Inclusive Growth in Sheffield

Evidence hearing 1 Writeup 29 June 2016 The RSA Inclusive Growth Commission is running four evidence hearings across the country during the course of its inquiry. The first took place in Sheffield on 29 June 2016. The hearing called upon senior leaders to give evidence to the Commission in a series of three panel sessions. Each of the panel sessions featured leading figures from within the city region and further afield (where their remit connects Sheffield within the wider northern powerhouse), and includes those from business, public services and the council or combined authority. The evidence gathered through the hearing will serve to enhance the Commission’s understanding of how the inclusive agenda plays out at a place level, and will be used to inform the development of our findings and recommendations. The evidence session was chaired by: Stephanie Flanders Chief Market Strategist for J.P. Morgan and Chair of the Inclusive Growth Commission Charlotte Alldritt Director of the Inclusive Growth Commission and Director of previous City Growth Commission Ben Lucas Director at Metro Dynamics and Commissioner for the Inclusive Growth Commission

Pannellists is spatially distributed, but also that the right sort of growth is achieved – growth that, for example, promotes social mobility. Session 1: For example, Sheffield’s employment rate is actually relatively high but wages are low, and • John Mothersole, Chief Executive of Sheffield business stock is low. City Council • There are three key challenges: one is about • Simon Greaves, Leader of Bassetlaw District achieving growth, another is about ensuring Council people are able to participate in that growth, • Dr. Dave Smith, Interim Executive Director at and the third is about ensuring people have Sheffield City Region the capabilities to be involved in that growth. • David Brown, Chief Executive of Transport for The latter relates to the life chances agenda, the North promoting aspiration and investing in early support. Session 2: • In light of Brexit, inclusive growth is now an absolute imperative. As the die is cast for • Hugh Facey MBE, Chairman of Gripple the next era, it is important to develop levers • Martin Mayer, Secretary Sheffield at Trade that allow a new form of redistribution: Union Council redistribution through growth, rather than just • Julie Kenny CBE DL, Commissioner at through taking what we have and spreading it. Rotherham MBC The dominant economic Session 3: narrative in the past has • Paul Corcoran, Chief Executive of the Sheffield been that any growth is good College • Professor Chris Husbands, Vice-Chancellor of growth and that the proceeds Sheffield Hallam University will trickle down. The • Anna Round, Senior Research Fellow at IPPR ‘‘ • Stephen Clarke, Research and Policy Analyst at consequences of this have Resolution Foundation been that while the economy might be growing, many Panel Session One people do not feel a part of it

John Mothersole, Chief Executive of Sheffield City Council – opening statement Cllr Simon Greaves, Leader of Bassetlaw District Council – opening statement John emphasised the centrality of achieving more inclusive growth to Sheffield and the surrounding Cllr Greaves set out the economic challenges city region. He noted that: facing his district and how they relate to wider issues in the city region. He noted that: • Both of the words that constitute ‘inclusive growth’ are vital and should be mutually • Within Bassetlaw there is a good level of inward reinforcing: there is little point having growth investment but questions about the inclusivity without inclusivity or ‘moralistic’ inclusion of this: there is some disconnect between the without growth. wider community and particular businesses. • In relation to this, we have to see economic and More extreme examples of this are present in social policies as indivisible. Derbyshire, with Sports Direct. • The dominant economic narrative in the past • Bassetlaw has set out a positive direction has been that any growth is good growth in moving on from industrial decline, but and that the proceeds will trickle down. The as with other parts of the city region and consequences of this have been that while the beyond, there are significant challenges with economy might be growing, many people do moving the community forward with positive not feel a part of it – because it is not widely interventions that address a legacy (industrial shared. decline and the multigenerational blight that • We must promote the opportunity for people followed) that has never been dealt with. to participate in the economy inclusively. • As an example of these legacy issues, Cllr This is about not just ensuring that growth Greaves mentioned the relatively high levels of

1 educational attainment amongst young people in Bassetlaw, but how this potential has been • Thus, policies for implementing inclusive constrained by a lack of aspiration stemming growth are unlikely to succeed unless we from their parents’ long-term disengagement understand that core issue and recognise that from the labour market. no single place or sector is going to achieve • As an example of a positive intervention, Cllr the scale of growth or inclusivity necessary to Greaves mentioned the development of a deliver the ambitions we have as a region. distribution facility that was built on an old • It is vital to recognise the public sector pit site. The facility has higher employment contribution to the agenda around economic now than when it was a pit with peak and inclusive growth. The key role for public production of coal – and with very good services is to create the conditions and terms and conditions. Originally the facility opportunities for inclusive growth – not to relied on Eastern European migrants but now believe that we hold the levers of growth the majority of workers are from the local ourselves. population. It has also been an example of • Sheffield City Region faces very significant positive engagement between the trade union challenges – it is dealing with very low levels of and the business. Cllr Greaves mentioned other productivity, a low wage economy, low levels of examples, including how the district has been enterprise comparative to the size of the region, working with startup incubators for small and and being in the unenviable position of being medium-sized enterprises (SMEs) in two major the only region during the boom years where towns, to develop their business base. the private sector actually declined. • In terms of the city region agenda, Bassetlaw • We need to understand why the city region has engaged strongly with the Combined has experienced such issues, what policy Authority and is seeking full membership. failings exacerbated it, and what lessons can Connectivity between different parts of a city be learned if we are to avoid the same trap region is essential – and we should explore and, importantly, how the Local Enterprise how skills can be developed and opportunities Partnership, Combined Authority and for inclusive growth can be opened up. City individual local authorities can deliver growth regions and local areas should be at the that is inclusive to the population of the city forefront of this. Someone pulling a lever in No region. 10 will not make inclusive growth happen – it is local leaders and local people that will do that. David Brown, Chief Executive of Transport for the North – opening statement

