Driving growth and overcoming barriers in Liverpool City Region

Posted on: 6 May 2025 by Roger Baxter in Blog

The UK’s new Industrial Strategy is emerging at a critical moment. As the government moves from consultation to delivery, it faces mounting pressure to identify and implement solutions to unlock economic growth and accelerate the net zero transition.

But while the broad strokes of national priorities are reaffirmed, the devil lies in the detail—particularly at the local level, where delivery must meet complexity head-on. For regions like the Liverpool City Region (LCR), which will soon need to align their Local Growth Plans with a forthcoming 10-year Investment Strategy, the path forward is less about reinventing the wheel and more about playing to their existing strengths—and choosing wisely where to place bets.

There are structural and institutional barriers that the UK must overcome to ensure its Industrial Strategy delivers tangible outcomes. As Stansbury has argued, policy success depends not only on setting priorities but also on building the institutions, partnerships, and capacity to deliver them. From a Liverpool City Region perspective, this requires a concerted focus on horizontal collaboration—both between regional and local actors, and across different levels of government. It also requires accepting that solutions will need to evolve as global economic conditions shift.

The strategy cannot be the be-all and end-all. It must offer a flexible, high-level framework capable of adapting to geopolitical shifts while also enabling regions to act with confidence. For the LCR, this means making tough, strategic choices about where to focus investment—targeting sectors where the region already has demonstrable strengths, such as advanced manufacturing, health innovation, and net zero technologies—rather than trying to do everything.

Unlocking investment

The UK continues to underperform in attracting foreign investment, hampered by Brexit-related uncertainty, complex regulations, and regional disparities. The Liverpool City Region has benefited from targeted funding, yet this has not been sufficient to level the playing field. A stronger alignment between national policy and local opportunity is needed, particularly through integrated schemes like Freeports and Investment Zones.

This alignment must include institutional support for local actors who understand their unique investment barriers. For LCR, this means reinforcing the region’s R&D ecosystem and strengthening its pipeline for commercialisation, such as expanding on the LCR 4.0 model which brought SMEs into collaboration with local universities.

Bridging the skills gap

A robust skills system underpins industrial competitiveness. Yet the UK’s fragmented skills landscape—split between devolved administrations and England’s hybrid governance structure—prevents coordinated, timely responses to employer needs. The creation of Skills England is a step forward, but its success depends on genuine collaboration with Mayoral Combined Authorities. Both vertical and horizontal partnerships will be crucial for Liverpool. This includes coordinating with schools, colleges, and universities to build industry-specific pathways—especially in sectors like net zero, where demand for new skills is growing rapidly. The region must also push for local flexibility in skills funding and programme design, ensuring they align with the industrial goals of both the city region and the national strategy.

Driving innovation

The UK has world-class research capacity but struggles to turn innovation into commercial success. In Liverpool, this challenge is familiar: the city region is home to strong research institutions and has made strides in digital innovation and life sciences, yet there remains a disconnect between R&D investment and industrial scaling. Supporting university–industry collaboration remains vital. Co-funded programmes that build on existing initiatives, such as Strength in Places or UKRPIF, can help Liverpool realise its innovation potential. Moreover, public intervention must be tailored to business realities, including long-term funding for applied research and innovation.

Leveraging data and digital infrastructure

Data is a powerful driver of growth, particularly in the emerging AI and digital services economy. The UK has a relatively open data-sharing environment, but cultural and bureaucratic inertia still slow progress. LCR has a unique opportunity to lead through the development of civic data clusters—harnessing local public service data to fuel innovation and test new solutions at pace. Establishing a national digital commons, where algorithms and data standards are shared, could amplify these efforts. Trust is key, and public-private partnerships must work to ensure ethical data use and meaningful community engagement.

Infrastructure and electrification

Poor transport connectivity and infrastructure planning continue to hold back productivity in regions like Liverpool, with large-scale uncertainty—exemplified by the HS2 debacle—only deepening investor scepticism. The newly operational National Infrastructure Service Transformation Authority (NISTA) should empower local leaders to co-develop long-term infrastructure strategies. In LCR, priorities include improving transport links to key employment and R&D hubs, and ensuring that energy infrastructure keeps pace with industrial demand—especially as firms move to electrify their processes in support of net zero.

Local and international investment decisions

Capital continues to flow disproportionately to London and the South East. Regions like Liverpool must develop bespoke financial ecosystems that reflect local risk profiles and market opportunities. This includes investing in critical enabling assets—like high-quality lab space for health and life sciences—and promoting locally anchored investment vehicles that support long-term, mission-driven growth.

International collaboration is essential for expanding markets, attracting talent, and stimulating innovation. Universities can play a pivotal role here. The University of Liverpool has shown leadership through initiatives like the Pandemic Institute and the Digital Innovation Facility, while the City Region’s partnership with Busan, South Korea demonstrates the potential of city-to-city diplomacy. These efforts must be scaled and strategically aligned with national programmes such as the UK–Republic of Korea Innovation Twins initiative. The LCR’s unique strengths make it a natural node in global innovation networks.

Making strategic sites investment-ready

Regions must focus on making strategic sites ready for private investment. This involves more than physical infrastructure—it includes building out soft assets such as local skills, public services, and liveable communities. Investment-readiness must also mean better alignment of local and national priorities. Efforts in Liverpool should focus on strengthening foundational assets like public transport, schools, and housing, while also improving access to flexible financing mechanisms. Deeper fiscal devolution would empower the Combined Authority to make decisions more swiftly and effectively.

Evolving governance through the Industrial Strategy Council

Strong institutional frameworks are vital. The Industrial Strategy Council (ISC) must become a credible, independent voice—evaluating progress, holding government accountable, and facilitating collaboration between business, local government, and civil society. The ISC should establish regional offices to ensure bottom-up intelligence is incorporated into strategy development. Regular stakeholder engagement—through structured forums, working groups, and progress reporting—will be key to maintaining momentum and trust.

A theory of change for a national-local strategy

The Strategy must be built on a robust Theory of Change, which should clearly state where and whether the priority is growing overall productivity or reducing regional inequalities. These are not mutually exclusive, but do require different policy levers.

It must also incorporate scenario planning to account for geopolitical shifts, technological disruption, and environmental shocks. A flexible, transparent analytical framework—grounded in continuous monitoring and evaluation—will ensure that the strategy remains relevant and responsive. In practice, this means feeding local intelligence into national planning mechanisms and ensuring that local priorities are visible and valued at the national level.

Betting smart for regional success

Liverpool City Region, like many others, is not starting from scratch. It has a clear understanding of its strengths, challenges, and opportunities. As the UK’s Industrial Strategy evolves, Liverpool must be empowered to focus on a few key bets—those with the greatest potential to unlock inclusive growth and resilience.

A national strategy that supports place-based priorities, strengthens institutional coordination, and builds from local knowledge will not only serve the Liverpool City Region—it will serve the country as a whole. The challenge now is to align frameworks, funding, and flexibility to make this possible.

Image credit: Roger Sinek