Government influence on industry

Successive British governments have tried, since 1945, to encourage industry to move into areas of high unemployment. The size and location of these areas has changed over time.

Over the years the government has tried to encourage new industries to reduce unemployment by:

  • Industrial development certificates which control where a firm can locate(first used in 1947)
  • The creation of new towns in order to take work to the unemployed.
  • Providing ‘advanced factories’ and industrial estates with services already present (eg roads, electricity)
  • Financial aid in the form of removal grants, rent-free periods, tax relief on new machinery, and reduced interest rates on borrowing.
  • Decentralised government offices eg Royal Mint in Cardiff. Army pay offices in Glasgow.
  • Improving communications and accessibility.
  • Subsidies to keep firms going which otherwise would close down
  • Retraining schemes
  • Job creation eg Youth Training Schemes (YTS)
  • Enterprise zones
  • Assistance from the EU.

Enterprise Zones

  • Launched 1981.
  • Planned for areas in acute physical and economic decay.
  • Aims were to create conditions for industrial and commercial revival by removing certain burdens and administrative controls. They tended to fall into two main groups:
  1. Old inner city areas where factories had closed, causing high unemployment, and where old houses had been pulled down and the land left derelict, eg Isle of Dogs in London or Clydebank in Glasgow.
  2. Towns that had relied upon one major industry which had been forced to close down, eg Corby(steel), Clydebank in Glasgow(shipbuilding & heavy engineering)

Regional Economic Development

The Department of Trade and Industry (DTI) is helping every region of the UK to increase sustainable economic development. They work in partnership with theRegional Development Agencies (RDAs)and other regional bodiesto raise national and regional economic performance by working to promote regional regeneration,investment, skills, training, employment, efficiency and competitiveness.

Regional Aid and UK Assisted Areas

State Aid granted to promote the economic development of certain disadvantaged areas within the European Union is considered compatible with the common market by the European Commission. This kind of State Aid is referred to as Regional Aid.

Regional aid consists of aid for investment granted to large companies or in certain limited circumstances operating aid which in both case are targeted on specific regions to redress regional disparities.

England's Regional Development Agencies

There are nine RDA’s. Their primary role is as strategic drivers of regional economic development in their region. The RDAs aim to co-ordinate regional economic development and regeneration, enable the regions to improve their relative competitiveness and reduce the imbalance that exists within and between regions.

Each Agency has five statutory purposes, which are:

  • To further economic development and regeneration
  • To promote business efficiency, investment and competitiveness
  • To promote employment
  • To enhance development and application of skill relevant to employment
  • To contribute to sustainable development

The RDAs' agenda includes regeneration, taking forward regional competitiveness, taking the lead on inward investment and, working with regional partners, ensuring the development of a skills action plan to ensure that skills training matches the needs of the labour market.

Eg Washington near Sunderland in the NE of England, within a development area, had been designated a new town in 1964 due to the high rate of unemployment in the North East, following the decline in the traditional industries of that area-steel, ships and engineering. Nissan were given permission to locate a car factory in the UK in 1981, and Tyne and Wear council successfully attracted Nissan against fierce competition by showing them that they could get grants to cover 33% of their building costs by being in a development area. This was a huge boost to the local economy.