The north has a big David Brown, who has had a career in transport economic geography across the public and private sectors, discussed the importance of transport to the inclusive growth that includes sixteen million agenda. He noted that: people. But the GVA gap • Transport for the North (TfN) is the first sub- between the north and the national transport body covering the whole of ‘‘ the North of England, which will produce a average for England is £37bn strategic transport plan that supports economic per year. growth. It will provide an investment plan for infrastructure and services at a northern level that supports economic growth. It is thus most Dr David Smith, Interim Executive Director at relevant to the ‘growth’ side of the Commission. Sheffield City Region – opening statement • David mentioned the TfN commissioning the Independent Economic Review (IER) of the Dr Smith, who was previously Chief Executive north, which identifies the strengths and the at Sunderland City Council and also has an capability areas that would provide the north, academic background, examined inclusive growth if it was better connected, to achieve a national from a city region perspective. He argued that: and international competitive advantage – which would have economic benefits and jobs • We need to recognise that inclusive growth growth. has to begin with understanding the • The TfN is putting together a strategic interdependencies of the region – no single transport plan that connects places in the north part of the region is capable on its own of – both in terms of people and markets – to areas achieving this in isolation because it will not of opportunity in the north. For example, this have the scale or density to grow the whole would allow Sheffield to be better connected region in an inclusive way. to places of opportunity across the north of England.

2 courses were developed to connect local people • The north has a big economic geography that to the new businesses in the district. includes sixteen million people. But the GVA • A number of examples were also provided of gap between the north and the average for local area leadership by Sheffield City Council England is £37bn per year. We need to pursue in stimulating business collaboration and a long term plan that enables us to invest in creating stronger links between schools and transport infrastructure in the north, against local businesses. For example, there were a backdrop of significant underinvestment initially some concerns from local advanced in transport infrastructure in northern manufactures about Rolls Royce establishing England compared to the rest of the country. itself in the city region and impacting There is a significant backlog of connectivity recruitment and growth of local companies. requirements. To allay these concerns Sheffield City Council • We know that transport and connectivity is worked with the University of Sheffield to only one part of the economic growth story – it build a state-of-the-art manufacturing college is also about education, skills, innovation and providing 600 high-end apprenticeships, enterprise – so our work is only one part of that which was co-located with Rolls Royce but not picture. exclusive to Rolls Royce. This helped create a larger workforce supply that also benefited Overview of key points during evidence local advanced manufacturers. The council is discussion also helping to create stronger links between schools and businesses – many schools in City region leadership and collaboration was Sheffield now have businesses helping to identified as a key opportunity by participants. develop their curriculum, with a stronger The city region has put structures in place that emphasis on some of the ‘softer’ skills (such as enable it to have visibility as a city region. These application and grit) that support employment include: readiness.

• A Sheffield City Region (SCR) Growth Hub for effective and coordinated business support, One of the central linked to the growth needs of SCR. benefits of devolution is • The Sheffield City Region Investment Fund (SCRIF) which is bringing together resources that city regions receive un- from different funding streams to maximise ringfenced funds so that they the economic impact of investments, and to invest in areas where banks won’t go. have the flexibility to develop SCRIF is currently focused on two key areas: ‘‘ their own approaches that infrastructure investment (typically transport) and business investment (typically loan based). better meet local need. Proposals for SCRIF investment are evaluated for their GVA impact. An importance piece of Participants discussed the potential for devolution learning is that some schemes (such as housing to rewire services and governance structures, schemes) score low for their GVA impact, so funding and investment, and how this might there is some need for adaptation particularly unlock opportunities for more and better growth. from an inclusive growth perspective. • City region leadership can help ensure that the • One of the central benefits of devolution is that north is more strategic in its investments and city regions receive un-ringfenced funds so that growth plans. For example, logistics is a key they have the flexibility to develop their own strength of the north but has tended to lack the approaches that better meet local need. It was strategic view and connectivity to maximise its argued that devolution simply means being growth potential. provided with the tools to do the job – without • As well as city region leadership, local area this, it would be a vanity project. leadership was also identified as important for • As important as it is to obtain new powers inclusive growth. For example, Bassetlaw as a and flexibilities, it is crucial to recognise that district maintains a very strong relationship there are many things local authorities are able with the local FE college, which has enabled to do themselves without the need for new it to work with them to develop courses that tools – so city region leadership is also about ensure local people benefit from growth understanding the tools that are available to opportunities. As an example, when developers achieve outcomes. and firms for high-end manufacturing set up • It is vital that city regions are clear about what in the district, the council working with the the offer is they are making; and that it is college was able to ensure that bespoke training

3 persuasive and well evidenced. For inclusive Mayoral model will also help provide a focal growth this might mean being clear about point for this. what outcomes you would like to achieve and • Better integrating social and economic policies what needs to be done to enable this. shouldn’t necessarily be about ensuring that inclusion, for example, runs through all economic activity: there will be some that Connectivity should are focused primarily on growth. The key extend beyond challenge, rather, is to ensure there is strong alignment between growth and inclusion infrastructure and can also efforts. include reconnecting social Participants discussed the challenges and and economic policy, so that opportunities around supporting those that ‘‘ are furthest from the labour market or locked traditionally peripheral places into low-end employment. A policy disconnect are connected to growth between central and local government was identified.

