Don’t wait for Westminster, build local economic change today

Despite potentially being nearly two years away, it is clear that the battle lines for the next general election are already being drawn, says Tom Lloyd Goodwin.

This article originally appeared in the MJ.

With Jeremy Hunt delivering his first budget a few weeks ago, keen eyes were trained on plans for regional economic growth. Meanwhile, Kier Starmer’s speech, delivered in Manchester at the end of February, served up Labour’s vision on the same topic. But as ever, talk of growth tomorrow does little to address the  immediate challenges facing places across the UK.

Whilst on the face of it Starmer’s speech was ripped straight from the Tory playbook, within the text, there are signs that some on the shadow team are beginning to ask better questions about our economy and who benefits from its success.

The speech talks of  growth which produces “good jobs…making everyone, not just a few, better off ”, of “fair growth…growth from the grassroots…[w]ealth created everywhere, by everyone, for everyone.” This then could be interpreted (if we’re being generous) as not merely a “growth for growth’s sake” narrative but rather a vision for a more inclusive UK economy – an economy which supports good jobs and wages within environmentally sustainable limits and actively removes barriers to participation.

“it remains unclear how Labour intend to deliver”

That said, potentially two years ahead of a general election, it remains unclear how Labour intend to deliver a more inclusive economic future than the Government. What is more, to do so will be no mean feat. There is often talk about how Britain has been stuck in a rut, with the low economic growth we have experienced since the 2008 financial crisis and the need to remedy this state of affairs becoming the sole focus of many economists and parliamentarians alike. But achieving growth is only part of the problem. The composition of growth is also more important than many recognise.

Take GVA, the typical measure of total economic output for local economies. GVA has two key components: compensation for employees (aka wages) and gross operating surplus (aka profit). Yet our analysis shows that in Greater Manchester (often held aloft as a regional growth success story), while manufacturing growth has increased and profits have almost doubled since 1998, compensation for employees has not followed suit, rising by only 19 per cent in the same period.

The questions of what we grow and who benefits from that growth will be fundamental, then, when it comes to realising Labour’s ambitions should they succeed in reaching Downing Street at the next election. In addition, they will also need to have an answer for places where growth is absent and unlikely, who cannot be fobbed off with platitudes about inward investment and global competitiveness.

“the answers are apparent in the work of local organisations”

However, the good news for Labour is that the answers are apparent in the work of local organisations in places across the UK including the devolved nations, mayors and local councils across the UK. Many places are harnessing the power of local assets, spend, jobs and ownership to help build wealth for local communities and quietly cracking on with the business of developing economies where wealth flows more easily to where it’s needed most.

And now we’re seeing health systems follow suit. For example, across England Integrated Care Partnerships now have objectives to address social and economic development, reduce health inequalities and to work in close partnership with local government.

One of the biggest challenges facing organisations like the NHS is recruitment with thousands of unfilled vacancies across the country. In addition, there are related problems with supply chain resilience which means hospitals not being able to access the basic equipment they need on an every day basis to function effectively, all the while being under pressure to reach net zero by 2045.

“a huge win-win for local economies”

Legislation that enables more NHS expenditure to be part of local economic development activity would amount to a huge win-win for local economies: enabling local businesses to capitalise on the steady order book of NHS procurement opportunities while potentially avoiding embarrassing governmental missteps like the PPE “contracts for cronies” scandals we saw through the pandemic.

There is also increasing evidence that a more locally based approach can work. In Preston, for example, often hailed as the community wealth building pioneers in the UK, their work in redirecting public expenditure towards local SMEs, paying the Living Wage and building affordable housing has increased local economic expenditure, raised average wages and, crucially, it has correlated with improvements in socioeconomic deprivation since the programme has started. Evidence is now emerging that these interventions potentially provide an effective model for economic development that leads to tangible public health benefits.

So, to anyone concerned with the health of their local economy, we say: don’t wait for Westminster, or the ballot box, start building better lives for the people in your place today.