This is the speech delivered by Tony Danker today (10th Feb) at the “Building A Greater Glasgow” conference.
Britain’s Northern Superpower: Building a Greater Glasgow
CBI DIRECTOR GENERAL, GLASGOW, 10 FEBRUARY 2023
Thank you to Lord Sainsbury, Gordon Brown, and Stuart Patrick of the Glasgow Chamber of Commerce. And Susan Aitken, leader of Glasgow City Council, for joining us today.
My thanks also, of course, to Doubletree Glasgow – by Hilton – for hosting us.
It’s wonderful to be back in Glasgow, a city I know well. I only wish my Glaswegian grandparents were here to see me described as an expert on Glasgow’s economy. My grandad would have liked it. My granny would have believed it.
And I got to know it even more during COP26. It’s a great city that the CBI loves: we even based our Scotland office here on West George Street. It’s also, of course, the home turf of our President, Brian McBride.
More than that though, this is a city of huge potential that speaks powerfully to our driving purpose at the CBI: getting the UK growing again.
Inclusive growth in all regions and nations
As communities and businesses in all corners of the UK continue to feel the squeeze of a cost of living and doing business crisis, it’s an imperative.
The Chancellor and Prime Minister have restored stability following the fallout of last Autumn. But it’s only growth – real forward momentum – that will overcome the headwinds the UK faces and put pounds back in families’ pockets.
And Gordon, your report from the Commission on the UK’s Future last year was absolutely right – we can only achieve that by addressing regional inequality and sharing the potential of new industries across all parts of the country.
It aligns with the CBI’s own economic strategy for the UK, Seize the Moment.
Launched in 2021, it argues one of the big bets we must make to transform the UK’s productivity and success – is creating thriving regions and nations. That are internationally famous, for unique competitive strengths.
It’s a subject we’ve put a lot of thought, time and investment into. And today, I want to share what we’ve learned and our progress so far.
Prosperous regions have four things in common
From our work, we see four ‘vital ingredients’ to creating prosperous cities, regions and nations across the UK:
- High-value sectors
- High-value firms
- High-value skills
- And higher business investment
Wherever you find high-value sectors you’ll almost always have better economic outcomes for people. They bring added value into a place and spawn higher wages in turn. But in far too many places the UK feels like a branch-line economy, where the most productive parts – the HQs – are in London and the back office is elsewhere. What we need instead is a multi-hub economy. With high-growth sectors everywhere.
Then, high-value firms can transform a region or nation’s economy. This could be an overseas investor that commits to the UK, or a ‘relocation’ that plants a new seed in a different city. Or a local start-up that goes global. I would share one personal observation: you need a big beast or two in a place to really give it lift.
High-value skills matter too. They’re a key foundation for prosperity, because when skills rise, so does economic growth. And with a highly educated workforce, Scotland can get a head-start here.
And then there’s business investment. It’s been too low for too long. Everywhere.
When businesses invest in a region – in R&D, in technology and in talent – it helps raise the region’s profile. It drives prosperity and encourages more investment. More firms follow, spending to attract more talent and also nurture local skills. And so on it goes…
A clusters approach
Because when you put those four ‘ingredients’ together, in the same place, you’ll create a cluster. A concentration of like-minded firms, suppliers and institutions. A genuine ecosystem .
As these organisations collaborate and compete, they attract adjacent industries, have spill-over effects, and make a city or region a place that people want to be a part of, a place that is greater than the sum of its parts.
That’s the CBI’s ambition for the UK’s regions and nations. And it’s something we’ve been exploring as an organisation for nearly a year now.
We want to understand what makes a city or region not just nationally, but globally competitive.
So last year, we launched a project to help answer these questions. It’s led by firms from across the UK, and will shape our policy work and engagement with government at all levels from local mayors to Westminster and the Devolved Nations.
Since then, we’ve hosted a series of roadshows – one of them here in Glasgow last June – to help understand what a business-led cluster development could look like.
Business-led is the vital term here. Actually, for decades, governments have tried to stimulate clusters. But all too often, businesses didn’t come. So, we flip the question on its head: what would make businesses really invest? And then let policy flow from there.
We’re also running two demonstrator projects, in high- potential cluster regions. The first focusing on the huge opportunities offered by green growth and net zero transition in the Humber. And the second in South West England, anchored in Cheltenham but with arms in Bristol and Cardiff – all connected to our national cyber technology assets.
The idea is to test and refine our theories on cluster development as we go – taking what we learn to help write a ‘cluster playbook’.
It’s a live, continually updating document – a how-to guide to help others put what we’ve learned into practice in their city or region.
It launched today on our website, and we’ve already got some big lessons.
Secrets of cluster success
Businesses across the country helped us identify six characteristics of successful clusters, that help create the best conditions for growth.
- The most successful clusters have a shared economic prize.
It’s something no one in that city or region can capture on their own – because of its scope or scale. But it’s big enough that organisations know they must partner to grab hold of it and win share in international markets.
We’ve seen this in the Humber – where businesses have filled a political vacuum. The prize here is decarbonisation – I’ll talk more about our work in the Humber shortly.
- You’ll often find an anchor institution in a successful cluster.
Just look at the power of Cambridge and Oxford Universities and the supercluster they’ve created. Their gravitas, resource, skills base and trusted brand acts as a magnet for others to coalesce around.