Participants considered economic growth that • Supporting cohorts of people least connected promoted ‘quality GVA’ and how connectivity to growth and furthest from labour market might help bring this about – including through opportunities is incredibly complex and integrating social and economic policy. requires joining up different sources of support. While a lot of places are working more • High GVA growth sectors, such as advanced effectively with the Department for Work and manufacturing and health research, could be Pensions (DWP), it is often very difficult to brought more closely together across the north engage with it (see below). – and this scale and connectivity would make • The hardest cohort to make progress with are them globally relevant. One of the challenges those that are experiencing absolute crime and is that these sectors provide significant GVA poverty – and they have also been impacted uplift but not necessarily notable jobs growth. most adversely by welfare changes. The national It is important therefore to bring them together Work Programme has performed poorly for alongside investment in other sectors such as these people, particularly those that have financial and professional services which are significant mental health challenges. Sheffield more job-rich. Connectivity across the north City Region is currently undertaking a pilot in these areas has been depressed and there alongside DWP and the Department of Health are opportunities to address this through the to better support this cohort of people. It was connectivity plan. emphasised that the majority of people do • Connectivity should extend beyond want to work (contrary to popular assumptions infrastructure and can also include about the long-term unemployed) but that they reconnecting social and economic policy, are often held back by the enduring scarring so that traditionally peripheral places are effects of being disengaged from the labour connected to growth opportunities. Transport market for a long time. connectivity was identified as a ‘quick win’ • The answer to addressing the complex to begin to realise the economic potential of challenges many of the most disengaged face the north, but that it was only one part of the is to take a long-term view – to start with early solution. Inclusive growth requires addressing life support and recognise that turning around the more complex challenges which can help the lives of such individuals and communities realise significant benefits – for example raising is not a three or five year programme, but a education and skills levels particularly in places twenty year programme. with high levels of deprivation and weak labour • Despite the importance of taking a long- markets. term view, there is a disconnect in policy • Place-based economic leadership was identified terms between central government and city as a central enabler to connecting social and regions. The DWP and the Treasury regard economic policies and investments. In this more expensive and long-term approaches respect, the nature of leadership matters as well for supporting those furthest from the labour as defining the economic purpose of a place. market as a huge financial risk. However, city This can help galvanise the social and economic leaders would argue that failing to support case for investment – underpinned by a strong these people and places is the primary reason evidence base and committed leadership. many cities are so suboptimal in productivity Part of this is also about defining the role of terms and in terms of labour market city regions within the wider geography. The engagement.

4 employment – and that in-work progression is • While there has been much interest in promoted to enable people to be able to move giving local places greater influence in the into higher skilled, higher wage employment. commissioning of welfare to work schemes, • Many local authorities (including within SCR) there is a sense that even in emerging ‘co- already promote the ‘real living wage’ locally, commissioning’ arrangements local authorities including through their supply chains, and the are little more than consultees, and the impact on businesses is often not as great as the DWP retains effective control – it is not joint perceived fear of the impact. commissioning. For city leaders the ambition • Local and regional economies need to be more is for genuine joint commissioning, but this is inclusively ‘wired’ so that progression is built prevented as a result of the policy disconnect within them. Currently, far too many people mentioned above. are moving around horizontally, ‘trapped’ • Because supporting this cohort of people is in low-wage sectors. It is important to create significantly more expensive and resource ‘vertical wiring’ so that people are able to intensive, it is difficult to make the case to progress – and this can only be done at the level central government. While local leaders of place. Job quality is also a key imperative. As have evidence that points to the fiscal and one participant argued, “you would never turn economic case for such investments, the a call centre job away, but you wouldn’t build government tends to look back to the history your economic strategy around it.” of interventions that have attempted to tackle such issues and not succeeded, or succeeded but at a very high per capita cost (such as Panel Session Two Intermediate Labour Market approaches). A key difference between the past and the post-2010 context is that now the benefits that Hugh Facey MBE, Chairman of Gripple – are accrued from public interventions should opening statement include cash savings, whereas in the past key success measures were non-cashable (for Hugh Facey discussed some of the challenges example improvements in employment rates, of funding, how local economies can best be neighbourhood satisfaction). supported and the contribution that employee- owned companies (such as Gripple) can make. He There was discussion about the resourcing argued that: needs to help devolution achieve its potential – and whether in a climate of austerity there are • National politicians are not able to do enough necessary trade-offs: for example greater local to support local economies, and that more control and flexibility over funding (less strings financial resources should come directly to attached) but with a smaller pot of relative local authorities. funding. • Hugh underscored the importance of business investment by highlighting that Gripple, • Participants were sceptical about the scale which employs 650 people and with 84 percent of outcomes that could be achieved without of its products/services are exports, invests sufficient resourcing. between four and five percent in ‘ideas and • One participant argued for major public innovation’, which is a key enabler of growth investment (‘a Marshall Plan’) to drive growth for the company. The problem is that many and reverse the fortunes of places that had businesses don’t invest in this way: the average been adversely impacted by the legacy of investment in Research and Development economic decline and restructuring (including (R&D) is less than one percent. One example many post-industrial towns and cities), many of the innovative approach Gripple employs is of whom had experienced several economic its target of having 25 percent of its sales come shocks through the 70s, 80s and 90s – before the from products that the company did not offer current recession hit. four years ago. • Capital investment allowance should be 100 Participants discussed the importance of percent – but it was reduced to 18 percent (from addressing low-wage and insecure employment, 20 percent) in the last budget. This reflects the which has become a structural feature of the lack of understanding from central government SCR’s economy. about investment, particularly to support manufacturing (which requires investment in • The national living wage (as well as the ‘real plant, machinery and buildings). living wage’) will positively affect Sheffield’s • Employee-owned companies (EOC) can be a workforce, but it is important the living wage key part of more inclusive growth. Gripple is doesn’t simply become the ‘standard’ rate for an EOC where all employees are shareholders

