Hertfordshire’s overall economic position relative to other areas remains strong with high rates of economic participation, low unemployment, a comparatively well skilled workforce and a growing enterprise base. But there are still some major challenges ahead to meet the demand for skills in a tightening labour market.
A push on productivity
The Budget sets out the Government’s vision for an economy that is fit for the future and provides greater opportunities for the next generation. An economy driven by innovation that will see the UK becoming a world leader in new technologies such as Artifcial Intelligence (AI), immersive technology, driverless cars, life sciences, and FinTech. The Industrial Strategy will outline how this can be achieved and we like other LEPs are uniquely placed to develop localised strategies that build on the priorities set out in our Strategic Economic Plan. View our response to the Industrial Strategy.
Here in Hertfordshire we have seen a traditionally sluggish growth rate measured by Gross Value Added (the contribution to the economy per hour worked of each individual, producer, industry or sector). The latest statistics [Hertfordshire Economic Outlook] show a slight improvement for Hertfordshire but long term productivity remains low.
Investing in infrastructure is key to driving up productivity by improving transport connections to help people get to their place of work and delivering faster broadband speeds. We welcome the Chancellor’s commitment to investing more than £500m “in a range of initiatives from artificial intelligence, to 5G and full fibre broadband”.
Other key factors include the rise of low-paid, low-skilled jobs holding back investment in more efficient working and the big skills and education gap in key sectors such as advanced manufacturing, engineering and technology. These are key priority areas for the LEP.
The Budget is to invest an additional £406 million in maths and technical education to encourage take-up of STEM related subjects as well as further skills training.
Hertfordshire needs to plan for 100,000 new homes in the next 15 years, equivalent to a town the size of Stevenage, and create 100,000 jobs. We, together with our partners, need to help influence this delivery so it meets the needs of all our current and future residents and workforce. The Government wants homes built in high-demand areas and around transport hubs, with a commitment to build 300,000 new homes a year, an amount not achieved since 1970.
Key to this delivery is ensuring we have the workforce to build these homes. The Government is to provide £34 million to scale up innovative training models across the country, and is working with industry to finalise a Construction Sector Deal that will support innovation and skills in the sector, including £170 million of investment through the Industrial Strategy Challenge Fund. Construction skills will also be a focus for the National Retraining Scheme.
Building a growth model for Hertfordshire was the key theme of our recent Building Solutions event. Major house builders, construction firms, developers, designers and architects as well as housing associations, local and central Government departments and further education colleges came together to attempt consensus on what this might look like and the skills needed to take this forward.
Last week the National Infrastructure Commission published their report on the Cambridge-Milton Keynes-Oxford corridor. Today the Chancellor committed to building up to 1 million homes on this corridor by 2050.
Hammond says planning reform is also needed to encourage better use of land in cities and towns for housing use and has put forward a range of proposals to increase housing density in urban areas including permitted development rights (PDR) to allow commercial buildings to be demolished and replaced with homes. View local PDR comment piece here.
The county has a growing enterprise base with one of the highest start-up rates for small businesses but survival rates after one year are below the national average and it underperforms when it comes to scaling up these businesses to achieve a £3m turnover. The lack of available finance for SME investment is one factor impeding growth and we welcome the Chancellor’s package of measures to finance growth in innovative firms. Budget measures that will benefit our small businesses include a VAT threshold for small business to remain at £85,000 for two years as well as faster broadband speeds. View our Economic Outlook.
Research and development
Hertfordshire has strong sectorial assets and in Stevenage alone life sciences is particularly strong with global pharma giant GSK, Stevenage Bioscience Catalyst and the new £55m Cell and Gene Therapy Catapult Manufacturing Centre all choosing to be anchored here. We welcome the Chancellor’s commitment to a further £2.3bn for investment in research and development and specific life sciences support. Read about our East of England Science and Innovation Audit.
Other sectorial support includes:
- support for our creative and digital industries by developing pioneering immersive technology for creative content, and launching a new AI and machine-learning programme targeted at the services sector;
- £170 million for innovation to transform productivity in the construction sector;
- new support to grow the next generation of research talent and ensure that the UK is able to attract and retain the best academic leaders globally.
But the biggest single factor affecting Hertfordshire and the UK as a whole is Brexit. Will the £3bn set aside be enough to prepare for "every possible outcome?". We can only gaze into our crystal ball…