Lancashire Growth Plan (HTML) - Section 3: The case for growth

A clear evidence base to underpin the Growth Plan

Our plan is grounded in a robust and wide-ranging evidence base, including the Lancashire Independent Economic Review (2022)^xx, the Lancashire 2050 Strategic Plan (2023)^xxi the Lancashire Combined County Authority Proposal (2024)^xxii, and the Lancashire Skills and Employment Strategic Framework (2024)^xxiii.

Lancashire is a region of national significance, with a working-age population approaching one million. However, it faces challenges related to an ageing population and rising economic inactivity, resulting in one of the lowest workforce-to-resident ratios in the country^xxiv. Despite this, adjusted job density figures indicate that there are sufficient jobs^xxv to support the active workforce, performing well compared to other areas in the north west outside the regional core. The evolving Get Lancashire Working Plan aligns with the Growth Plan and aims to drive up employment rates, with residents benefiting from economic success.

While Lancashire’s economic mass is considerable, its relative position has remained broadly unchanged over the past two decades. Economic output is concentrated along key transport corridors, particularly those aligned with motorway and rail infrastructure, while rural areas and Areas of Outstanding Natural Beauty contribute less to overall output.

Lancashire’s opportunities

Based on the evidence base, we have identified the following key opportunities.

Scale and significance

Lancashire is a major economic area with a population of nearly one million working-age residents and an economy valued at £40 billion.

Advanced engineering and manufacturing (AEM)

The AEM sector contributes over £7 billion annually to the local economy and has employment levels well above the national average^xxvi.

High-productivity clusters and innovation assets

The county is home to four universities, three university teaching hospitals, and a growing number of high-tech spin-outs, and strong research capabilities that support technology retention and skills development^xxvii.

Job density and employment structure 

Lancashire has a sufficient number of jobs to support its workforce. The focus is on creating more high-value roles while recognising the importance of quality employment across all wage levels.

Concentrated economic performance 

Economic output is increasingly concentrated in well-connected areas, with opportunities for further agglomeration, highlighting the importance of infrastructure in driving productivity.

Lancashire’s challenges

The evidence base also highlights the following challenges.

Sustaining growth momentum

Lancashire must maintain and build on recent improvements in growth rates, which have historically lagged behind Mayoral Combined Authorities.

Sectoral imbalance

The economy is heavily reliant on AEM, with a relatively low share of output from knowledge-based sectors. There is a need to upskill the workforce and raise awareness of emerging opportunities.

Connectivity gaps

While north-south transport links are strong, east-west connectivity remains poor, limiting labour market mobility and economic integration across the county^xxviii.

Investment constraints

Public and private investment levels have remained stagnant or declined in real terms, limiting Lancashire’s ability to scale innovation and infrastructure^xxix.

Workforce pressures

High volumes and rates of economic inactivity and an ageing population are placing pressure on businesses and public services, reducing productivity potential.

Productivity and innovation

The evidence base reveals that Lancashire’s overall productivity is below the national average, though some areas, particularly those with strong AEM activity, outperform national benchmarks. Research shows a strong correlation between productivity and the proportion of residents with Level 4 and above qualifications^xxx which explains a significant share of local variation^xxxi.

The business base is one of the largest of any Combined Authority area in the UK^xxxii, but many medium-sized firms are not scaling into larger employers. While AEM remains the largest economic contributor, Lancashire has the second-lowest concentration of output from Knowledge Intensive Business Services (KIBS) among Combined Authorities^xxxiv. 

Looking ahead, forecasts suggest a gradual decline in manufacturing employment, offset by increased output and specialisation in advanced manufacturing. Growth is also expected in digital, professional services, healthcare, and education^xxxv.

Investment and connectivity

The evidence base highlights that commuting patterns show a strong north-south orientation, with limited east-west movement due to weaker transport links^xxxvi. Many residents commute to neighbouring regions such as Cumbria, Greater Manchester, and Liverpool^xxxvii. 

Since 1998, Lancashire has experienced the lowest growth in investment spending of any UK region. This may explain its relatively modest economic growth over the same period^xxxviii. In terms of innovation, Lancashire ranks in the lower half of UK regions for Innovate UK grant awards^xxxix and in the bottom quarter for average grant size. These grants are increasingly concentrated in areas with strong KIBS sectors, rather than production-oriented economies like Lancashire.

This section underscores Lancashire’s vital role in the national economy, backed by a robust evidence base. The region’s strengths and opportunities in advanced engineering, manufacturing, and high-productivity clusters are balanced by challenges such as connectivity gaps. Addressing these will enhance productivity and sustain growth, positioning Lancashire to drive innovation and contribute significantly to the UK’s economic goals.

Lancashire's economic landscape