5 in the business. This helps create a climate in to move back into London due to budgetary which everyone involved in the business feels pressures – including the civil servants that are part of it and its success, and everyone has a working on the northern powerhouse project. sense of commitment and shared endeavour. • The public sector and public investment should EOCs are an important part of the economy be a key role in supporting and leading growth, and city regions should be encouraging their but this is being directly hampered by a big development and growth. withdrawal of state funding for this purpose. Many places are doing great stuff on an ever Martin Mayer, Secretary Sheffield at Trade decreasing budget. Union Council– opening statement

Martin identified the big structural economic and The above issues are labour market issues in the Sheffield City Region, compounded by the the impact of public expenditure cuts and the importance of community outreach and how withdrawal of the state - the trade unions are supporting this. He noted: welfare and service cuts are

• Part of the explanation behind Brexit is not just affecting those who the disillusionment felt by working class ‘‘ are unemployed, but also communities. These communities in Sheffield City Region have been particularly affected people that are working but on – even more so than other cities in the north. low incomes. Sheffield has the lowest level of incomes and more people on the national minimum wage than anywhere else in the country. It stands to gain most from the national living wage. • One of the most notable recent stimuluses However, the issues run deeper. in the trade union movement is the creation • There is a ‘broken economy’ in Sheffield – of Unite community branches – which aim including housing estates that are in dire straits to engage not just workers, but to reach out with high levels of poverty and real issues to those people and communities that are around job quality. While the unemployment not in work – such as unemployed students rate may be low in relative terms, many jobs are and retired people. This has helped trade low paid or poor quality – so there are some unions to create stronger local links with their people that are having to take on two or three communities and to develop strategies to give jobs. In addition, there are real issues with zero these communities a voice. One of the projects hour contracts and ‘bogus’ self-employment. that has resulted from this is ‘Sheffield needs a • Parts of Sheffield City Region are also pay rise’ – which aims to reach out to high street particularly vulnerable to job losses related shops (none of which are unionised or signed to manufacturing decline including the up to the real living wage). There has also been steel industry. There is a significant degree the establishment of ‘solidarity centres’, which of uncertainty over thousands of steel jobs bring together trade unions and organisations in Rotherham and Stockbridge. There have struggling to deal with poverty and issues such also been plant closures in places such as as housing. All of this is aiming to link up the Tinsley affecting hundreds of jobs. There is an way in which we give a voice to working class important question of how these sorts of jobs communities. are replaced. • The deregulation of public transport in • The above issues are compounded by the 1986 has had a very detrimental impact on withdrawal of the state including in providing transport quality as well as the access that poor social security – and the welfare and service communities have – the services are now less cuts are not just affecting those who are regular, far less affordable, and significantly less unemployed, but also people that are working integrated than in the 70s and 80s. Many of the but on low incomes. The ‘bedroom tax’ has communities that benefited from the latter are caused hardship in local council estates, now isolated by the public transport system. and there are growing challenges associated Having an affordable and well-run public with the withdrawal of the social housing transport system is an important part of the market and significant cut backs in council solution to sustainable and inclusive growth. housing provision. In recent campaigns the TUC has asked if we are pursuing a ‘northern powerhouse’ or a ‘northern poorhouse’. Indeed, the Department for Business, Innovation and Skills (BIS) office in Sheffield itself is likely

6 from training – and how her employees are Julie Kenny CBE DL, Commissioner at encouraged to learn and engage in community- Rotherham MBC – opening statement based activities, such as becoming governors or trustees. Julie has served in a number of prominent • Some companies are nervous about investing public service and business positions – she has in training staff that may end up leaving – run businesses, chaired a Regional Development but Julie mentioned that this can be worked Agency (before they were closed) and Business around. For example, her business creates Link. She is also currently the UK Commissioner agreements with employees that are trained, for Employment and Skills, sits on the local LEP where they pledge to stay with the company Board, overseeing access to finance for the city for at least two years after their training. Julie region, and involved is in the Learning Skills emphasised that training should be regarded as Council. an investment for the future. • There needs to be better connectivity • Julie emphasised the importance of business between businesses and cultures within investment, joining up public services to places. Julie argued that there could be more support those most in need and ensuring the commercialisation from universities with government has a strong role to play (including greater involvement from businesses. funding) in supporting local economies. She • Developing further incentives for businesses noted: to invest in training to raise skill levels can also • R&D is key – Julie’s business invests 8 percent be explored – for example potential tax fiscal in research and development and that is what benefits, which may also play a positive role in has kept the business ahead. The business is influencing business behaviour and priorities. bringing manufacturing from China to the UK. Julie mentioned that there are some problems • A big part of the focus is on creating high with the current approach to apprenticeships – value jobs and seeking to keep employment in in terms of challenges such as take-up, and how Rotherham the system is working. • In order to reach the poorest people and improve their social and economic outcomes Overview of key points during evidence it is vital to join up public services, to bring discussion together the various organisations involved in addressing poverty and supporting families Participants discussed whether sub-regional (such as schools, probation, health officials, devolution is creating new openings for councils etc.) and creating a ‘one local stimulating local growth and inclusion. While government’ for local areas. Currently there is there was strong support for the principles too much fragmentation between departments. underpinning devolution, there was scepticism It is important to pull these resources together about current approaches, particularly in terms – to think about how public services can of funding levels, capacity and skill sets, and the provide a single ‘front door’ for families, and to actual degree of local autonomy. connect them to the support they need. • Since 2010 there has been a significant • One participant argued that the regional reduction in resources directed towards local approaches under Regional Development growth. Julie mentioned the example of Agencies (RDAs) worked well, and that LEPs advanced manufacturing and logistics, which lack the same level of political and financial previously had substantial resources around clout to make an economic difference. In economic regeneration – and that’s all gone. addition, local authorities (and Combined Similarly, speaking from the perspective of Authorities) lack the requisite skill sets and being inside a council, there is no money there it is important to raise these skills, which to lead any sort of strategic transformation. Combined Authorities are beginning to do. Under the current constraints, we are not going • There is some concern that devolution risks to get the resources that the RDAs got – we adding further layers of bureaucracy. There are have lost half the budget. There is therefore a also issues around the politics and governance big question about whether councils are able of sub-regions, including parochialism over to develop the infrastructure necessary to make funding. a real difference. Nonetheless, it is important that the devolution money that comes through There was a strong emphasis on the scale provides local places with flexibility. of reductions in funding for local growth • Developing cultures of learning through programmes and how this is constraining the effective leadership and management can help potential of devolution. However, there was also a support better quality growth. Julie reflected recognition that current approaches are providing on her personal experience of benefiting far greater flexibility to meet local needs.

