It’s time to focus on creating jobs where they’re needed most

Richard Lambert, in his last major speech as CBI director-general in January, rebuked the coalition government for its lack of focus on job creation and for so far failing to articulate in big picture terms its vision of what the UK economy might become.

Lambert rightly emphasises the need to create jobs, now. Youth unemployment is pushing one million, the highest since records began in 1992. It is almost a daily occurrence to hear one local council or another announce large-scale redundancies, as Manchester, Liverpool, Hampshire and Norfolk have all done over the last few weeks. And there is as yet little evidence that leaving it to the private sector, itself under pressure, will fill the gap.

There is also a need to focus on creating jobs in those places that need them the most. Economically, some parts of the country are faring much worse than others. Over four-fifths of the jobs gap – the difference between the size of the working age population and the number of jobs – is accounted for by regions outside of London and the southeast. The north-south divide, already high, is on the increase.

In addition to creating enough jobs in the right places, we need to stimulate those economic activities and sectors which will help create prosperity while at the same time shift us towards a lower carbon and less resource intensive economy over the longer-term.

The scale of transformation required is substantial. As an example, residential housing accounts for 30% of carbon emissions and yet nine million homes had uninsulated cavity walls when assessed in 2005, with 6.3 million homes having no or minimal loft insulation.

David Cameron claims that tackling these issues is a priority for the coalition, and that the government plans to ‘invest in the industries of the future… while at the same time encouraging growth beyond the southeast to balance the economy’.

The Regional Growth Fund and the Green Investment Bank reflect some of the efforts made to date. Although welcomed, neither is likely to operate at the scale required to achieve a transformative or lasting impact.

Perhaps more worryingly, the government lacks an immediate term strategy to create new jobs to replace the million or so additional jobs that will be lost over the next couple of years. Nor do they have any coherent strategy to stimulate demand and increase entrepreneurship over the medium to longer-term. Deficit reduction, it seems, is the only economic policy in town.

So what needs to happen? My view is we need to develop and pursue an intentional economic development strategy at a national level. An industrial strategy or ‘good jobs’ plan, if you like, where a strategic state plays an active role in stimulating those industrial sectors and economic activities which will contribute to enterprise formation and job creation right now, and help shift us towards a different type of economy in the long run.

An economy which is less resource intensive, creates more satisfying work, and ensures prosperity is more equally distributed. This necessitates developing the fiscal and monetary instruments to make it happen so that investment is channeled towards, for example, resource productivity, renewable energy, clean technology, and the like.

And crucially, to match the opportunities this type of economic policy will provide with those parts of the country in greatest need of regeneration and with those communities, including young people, experiencing greatest disadvantage.

Isn’t this the vision of what the UK economy might become that our coalition government should be developing and working towards?