakeholders suggest ‘gap funding’ would encourage private sector investment in brownfield sites, new workspaces and historic assets.[30]

1.3.5 Centralisation of powers

The UK’s centralised model of decision-making and public spending has been criticised for undermining local government’s ability to respond to identified needs.[31] Local authorities have called for greater devolution of powers and funding, saying that the current system distorts decision-making and means “funding decisions are not able to be taken at the kind of granular level required to ensure funding goes to those places with the greatest need”.[32]

In addition, many of the issues local areas want to address are cross-cutting and are affected by policies which span the remits of central and local government and devolved administrations. Local authorities report difficulties joining up overlapping initiatives owned by different parts of government, observing that a lack of coordination can undermine long-term planning and lead to duplication or gaps in provision.

A recent inquiry initiated by the Local Government Association considered how the government’s levelling up aspirations (discussed below) could better strengthen local communities.[33] Amongst the inquiry’s findings and recommendations were calls for greater devolution of powers and funding, an end to competitive funding arrangements, more efforts to better connect local communities with the design and evaluation of policies designed to benefit them, and recognition of the contribution of local leadership.

Some of the core recommendations were to:

  • recognise the key role that councils and combined authorities have in economic growth and prosperity and give them the power to keep proceeds of local growth to reinvest according to local need
  • replace competitive funds with a single pot of capital funding which would enable them to invest in social and community infrastructure
  • pilot single budgets under local government leadership for areas that want them
  • ensure policy design and evaluation processes meaningfully engage with people’s lived experiences

Since the report was published, the government has published new devolution deals with Greater Lincolnshire, Hull and East Yorkshire, Lancashire, and Cornwall.[34] It has also agreed ‘trailblazer devolution deals’ with Greater Manchester and the West Midlands, which include various new powers and a ‘single financial settlement’ to replace several individual grants.[35]

1.3.6 Complex and fragmented funding streams

Over the past decade there have been a variety of funding streams to promote local economic growth, as illustrated in figure 2, below, from the 2022 white paper on levelling up:

Figure 2. Local growth funding pots introduced in the UK since 2011/12
Figure 2. Local growth funding pots introduced in the UK since 2011/12
(HM Government, ‘Levelling up the United Kingdom’, 2 February 2022, CP 604, p 127)

The government has established several funds and initiatives to support local economic growth over the past five years:

Reflecting criticisms made by local government, it acknowledged that a lack of coordination over the past decade had resulted in “a patchwork of fragmented funds, separate but often overlapping.[36] It recognised that local government stakeholders had complained of inefficiencies, decision-making complexity and reporting burdens and had called for fewer competitive bidding pots and restrictive ringfences on how funding could be used.

In July 2023 the government published a new plan to increase “the effectiveness and efficiency of the current funding system”.[37] This reflected a commitment in the levelling up white paper (discussed below) to streamline the funding landscape and help local stakeholders navigate funding opportunities.

The government has also committed to publishing a document showing how it has taken the devolved administrations’ considerations into account in relation to its levelling up missions.[38]

2. Policy interventions: The levelling up agenda

Action to address the needs of former industrial areas falls within the scope of the government’s levelling up policy agenda. ‘Levelling up’ is an umbrella term for a loosely connected set of policies designed to address the longstanding problem of the UK’s regional economic, social and health inequalities.

The ‘Levelling up the United Kingdom’ white paper, published in February 2022, outlined a policy programme based on five “mutually reinforcing pillars”. The pillars are:[39]

  • a set of 12 medium term “missions” (objectives), all due for completion by 2030
  • reorienting central government decision-making to align policies with the levelling up agenda
  • empowering decision-makers in local areas by providing leaders and businesses with the tools they need
  • transforming the approach to data and evaluation to improve local decision-making
  • creating a new regime to oversee the levelling up missions, including a statutory duty to publish an annual report analysing progress

The 12 missions are grouped into four focus areas.[40] Many are relevant to the frequently identified regeneration needs of older industrial Britain.