7 Public investment into local economies and assets and what they can do, rather than simply communities (including through public services) their needs. was seen as vital.

• Business participants emphasised that public Business participants investment into local growth (including emphasised that public through recent initiatives such as the Regional Growth Fund) is vital for business success investment into local growth is – and helped lay the foundations for the vital for business success growth of their own businesses as well as local employment (“we are a successful business because of the support that we got”). However, ‘‘Trade unions were discussed as key institutions for funding levels have fallen dramatically since promoting inclusive growth. 2010 – for example, LEPs have a third of the funding that RDAs held. Participants • Trade unions should have an important role emphasised that this has impacted the growth to play in driving up wages and job quality. potential of their businesses. It has also made it Although union membership has now declined difficult to achieve private sector growth in city significantly, they have traditionally served to regions such as Sheffield that have historically regulate the labour market, helped to ensure relied on the public sector. As one participant the distribution of growth is more evenly put it “I’m a great believer in devolution, but shared and helped to secure good wages for money needs to come in.” workers. Unions have often been excluded from • One participant however argued that while constructive conversations with business, but RDAs and previous initiatives may have driven they have a significant contribution to make in growth, they were not particularly successful at promoting sustainable and inclusive growth. driving economic inclusion. Many of the wards • The low-wage sectors of the economy present a that were the most deprived in previous periods challenge to unions because they tend to have are also amongst the most deprived today. high staff turnover rates, so it is difficult to help Moreover, a more sub-regional, local authority employees get organised. However, the TUC is based system is far more effective than the undertaking a lot of work examining how it can RDAs in understanding the needs and nuances support people in areas of the economy that are of local economies and developing incentives more difficult for organising labour. that work for local people and businesses. • Employers are often anxious about the role One clear example mentioned was how SMEs, of trade unions but they can benefit from which account for a very large proportion of establishing constructive relationships with SCR’s business base, were ineligible for national unions. For example, helping to achieve growth funds but are now effectively engaged reasonable levels of pay and decent terms and as part of local and sub-regional initiatives. conditions can significantly reduce the costs • Between 1999 and 2009 Sheffield increased associated with high staff turnover, as well as productivity by 60 per cent more than other increase skills levels for workers. core cities, which raises important questions: what helped that happen; what went wrong after that period and why didn’t it become embedded and shared over a longer period Panel Session 3 of time? In answering this, one participant provided three arguments. First, the centralist economic model has gone as far as it can take Paul Corcoran, Chief Executive of Sheffield us. Second, local growth needs to connect College – opening statement more to what we have traditionally seen as an isolated set of social policies (such as early Paul underscored the importance of Further years). So our view about what public services Education (FE) to more inclusive forms of growth. are about needs to shift from what we currently He noted that: have when we talk about spending and cost of finances to one which is about investment • FE is vital to the inclusivity agenda. Sheffield – where the emphasis is on “invest to save over College has 18,000 students and many of the the long term” as an alternative to a deficit college’s students come from challenging model. Thirdly, it is important to address the backgrounds – the ratio of students from relationship between citizens in a locality and deprived wards compared to advantaged wards the state. This means reconfiguring public has increased from 1.4 to 1.7, showing that more sector/local government services, cultures and disadvantaged students are coming into further behaviours so that they see citizens for their education than ever before.

