The economic consequences of the Tees

The Teesside steel workers, rather like the Port Talbot steelworkers, are in a sense a traditional phenomenon: industries have always breathed in and out. They are not so much a symptom of deindustrialisation – someone is still making steel, after all – but of a gap in our understanding about how to manage the change when a whole regional economy depends on one industry.

We have laboured over the past half century or so under two rival solutions to sudden industrial change. They are both still with us, and were out gargling in force to greet the publication of Lord Heseltine’s report Tees Valley: Opportunity Unlimited. 

The prevailing solution to rescuing a local economy which had been allowed to become too monocultural, and then suffered the economic equivalent of a heart attack, is to train. It is to improve local skills and their flexibility, even perhaps their pliability, and to invest in infrastructure to let people drive, fly, truck and train themselves and their products in and out. There was some of this in Heseltine’s recommendations.

The rival solution was that the government should somehow act to protect the ailing industries or to provide investment for replacement factories. There remains a nostalgia for the central technocratic planning so reviled by Friedrich Hayek in his 1944 Road to Serfdom.

But there was a hint in the Tees Valley report of something rather newer, which is only just seeping into the mainstream debate about inclusive growth – the idea that there is knowledge, imagination and human resources inside these local economies which might make them beat again.

Or, as Heseltine himself put it on the Today programme:

“The thing that struck me about Tees Valley and slightly surprised me, because I didn’t know much about the area, was the can do attitude here. Wherever you go, you find bright, intelligent, hard-working people who are determined to make a success of this place and know how to do it.”

This was what lay behind his recommendations to combine business advice and support into one service.

All this may seem obvious, but much of the debate about city economies and inclusive growth has been elsewhere. If the economic futures of cities are in the hands of the government or Chinese investors, then all cities can do is to get out the gloss paint and hope for the best – and maybe look up the flight times to Shanghai.

But if the basic raw materials of success are already there, in the sixth forms and apprenticeships schemes, and in the imaginations of the locals, then it implies a much more involved and potentially distinctive approach for the city leaders. It implies that they have some continuing responsibility for economic revival which the old debate assumed was too technocratic, or not really their business.

In short, if the resources are there already – if the key is liberating the entrepreneurial drive of the people who live there – then cities have a responsibility which has not been completely recognised even in the devolution debate.

They will need to have a great deal more information about how the local economy behaves, as Manchester is beginning to do. Or where the money is going, as Preston is doing. They will need to emphasise local enterprise as a core part of their central purpose, as Birmingham is doing. They are going to have to treat their own populations – not as a lumpen mass that needs somehow to be fed – but as the source of wealth, with imagination and flair that needs to be nurtured.

This small shift has the potential to set the inclusive growth debate on fire, and there is another potential shift here too. If it is the gift of Whitehall, Brussels and Shanghai to make our urban economies work, then the inclusive growth debate will be theoretical, technocratic and academic.

If cities have levers they can pull themselves, then the debate will be practical, anecdotal and led by people who are actually doing things rather than just measuring things, or thinking things.

The business of making economies thrive then comes out of the economic Accident & Emergency department and into the council chambers and the communities. That is the shift that is already happening, which the Heseltine report may turn out to mark, because it brings the debate right home.

Find out more about the RSA's work on inclusive growth