And it doesn’t have to be a university – it could be an established international firm or public entity. These anchors help a city or region raise their profile.
- Successful clusters have a powerful story to tell.
Those in that city or region can articulate what it is they stand for, what their USP is, what it is that creates pride of place, what their pitch is to international investors.
- Many successful clusters have a go-to figurehead.
It’s the answer to the ‘who do we call?’ question. I’m talking about champions and advocates for a city or region.
There’s one here today: the Leader of Glasgow City Council, Susan Aitken. It’s people like Susan – political leaders and civic leaders, who can speak for the region to the outside world, and also work with business within it, to unlock investment.
- No cluster can thrive without superb partnership.
I’m talking about collaboration between rival firms. Links between industry and academia. Business-friendly local authorities.
When they all work in partnership, in pursuit of a shared goal, then that collaboration brings tangible benefits to a region. And it also has a snowball effect, with adjacent industries crowding in.
In effect, they create a safe place to do risky things – because we have each other’s backs. Then…
- The final ingredient of an internationally competitive cluster is a supportive policy environment.
What does that mean? Well, it’s all about policies – at a national and a local level – that ensure businesses have the confidence to take decisions and invest in the region.
It’s about having a clear, consistent policy framework for the short- medium- and long-term.
And it’s about ensuring that framework can deliver the quality infrastructure – physical, digital and human – that is essential to the success of every cluster.
Humber Case Study
So, here’s an example of a place where all of these things are coming together – the Humber.
It’s an interesting place – home to some heavy industry and heavy emitters, with the river acting as a geographical, and political, divide.
And it’s a place of immense importance in terms of the UK reaching its climate goals. Nearly half of the UK’s industrial cluster emissions come from Humber and Teesside. And the interesting plot twist here? Your weakness becomes your strength!
Because at the same time, it has huge decarbonisation ambitions, with businesses developing green technologies, alternative sources of energy and solutions to help us transition to net zero.
Business and academic institutions are already coalescing around this transition. Leading the way is Zero Carbon Humber, a consortium of 14 businesses working to build the world’s first net zero carbon region by 2040. Not a mayor. A business coalition.
Among them are titans of industry, as well as pioneers in carbon capture and storage, low-carbon hydrogen and other technologies to help energy-intensive industries decarbonise.
All this will provide jobs for the existing workforce as well as attract new talent and investment to the region.
The private sector leadership here has been huge – they’ve stepped up to fill the vacuum – demonstrating their commitment to the region, its people and their ambitions to build a net zero economy.
It’s the perfect example of business leadership. And what that means is that government doesn’t pick winners, it just backs the successes. The market sends the signal, the government backs the market. Not the other way round. That’s a radical shift.
And as one of our cluster demonstrators, the CBI’s supporting the Humber, by bringing our resources, expertise and convening power to help crowd in more private sector investment.
It’s a work in progress! But what’s clear so far, is that policymaking must keep pace with projects. If not, then Board and investor confidence wanes.
So what does this mean for Glasgow?
But of course, what you’re really interested in – is what could all this mean for Glasgow? Well, all the elements are here in this city – with high-value sectors, firms, skills and business investment.
And as you know – and will hear from everyone today – the ambition and potential are here, through innovation in life sciences, education, and other future high-growth, global markets.
It’s helping Glasgow’s high-potential clusters build a global reputation. To mention just a few…
Take space – where the story is strong, and anchor institutions are already giving their backing.
Last June, we held a cluster roadshow on innovation here in Glasgow – at the brilliant University of Strathclyde.
One of our guests was Craig Clark – the Founder of Clyde Space and a professor at the University. There was next to no space sector in Glasgow when Craig started out.
It’s grown organically. And, today, Glasgow’s businesses provide critical components to the UK’s space and satellite industry. Making this a cluster in its own right but also a valuable connection between Glasgow and other regions.
Then, there’s creative and digital technology. This sector already employs over 30,000 people in Glasgow and boasts a turnover of more than £1bn – attracting both established global names and tech start-ups, investing in fintech, createch, digital media and more.
While both BBC Scotland and STV have their HQs in the city. And the fact that the European Commission named Glasgow the UK’s cultural and creative capital back in 2019 helped raise its profile further.
Then one more to finish: the green economy.
COP26 put Glasgow on the world stage. Not only did it rise to the challenge, but its legacy lives on. Glasgow has pledged to become the UK’s first net zero carbon city by 2030 – and it’s on track to get there.
For example, the region has more renewable energy sites than any other UK city – there’s over 12,000 of them.
And that’s before we even get to the innovation and research being forged in this city, by the University of Strathclyde and others – into renewable tech and deployment, buildings and energy efficiency, and more. It’s knowledge and expertise that will help to accelerate our net zero transition, but also can help fuel our exports in the growing green markets of the future.
In summary, Glasgow already has the makings of a cluster success story in more than one growing industry. Now, I can’t pick your winners. And nor can you. The market will be sending you signals. Back them.
Look out for the major drivers of success: high value sectors, firms, skills and business investment.
And then ask for each whether you’ve got –
- A shared economic prize to reach for;
- A strong anchor institution to root you;
- A powerful story to tell about your ambitions;
- A great figurehead to shout about your successes;
- Superb partnerships to drive you on;
- And a supportive policy environment to empower you.
If you’ve got all that, you have high-powered engines of growth here in Glasgow to lift the city and the whole region.