8 for those in the bottom half of the population. • A key challenge for the college is to ‘transform Research has suggested that if you are a young lives through learning’ as part of a social person in the top 50 percent of the attainment inclusivity agenda. For example, ‘We will range your progress and pathway through contribute to social cohesion’ is one of the school and beyond is clear. However, if you are college’s strategic aims. This is based on the a young person below 50 percent the route to fact that the college believes economic growth work is far more cumbersome and complicated, needs to be inclusive and further education is with a lack of clarity about qualifications one of the most important ways to help local and routes into quality apprenticeships. people develop the higher skills needed to fill Unfortunately, the system is more difficult local jobs. This means there will be less need to to navigate for the half of the population for bring skills in from outside the city. whom it is most important to navigate. • The college also seeks to promote regional economic growth. One of the key strengths Anna Round, Senior Research Fellow at IPPR of the college is the reach that it has across – opening statement Sheffield city meaning it provides education and training for all members of society, Anna Round noted the research IPPR has including low-income, vulnerable and been conducting on devolution and its growth marginalised groups. potential for different parts of the UK. She underscored the importance of early years, strong Professor Chris Husbands, Vice-Chancellor public investment and the potential of joining up of Sheffield Hallam University – opening services through new opportunities provided by statement devolution. She argued that:

Professor Husbands reinforced the points made • The skills agenda is absolutely central to the by Paul Corcoran on the reach of Sheffield’s economic challenges facing the North. further and higher education (HE) institutions. • One key finding of the IPPR ‘State of the North’ He noted: report was the notable gap in attainment in early years between the North and the South • Hallam University has 33,000 students. 20 of England. In addition, the North has larger percent of the students are from the local area attainment gaps between children from with 40 percent having family incomes of less different backgrounds, as well as their school than £25,000. readiness. • The university is reaching deep into the city • In relation to the above, focusing on the early and the city region and plays an important years should be regarded as an investment role in regional growth. Professor Husbands and a way of putting resources in, rather than cited evidence from international research that as a ‘drag’ of expenditure. The development in order to achieve high levels of growth it is through school suggests that education should important to create high skill levels. But on be seen as a process and a series of inter-related the basis of some international comparisons, stages rather than simply as a set of outcomes. the UK’s participation rate in HE is relatively For example, there is a strong relationship low, at 35 percent; compared to, for example, 83 between attainment in primary school and percent participation in South Korea. attainment in secondary school. Opportunities • One of the key issues for the region is that levels around devolution and education can be used of attainment coming out of the school system to pursue locally responsive, flexible skill mixes are far too low. By systematically raising these which make labour markets more attractive to levels of attainment it is possible to better grow invest in. the economy; to increase the attractiveness of • There is a strong link between economic the region to investment; to promote better in- growth and social policy – and life-course work progression; and ultimately, over the long- approaches are key to this. Developing skills run, to systematically strengthen the regional can help fill labour markets but also builds economies. careers for individuals and career pathways • Hallam University plays an important role in for communities. Skills support can be a supporting regional economic development. As mechanism not only to get people into jobs but an example, one of the hallmarks of the courses also engage them in lifelong learning. at the university is ‘applied provision’ – more • An important part of the skills system has to be than 19,000 students undertake placements as about improving labour market access for older part of their programme. workers, who have tended to struggle if they • In terms of the broader skills and employment have experienced long-term unemployment. system, there is a great deal of work to be done This can include reskilling opportunities in creating better and clearer routes to work and promoting longer term access to labour markets.

9 market. The Resolution Foundation is carrying • Inclusive growth is not just an agenda for out research on full employment and has found big cities, but also smaller cities. Big cities are that the disabled employment rate in South important but they can’t be the only engines of Yorkshire is 10 percent less than in the South growth. East. • It is important to recognise some of the key • There are concerns that the profile of income challenges with respects to devolution. In growth is very much skewed towards the top addition to the major challenge of limited end (or higher earners) and less so towards the fiscal resources, there is also a big challenge bottom. Brexit may further affect this. around addressing some of the ‘disconnects’ • There are a number of areas important to that can hold back local economic growth – for inclusive growth and living standards that city example between businesses and policymakers regions will not have control over (as it will stay or institutions; and for ordinary citizens under the preserve of central government) – that feel disconnected from the democratic including policies such as universal credit, and process and local economies. One of the key recent changes to tax and national insurance opportunities provided by the devolution thresholds. While city regions may not have deals is the possibility of developing new formal authority over these areas, mayors as structures and being able to deploy mayoral high-profile leaders can nevertheless play a key power to promote the joining up of functions role in bringing them to the spotlight and show and services (for example transport and local how change can be made. economic development). Overview of key points during evidence discussion In addition to the major challenge of limited fiscal Participants discussed the impact that Brexit may have, particularly on the education and skills resources, there is also a big system which draws significantly on European challenge around addressing funds.

some of the ‘disconnects’ that • Sheffield Hallam University alone has 5,000 ‘‘ international students, and this number can hold back local economic excludes EU nationals. A key policy question at growth the moment is whether international students should be counted in immigration numbers. One of the bigger dangers from Brexit is that it Stephen Clarke, Research and Policy Analyst, will make the UK look less attractive – not only the Resolution Foundation – opening to investors but also to international students, statement who make an important contribution to local economies, add to cultural diversity and help Stephen identified some of the key challenges create connections between UK students and facing low to middle income groups as they seek the wider world. to benefit from growth. He noted that: • UK universities gain significantly from European Union research funds (it is a net • The Resolution Foundation is currently beneficiary). It is not only the money that undertaking research examining living is important, but also that the UK is able to standards across cities, including Sheffield. connect its higher education institutions to • The challenges across devolved regions are very a European network of universities with very similar – and one of the key features of this high levels of collaboration. For example, has been the big squeeze in progression and Sheffield Hallam University has a very earnings. strong cyber security network that works • The national living wage will place a lot of collaboratively with several other universities people on the ‘wage floor’ – in Sheffield 28 to 30 across Europe. Leaving the EU will have a percent of workers will be affected. But the real financial impact but it may also affect these challenge is not simply getting people onto the collaborative networks. national living wage but supporting people to • In terms of further education, there will be progress beyond that. pressure on programmes that support those • Another big issue is that while we do have furthest from the labour market, such as the low official unemployment, it will be a employability programmes financed by the significant challenge reaching the target of ‘full European Social Fund (ESF). These courses employment’ by 2020 as many people in the provide English and Maths teaching for those SCR are not very well connected to the labour adults who struggle with basic numeracy and

