Devolve, redirect, democratise

This article originally appeared in the LGC,  marking the release of Devolve, redirect, democratise: The future of local economic development in the UK

The role of local economic development should be to lessen the worst excesses of wealth extraction, serving to ensure that economic gains deliver social benefits within environmentally sustainable limits. However, as things currently stand, this interventionist strategy for improving the lives of citizens is falling far short of expectations: a new, substantive approach is urgently required.

At the latest count, 14 million people are living in poverty in the UK – more than one in five of the population, including four million children and two million pensioners. Zero hours contracts have recently hit a record high – with almost a million people now having no guaranteed work from one week to the next. The updated Marmot Review has revealed a stalling life expectancy for the first time in a century.

In an effort to raise prosperity throughout the UK, “levelling up” is the latest in a long line of much-heralded, yet flawed, national policy initiatives, promising to turbo charge economic development and address decades of longstanding inequality, and variations in economic performance across the country.

“levelling up will continue to fail to provide the necessary support at a national policy level to help”

Levelling up has been in part prompted by the government winning new seats in the north – the so called ‘Red Wall’. But, whilst the government’s pledge of £4.8bn to fund infrastructure and regeneration may provide some relief, evidence to date suggests that levelling up will continue to fail to provide the necessary support at a national policy level to help end economic divides and the longstanding disparities of economic and social disadvantage.

In addition to this failure at a national policy level, in local government the proliferation of an economic model prescribed by the Treasury and Whitehall has resulted in a narrowly focused local economic development practice. This has seen economic growth continue to be peddled as the defining metric of a locality’s success. And in the drive to achieve endless GDP growth city centre regeneration has been used as a proxy for economic strategy.

“the risk is that this dysfunction will be magnified”

Moreover, adherence to this economic model has resulted in poorly paid, insecure work, a gulf between property owners and renters and profits that are too readily extracted to distant shareholders at the expense of local people. With the economy battered by the effects of the pandemic, the risk is that this dysfunction will be magnified in the scramble to get the economy back on its feet.

Now – more than ever, with Covid-19, the climate emergency and impending economic, social and ecological crises – we must take significant, new and profound action.

To this end, CLES has published Devolve, redirect democratise: the future of local economic development in the UK. In it, we propose three central tenets to reshape local economic development with a view to addressing its failures to date. These involve recommendations for national policy as well as local economic development practice.

Devolve

A genuine step change is needed with respect to devolution in the UK, particularly in England. At a national policy level we need:

• a national constitutional convention to overhaul and shake-up power
• the establishment of a new national redistribution process – applied to local government funding, the devolved nations and public services – with a recognition that poorer areas need more resources
• the creation of new fiscal powers for local areas
• further social devolution
• more control over transport.

Redirect

Covid-19 has further exposed the need for an overhaul in the UK’s industrial strategy. Moreover, local economic development practice needs a broader focus to fundamentally consider what kind of development is being sought. Place-based approaches, such as community wealth building, should therefore be utilised to empower local areas and communities to maximise their existing skills, talents and capabilities in the pursuit of economic democracy. Here we address four areas for attention to bring about this redirection:

• progressive local economic strategies to support foundational sectors, address Covid-19 recovery and reform, tackle climate emergency and advance more democratic forms of ownership
• harnessing local public expenditure as a key driver of the just transition
• an end to wealth extraction within our public services
• a new approach to measuring economic development activity.

Democratise

At the local level, we must seek to expand opportunities for citizens to shape the economic destinies of their localities by strengthening the social architecture for participation, co-design and democratic agitation. We need not only to devolve and redirect economic development, but to deeply democratise it. In this, local government should:

• establish citizens assemblies
• invest in social infrastructure to create fertile ground for citizen-driven movements and initiatives.

With electoral cycles and an urgency to get things done, there is a tendency for governments of all shapes and sizes to forget what has gone in the past and what has worked or not worked. If we are to truly level up we are going to have to learn from past mistakes, break the historic trend and truly address wealth and power.