The first focus is to “boost productivity, pay, jobs and living standards by growing the private sector, especially in those places where they are lagging”. It includes targets to deliver improvements in the following areas:

  • Living standards: increasing pay, employment and productivity in every area of the UK
  • Research and development: increasing domestic public investment in R&D outside the greater South East by at least 40 percent and seeking to leverage at least twice as much private sector investment
  • Transport infrastructure: bringing local public transport connectivity across the UK closer to London standards
  • Digital connectivity: providing nationwide 4G coverage and 5G coverage for most of the population

The second focus is to “spread opportunities and improve public services, especially in those places where they are weakest”. It includes missions related to education, skills, health and well-being. They include targets to increase the number of people successfully completing high-quality skills training in every area of the UK (including 20,000 more people in the lowest-skilled areas in England) and to narrow the gap between the areas with the highest and lowest healthy life expectancy.

The third group of missions covers local satisfaction and engagement, housing, and crime. They are intended to “restore a sense of community, local pride and belonging”.

The final focus aims to “empower local leaders and communities, especially in those places lacking local agency”. It pledges that “by 2030, every part of England that wants one will have a devolution deal with powers at or approaching the highest level of devolution and a simplified, long-term funding settlement”. In the government’s view, “meaningful devolution of power and responsibility for economic growth to an accountable local leader has been proven to help once declining areas to recover”.[41]

Some of the measures in the white paper are being implemented through provisions in the Levelling-up and Regeneration Act 2023. The act included a statutory duty to lay before Parliament a statement setting out the government’s specific objectives to reduce geographical disparities and details of how progress will be measured.[42]

The first statement was published on 25 January 2024.[43] An accompanying written statement from Jacob Young, parliamentary under secretary of state for levelling up, housing and communities, drew attention to certain actions already taken.[44]

The following lists developments particularly relevant to older industrial Britain (further details on some of these are set out in the remaining sections of this briefing):

  • Transport: £36mn previously intended for the extension of High Speed 2 has been reallocated to transport improvements across the UK, including £19.8bn in the north of England and £9.6bn in the Midlands
  • Research and development: the £100mn innovation accelerator programme is investing in 26 research and development projects
  • Education: provision of targeted support in 55 education investment areas across England and offer of additional investment in 24 priority investment areas in England
  • Launch of the ‘Long-term plan for towns’
  • Funding: including the future high streets fund, the towns fund, and three rounds of the levelling-up fund, as well as investment zones, eight freeports in England and plans for freeports in Scotland and Wales
  • Local leadership: 10 devolution deals with 26 local authorities have been agreed since the white paper was published and over £5bn of long-term funding has been committed as part of devolution agreements in the past 18 months

2.1 In detail: Freeports

Freeports are designated areas of the country where different economic regulations apply.[45] They are intended to generate additional economic activity, investment and jobs by offering concessions which create a more favourable business environment.[46] Recent governments have considered freeports to be a cornerstone of the levelling up agenda.[47] The government intends to establish freeports in all parts of the UK.[48]

The UK’s post-Brexit freeport model was developed in consultation with ports, businesses, local authorities and other stakeholders.[49]

Promoting regeneration and job creation is one of the main objectives for the freeports policy.[50] The government anticipates this will happen through the creation of high-skilled jobs in ports linked to the areas around them, ensuring sustainable economic growth and regeneration for communities that need it most. The government says that local economies will grow “as tax measures drive private investment, carefully considered planning reforms facilitate construction and infrastructure is upgraded in freeports”.[51]

The other two main objectives of the freeports policy are to act as “national hubs for global trade and investment” and to create “hotbeds for innovation”.[52]

The bidding prospectus for freeports in England identified regeneration and job creation as the lead objective, saying that suitable bids in deprived or vulnerable areas would be prioritised.[53]

The competitive bidding process identified eight locations for new freeport sites in England. These are in the East Midlands, Felixstowe and Harwich, Humber, Liverpool, Plymouth and South Devon, Solent, the Thames, and Teesside.[54] All the freeports in England are now operational.[55]

Each freeport is being offered up to £25mn seed capital funding and inducements including:[56]

  • Tax incentives to encourage businesses to open, expand and invest in freeports. These include enhanced capital allowances to incentivise new investment, relief of business rates, stamp duty land tax, and employer national insurance contributions for additional employees.
  • Customs measures, including simplified customs and tariff arrangements.
  • A supportive planning environment, such as extended permitted development rights and incentivising the use of local development orders.

