It has been a tumultuous, and potentially treacherous, time for those designing economic strategies. Core assumptions are regularly upended; existential questions about what matters most have been raised.

Metro Dynamics has been working with partners in Lancashire to develop the Lancashire Independent Economic Review, which has had to face and address these questions. We consciously eschewed a traditional approach, using standard data to make standard recommendations. From this experience we have developed four recommendations for those looking to chart a course through this decade for their places and people.

Economic strategy must place productivity in the service of prosperity

The last two years have been a powerful reminder that, as a society, we do not only value economic outcomes. Health has been paramount, with dramatic economic losses accepted in support of a greater good to limit the damage of COVID-19. The urgency of tackling the climate crisis has also become ever clearer, reminding us that undermining the ecosystems on which we depend is having an impact now and, unchecked, will have devastating consequences for our future prosperity and peace.

But tackling the major challenges undoubtedly facing our society requires an approach that works for everyone. It needs productivity growth, which can improve wages, reward innovation, and fund the public services upon which many people depend.

Economic strategy must recognise the central role of health

Analysis conducted in the review found that improving health has a big economic prize. Research by the University of Manchester shows that poor health accounts for 16.8% of Lancashire’s gap in productivity with the rest of England. Reducing the health gap with the rest of the country would generate £1.4bn additional Gross Value Added (GVA) for the economy per year and reduce demand on public services. The Heckman Equation demonstrates that there is a 7-10% per year return on investment from early intervention. In some parts of Lancashire, healthy life expectancy is as low as 46.5 years. By tackling some of the long-term health challenges which prevent the economy from being inclusive, we can ensure that everyone reaches their potential and leads a full working life, something we have explored further here.

Economic strategy must respond to the complexity of place

Lancashire is a county of contradictions. Wealthy, affluent areas sit side-by-side with areas of deprivation and poverty. The industrial revolution which did so much to shape Lancashire still defines it today. It has created both a vibrant manufacturing sector, but also the long-term challenges of deindustrialisation. Lancashire faces in multiple directions – to the rural areas of the Pennines and Cumbria in the North and East, to the major cities of Manchester and Liverpool to the South and South West. Its best connectivity runs North-South, but its most of its people live East-West in a central belt stretching from Pendle to Blackpool and the coastal economies.

Therefore, we conducted extensive research into understanding how outcomes vary by place, such as work on movement patterns (see below), a detailed manufacturing profile across Lancashire, and towns-level analysis. This revealed in more depth how place sensitive outcomes are. The chart below plots Lancashire towns based upon professional occupations and distance commuted. The arrows show examples of town pairings which are geographically very close together but highly differentiated in terms of the character of the resident workforce.

Residents in towns in Lancashire by professional occupation and proportion working more than 10km away

Economic strategy must be prepared to use less orthodox data sources

Finally, the rapid economic flux associated with Brexit and Covid-19 has begun to render traditional data sources – with longer lag-times – less useful for understanding economic performance. During the review we used mobile data to understand which areas in Lancashire had been most effected by Covid-19, with fewer people travelling to work. This revealed that Blackpool, Fylde, and Preston were most effected, whereas Pendle in fact saw work trips increase.

Changes in work travel flows: June 2019 – June 2020

We developed this analysis further, using these flows to construct economic clusters and corridors, and show the links between Lancashire and surrounding geographies. This highlighted the ways that Lancashire’s economic geography had already seen significant changes since the 2011 Census, and again since then.

If we have the data we need, it allows us to be not just clearer about what’s happening, but bolder in taking action.

Conclusion

As we move into the third year of a highly unpredictable decade, economic strategy is both harder, and more important, than ever. Those who are creating them should ensure productivity is placed in the service of prosperity, recognise how important health is for the economy, and be prepared to respond to the complexity of place using novel datasets.