10 language skills, in order to help them access conditions to ensure they are allocated to the employment market. It is these types of engaging disadvantaged socio-economic programmes that will be in immediate danger, groups. and funding companies may well pull back • Investment is needed to build skills capacity because of the uncertainty. Moreover, courses and capability at levels 3 to 5 in Technology, supporting those furthest from the labour Engineering and Manufacturing. This is market tend to require the most intensive forms important even if there is a current lack of of support, and thus they may be particularly demand for jobs requiring those skills in the vulnerable to funding uncertainty. This will local economy. Even if the jobs are not available directly impact how well we are able to meet just now in Sheffield this would help overcome specific inclusive growth challenges in the city one of the barriers to new employers investing region. For example, Sheffield has a growing in the region. Even without investment, people Roma community and equipping them with from the city would have the opportunity to basic English language skills is vital for social commute to jobs outside the city, which also cohesion and inclusion. brings money back in to the city. • Participants discussed the ostensibly It was argued that the skills and employment confusing nature of government reforms. system tends to be difficult to navigate for those Local authorities and city regions are being that need it in the most. Getting the incentives empowered on the one hand through right and scaling up successful initiatives is devolution (with an important skills and important. Different central government employment remit), but bypassed by other, reforms are also creating a confusing terrain, centralising reforms such as the academies with devolution providing localities with greater programme. Schools are often described as the influence over parts of the system on the one ‘red lines’ that won’t be crossed as part of the hand, but bypassing them in other aspects (such devolution process. However, one participant as schools). reflected that an important piece of learning from the devolution process is that ‘red lines’ • Sheffield Hallam University has undertaken can often be temporary. Secondary schools research on routes to work (for Labour’s Skills and 16-19 education funding may currently be Taskforce). It found that if you are a young red lines – but it is possible this may change person in the top 50 percent of the attainment in the future. Devolution may, for example, range your progress through school and open up opportunities to develop alternative beyond has clear and navigable pathways. If propositions, such as a duty placed upon all you are a young person below the 50 percent schools to collaborate in the design of city attainment range, however, the routes through region skills strategies. Indeed, some local education and into work are cumbersome with authorities have also explored the option of a fundamental lack of clarity – whether it’s becoming academy chains. Such approaches about vocational qualifications, GCSEs, or the could help address some of the current routes into apprenticeships. In other words, the atomisation of the schools system. system is most difficult to navigate for half of • It was argued that despite the challenges and the population for whom it is most important weaknesses of the overall system, there are to engage with and benefit from. plenty of ‘micro-examples’ of initiatives that • As well as targeting higher level skills have been successful but that haven’t been development to match sector growth forecasts, scaled up. In this context, the key question we should make sure that the education may not necessarily be what the solutions are system is providing all members of society to addressing skills and inclusion challenges, with the basic English language and maths but why those small-scale initiatives that seem skills that can get people on the employment to work haven’t been able to scale up. This is ladder and support their integration into partly connected to another key issue – the the community. This investment clearly has need to develop measures of success that societal benefits, not just economic. Sheffield drive the right sort of behaviour amongst College provides courses for English Speakers institutions, employers and individuals. For of Other Languages (ESOL) which play an example, in terms of challenges for University important role in breaking down barriers in the Technical Colleges (UTCs), a key issue is that community, as well as helping people get into secondary schools are reluctant to release 14 employment. year olds because of the financial incentives • It might be worth considering ring-fencing around student numbers. One participant some education and training skills budgets cited an example of a training institute that from the Devolution Deal and LEP budget has sought to promote the right incentives so that they are not just aligned to target by changing its measures of success – shifting economic growth sectors, but include from numbers (outputs), such as starts and

