The industrial strategy is not only an economic document it is also a roadmap for how the country will be governed.
At its heart is a simple premise. Places know what is best for people locally and power should be devolved to them. Not all powers, because some things like defence have to be coordinated at a national level, and certainly not lots of fiscal policy like taxation, but powers over things like spatial planning (where the government allows it), investment, and some parts of the R&D ecosystem.
The ideal body for distributing these powers is the Mayoral Combined Authority (MCA). These are the collection of councils in one area, usually a city, that work together to achieve more than they could alone. The Liverpool City Region Combined Authority and the West Midlands Combined Authority are just two examples
Process not an event
In 1997 then Secretary of State for Wales Rob Davies called devolution “a process not an event”, and he was right. Powers are not spread evenly through the UK, London has quite a lot and a local town council has very few. And the propensity for government to operate through pots of money that local government bid for to do stuff is unusual by international comparisons. This level of financial control limits many places to being the delivery arm of government more so than independent decision makers in their own right.
This patchwork approach also means higher education providers have a mixed relationship with the devolution story.
Solely through an academic lens research intensive universities have done well out of (even if they do not like it) how centralised the UK is. The REF just isn’t interested in geography. It follows quality, impact, and environments wherever they may be. Previous research pots like the Regional Innovation Fund which apply a funding multiplier to places underserved by research funding are the exception not the norm.
The industrial strategy is different in that it at least attempts some kinds of rebalancing in acknowledging that if the government funds the same things in the same places the same kinds of research outputs will be produced. The fact there is some money behind it is even better. As DK noted in his review of research in the industrial strategy:
The £500m Local Innovation Partnerships Fund is intended to generate a further £1bn of additional investment and £700m of value to local economies, and there are wider plans to get academia and industry working together: a massive expansion in supercomputer resources (the AI research resource, inevitably) and a new Missions Accelerator programme supported by £500m of funding. And there’s the Sovereign AI Unit within government (that’s another £500m of industry investments) in “frontier AI”. On direct university allocation we get the welcome news that the Higher Education Innovation Fund (HEIF) is here to stay.
The places that are located outside of major cities without large research portfolios have more reason to be sceptical about devolution. Deputy prime minister Angela Rayner has called for local leaders to “fill in the map” of devolution but this is easier said than done. Places have distinct histories, geographies, and can’t as easily be accommodated into MCAs as places like Greater Manchester.
While there has been interest in towns from time to time, the Towns Fund provided some funding to some places on some research projects, they risk being left behind within a devolution system that prioritises larger conurbations.
The universities problem
Let’s take the government’s proposals at face value and assume it is going to implement the full version of the devolution agenda it is proposing. This would mean local government has more funding to buy land, freeports and investment zones will be streamlined to provide even more business incentives, the British Business Bank (among other funders) will release and coordinate capital aligned to regions and the eight industrial strategy priorities, a further £200m will be spent on further education in England, and a series of growth funds will run directly through mayors.There are more announcements to come on skills, local economic regulation and infrastructure.
Universities are not losers in any of these measures but nor are they inevitably complementary to everything the governments wants to do. Former universities minister David Willetts, who had some reservations about the draft strategy, has softened his tone writing:
Most of the key industries set out in that visual [the one explaining the industrial strategy priorities] are heavy users of higher education. Universities will play a crucial role in the strategy. One of the biggest risks to delivering it is the financial fragility of these core institutions. It is good to see them getting a vivid illustration as well – on page 73. But the Government has not yet taken the decisions needed to ensure they can thrive and continue to be such a national asset.
This is the core problem. It is possible to imagine how industries may rely on universities but it is more difficult work out how universities, specifically, can deploy their capacity in the most effective ways. Universities cannot expect government money for everything they do but it is also true that if they fall over the industrial strategy will fall with them.
Philosophically, the industrial strategy neither supports enormous state intervention nor is it a hands off document of supply-side reform. It sees the state as an enabling force which can reduce risks to business, catalyse investment, and reconfigure the public sector. The industrial strategy does not tell universities what to do, or even what they might do in great detail, because that is not what it is designed to do. It gives an approach and it is for universities to choose whether and how they follow it.
Adapt or perish
This suggests a significant period of adaptation for universities. If more investment and political attention is flowing through their places then being involved in their places becomes significantly more important. Fundamentally, the industrial strategy is not an instruction manual but it is a guide to the things that the government will and will not fund.
There are lots of devolved things that universities would generally find unpalatable like top-slicing QR funds to MCAs. There are lots of things that universities could do and are doing to set an example which might one day be backed up by legislation. Organising regional bodies to coordinate the provision of education to meet local labour market needs. Forming joint research programmes and investment vehicles to form one front door for research in their area. Using their own research capacity to interrogate the best forms of devolution and devolved structures. And, perhaps most importantly, being embedded in the important but unglamorous business of transport and spatial planning.
The bigger mental shift is that the industrial strategy has two core centres of control. Its eight priority industries and regions and clusters within them. The challenge for universities, if they want to see sustained government support for their work, is to answer how what they do supports those two agendas. This is not a PR exercise but a careful interrogation of the limits and approaches of universities in their places and within those core industries.
In some places this might mean tweaking existing work, in others it might mean new partners or new projects, and in some it might mean a more fundamental reimagining of the shape of the education sector in a region. Given the perilous state of university finances it is the institutions that look like they have solutions that will do well in the era of uncertainty.
The industrial strategy does not leave universities behind, but it might. The opportunity is for universities to shape the settlement they want through being proactive in shaping their regions. This is not about another civic strategy but about creating the governance apparatus to support economic growth. Anything short of this risks an economic agenda which is done to universities rather than with them.