There will be two ‘green’ freeports in Scotland, in the Firth of Forth and in Inverness and Cromarty Firth.[57] Bids have also been approved for two freeports in Wales, located in Anglesey, and Milford Haven and Port Talbot.[58] The successful Scottish and Welsh bids are in the business case approval stage and are expected to become operational later this year.[59] Discussions on establishing a freeport in Northern Ireland were interrupted by the absence of a functioning Northern Ireland Executive.[60]

The bidding prospectus for England identified two specific regeneration outcomes successful bidders would be expected to deliver:[61]

  • employment: increased number of jobs and average wages in deprived areas in and around the freeport
  • economic activity: increase in economic specialisation in activities high in GVA [gross value added] relative to the current makeup of the local economy

Some commentators have expressed scepticism about freeports’ potential impact, citing evidence suggesting that they are more likely to encourage displacement of economic activity from surrounding areas rather than increase overall growth.[62] Critics have also raised doubts over the extent to which freeports generate high-skilled jobs.[63]

The Office for Budget Responsibility is assuming that freeports will have a greater effect on the location of economic activity rather than its volume.[64] It also anticipates that any additional economic activity generated will be small scale relative to the whole economy, and “would probably be difficult to discern even in retrospect”. It says international experience suggests that enterprise zone reliefs “act more as a reward than an incentive” and that existing infrastructure and transport links are stronger determinants of levels of activity.[65]

2.2 In detail: Long-term plan for towns

The government is providing 55 towns across Great Britain a “ten-year endowment style fund” offering £20mn of funding and support through its ‘long-term plan for towns’, which was launched in October 2023.[66] In return, the towns will be required to develop long-term regeneration plans which reflect broad themes of safety and security; high streets, heritage and regeneration; and transport and connectivity.[67] Their plans must be developed in consultation with the local community and will be overseen by newly established ‘town boards’. These will be made up of representatives from local organisations including community groups, local businesses and social enterprises, cultural, arts, heritage and sporting organisations, public sector agencies, and local authorities and elected representatives, including the local member of Parliament.[68] A new ‘towns taskforce’ within central government will offer capacity support to town boards and seek to attract private and philanthropic investment for the towns.[69]

The funding is intended to give towns “long term certainty to deliver projects over multiple years and the flexibility to invest in interventions based on evolving local needs and priorities”.[70] Responding to stakeholders’ criticisms of previous restrictive funding models, the plan emphasises that the towns “will not be subject to onerous reporting requirements; […] will be able to roll over funding into future years”; and will be “more able to capitalise on private and philanthropic investment, aligning timings with businesses and investors”.[71]

Furthermore, a needs-based approach determined which towns were selected for funding rather than a competitive process.[72] Two-thirds of the towns chosen meet the definition of “older industrial”.[73] 44 of the towns are in England. Of these, most are in the North West (10), East Midlands (9), and Yorkshire and Humber (9), followed by the North East (6) and West Midlands (4). Seven towns are in Scotland and four are in Wales. The government intends to discuss support for towns in Northern Ireland with the Northern Ireland Executive.[74]

Stakeholders in local government have broadly welcomed the plan, whilst noting that there are “numerous” other towns in need of similar funding,[75] and reiterating broader concerns about local government financing.[76]

The Industrial Communities Alliance published a more detailed response.[77] It noted the scheme’s relatively small coverage compared to overall town populations and the amount of funding offered. It also questioned the lack of consultation on the selection criteria, the plan’s chosen priorities, and the limited consideration given to the role of local authorities and devolved authorities. It cautioned that there is a need for realism about what such initiatives can achieve, concluding that “above all, what Britain‘s older industrial towns need is a lasting revival in their economy”.[78]

3. Read more


Cover image by Lison Zhao on Unsplash.

References

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  2. Industrial Communities Alliance, ‘Making places: How to rebuild the economy of Britain’s older industrial towns’, February 2020, p 8. Return to text
  3. Christina Beatty and Steve Fothergill, ‘Beyond the pandemic: Older industrial Britain in the wake of the crisis’, November 2021, p 10. Return to text
  4. As above. Return to text
  5. Christina Beatty et al, ‘The state of the coalfields 2019: Economic and social conditions in the former coalfields of England, Scotland and Wales’, July 2019. Return to text
  6. As above, p 8. Return to text
  7. Social Value Lab, ‘The Scottish coalfields in 2020: Report for the Coalfields Regeneration Trust’, March 2020, p 43. Return to text
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  10. As above, p 32. Return to text
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