11 completions, and into measuring ‘fulfilment’ out. This doesn’t just mean expanding SHU’s (outcomes), such as young people completing campus footprint, but also working harder courses and then finding jobs. to stitch together learning and progression • It is also important to consider how the routes across the city region, and raise levels of investments that go into skills and employment aspiration across communities. support also impact or can be integrated with • It was recognised that universities and colleges other parts of the public sector. This may can sometimes ignore their place context – include, for example, understanding how their cities and institutions. They may thrive in effective support and provision can lead to terms of institutional success, but this approach reductions in the costs of other services such means they won’t be generating the sort of as health and out-of-work benefits. There is growth and access that is required to serve the thus a substantial investment case for effective, communities in the city region. For example, joined up skills and employment provision that some colleges have pursued growth strategies extends beyond local growth impacts. where they step outside of their regional boundaries – but Sheffield College’s strategy is regionally rooted. • SCR is relatively unique amongst English city It is important to consider regions in that the further you move beyond the core city, the lower the skills base will be. how the investments that This makes the anchorage role of colleges and go into skills and employment universities even more important – reaching out to more peripheral, lower-skilled parts support also impact or can be of the city region. Thus, the campus outpost integrated with other parts of in Doncaster is not just an example of good ‘‘ practice, but also something that is more the public sector. important in a place like SCR than, say, Manchester. • The local economic impact goes far beyond Participants provided evidence about how higher student spend (the lens through which it has and further education institutions are growing traditionally been seen). There are several their role as anchor institutions – leveraging their examples of University of Sheffield, SHU and capacity as employers, educators (of thousands of Sheffield College using their Research and students), investors and spenders to benefit their Development (R&D) balance sheet as well place. as their financial balance sheet to promote local growth and employment. This includes • Sheffield College has a substantive the University of Sheffield’s Advanced apprenticeship programme, which is a means of Manufacturing Research Centre in the bringing in people from different backgrounds Advanced Manufacturing Park; SHU’s role to work in the college. In addition, the college in the Olympic Legacy Park; and SHU and has strong partnerships with other large Sheffield College’s partnership with major local institutions, who it works with to improve the employers in setting up the university technical skills and support they provide to students, college (UTC) on the Don Valley Stadium in especially those at the lower end of the skills Sheffield. spectrum. A key part of this is developing • A key part of this is about encouraging fourteen clear curriculums and pathways - which allow year olds to consider quality vocational students to progress from level 1 qualifications pathways, and build employer engagement into through to level 5, for example working as the process. This helps to address the challenge healthcare assistants. discussed earlier – where those children that • Sheffield Hallam University (SHU) also plays could benefit most from clear and transparent an important role as an anchor institution, pathways have to contend with a system and is seeking to develop this further. As a that doesn’t work for them. Similarly such major employer with 30,000 students and a approaches can begin to address some of the dense network of partnerships with a range skills shortages that impact local economies. of organisations and businesses, SHU makes a For example, a lack of technical, level 3 skills significant contribution to the local economy. presents a bottle neck to sub-regional growth, Nevertheless, a challenge is that despite affecting in particular the large SME base in these strengths the economy in SCR is still SCR. struggling. Moreover, for parts of the city region that are not as connected to the centre – such as Barnsley or Doncaster – there is a lot more the university could do in terms of reaching

12 There was further discussion about employer that skills support is dynamic and sustainable. engagement and the ways in which the As one participant mentioned, given the rate Apprenticeship Levy is altering employer of technological change in society, it is not perceptions and their understanding of the unthinkable for people to find themselves in system. This is linked to a broader shift in the role situations where the skills they have developed of apprenticeships and skills and employment in early life are not as relevant to the economy support in creating local economies that support fifteen to twenty years later. Technological disadvantaged groups and promote lifelong changes such as growing automation are having learning. particular impacts on low-skilled work, so it is vital to continue to invest in the education and • It was argued that the Apprenticeship Levy training of those most affected. Investment has increased employer interest significantly in lifelong, adult learning is critical – as well – and as employers become more aware of as supporting people to develop flexible and what apprenticeship progression routes there resilient skill sets underpinned by strong are, that could also raise awareness across a foundational skills. The latter is an important broader spectrum. Colleges and universities are piece of learning that has come out of IPPR’s spending a lot of time engaging with employers research with UTC’s in the North East. to help them better understand the mechanics • One participant argued that more actively of apprenticeships and the wider system. shaping labour markets was also important There is now a greater understanding amongst to creating successful apprenticeships – employers, for example, that apprenticeships internationally all the countries that have are not only for engineering and science, but successful systems of apprenticeships have also areas as diverse as human resources (HR), much more highly regulated labour markets accountancy and health care. than the UK. • One of the current flaws of apprenticeships is that they tend to go to people that already work inside a company. The Resolution Foundation is advocating for a certain amount of apprenticeships to be ring-fenced for people coming out of school or those that are disadvantaged. • It was argued that the challenges for apprenticeships aimed at 16-18 year olds are much greater than those for 19 and over. The opportunities for the former are more difficult to access and the Skills Funding Agency has said this is where growth will be targeted. • There is also a linked point about supporting those young people who may not have the skills or readiness to move into apprenticeships, through pre-apprenticeship support and other forms of support. In this respect, Sheffield has invested £100m into the Sheffield 100 Apprenticeships Scheme, which is working with employers to provide apprenticeship opportunities to disadvantaged young people. • With the increasing focus on apprenticeships, safeguards need to be put in place to ensure these are not used as vehicles to suppress pay of the most disadvantaged. The apprenticeships need to be high quality. The importance of using them to get older people into work, not just school leavers, also needs to be recognised and adult apprenticeship funding needs to grow accordingly. • One of the most important aspects of the Levy is that for the first time a clear link is being made between employers’ contribution to the levy and the lifelong learning requirement of the whole workforce. Lifelong learning is critical to both ensuring growth is inclusive and

13 Supported by About the RSA Inclusive Growth Commission Launched in April, 2016, the Inclusive Growth Commission is an independent, impactful inquiry designed to understand and identify practical ways to make local economies across the UK more economically inclusive and prosperous. Chaired by Stephanie Flanders, former BBC economics editor and J.P. Morgan Chief Market Strategist (UK and Europe), and building on the success of the RSA’s City Growth Commission, the Commission will seek to devise new models for place-based growth, which enable the widest range of people to participate fully in, and benefit from, the growth of their local area.

The RSA City Growth Commission demonstrated how the largest UK cities can drive prosperity through place-based investment and economic policy making, enabled through devolution and new forms of governance and finance. This economic narrative has since driven policy developments, but it has become increasingly urgent to understand how we can deepen and broaden this vision, tackling the entrenched inequalities within and between neighbourhoods that act as a drag on growth, and ensuring that the benefits of this place-based approach are more widely shared.

Find out more and get involved To find out more about the Commission and view its latest content, visit www.thersa.org/inclusivegrowthcommission or our Twitter on @incgrowth.

To find out more about how you can get involved, contact Charlotte Alldritt, Director of the Commission, at charlotte. [email protected] or Atif Shafique, Lead Researcher, at [email protected].

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