Inclusive growth is radical – here’s why 

As social hardship deepens across the UK, we need rapid and penetrative policy and action.  In a recent blog, directed at the recent RSA Inclusive Growth commission report, CLES CEO Neil McInroy, highlighted some of the limitations of the Inclusive Growth agenda and challenged whether it would truly herald an economy for all. As we move forward, spirited debate and respectful contestation is important for the Inclusive Growth agenda and in shaping a more socially just future. Therefore, we are now pleased to publish a rebuttal to Neil’s challenge, written by Atif Shafique, lead researcher on the RSA Inclusive Growth commission.

CLES chief executive Neil McInroy published a blog last week reviewing the Inclusive Growth Commission’s final report. He recognised the value that the Commission has added to policy and public debate about these issues, but also asked some important questions. This post is my rebuttal to some of the challenges posed, having worked as lead researcher on the Commission (I am not representing the Commission’s ‘official’ voice here – just my own). The thrust of my argument is that the Commission has offered a strong alternative to the economic orthodoxies of the past, and has advocated a set of reforms that would be genuinely transformative.

Some of the constructive criticisms have been fair – for example, more could have been made of issues around wealth and ownership, and we could have built further on our examination of the financial system (the report identified the potential of regional banks). Others have been less fair, such as the claim that the Commission was not concerned enough about social justice and the effects of austerity. The final report (and previous publications) made an explicit case for strong public investment to underpin inclusive growth, and highlighted the impact of cuts on services, family incomes and social and regional inequalities.

The critique also appears to conflate our careful tone and policy sensitivity (this is vital for an independent Commission that seeks to shift policy) with neglect or oversight. For the Commission, it was a given that there was a powerful social justice case for inclusive growth: this is why the ‘left behind’ narrative featured so strongly, and why we were so critical of past models of growth which had simply failed to deliver for most people. But our point was that unequal growth is not just bad for people’s social outcomes, it is also bad for long-term, sustainable economic growth and public finances. Quality, broad-based growth and human welfare are mutually reinforcing. Economic prosperity and social justice need not be at odds. For too long policymakers had seen them at loggerheads, compromising one for the other because of the supposed trade-offs at play.

It is true that, as Neil argues, there are places in the country that are economically struggling and will have little growth to share around – and that this agenda needs to speak to them. The Commission was not only preoccupied with the distribution of future growth – it was interested in transforming our economy and addressing its structural imbalances. Putting semantic differences aside, the Commission’s work was just as focused on building an inclusive economy (not just future inclusive growth). But it was also clear that growth does matter, especially to places that have been left behind. Crucially, though, it is the quality and not the quantity that matters most.

Neil’s most biting challenge is that the Commission’s recommendations aren’t bold enough and don’t do enough to challenge the prevailing social and economic model. I would argue this is not true. In fact, implementing our proposals would be genuinely transformative and strongly progressive – they are the antithesis of the neo-liberal, trickle down, New Public Management (NPM) policies that have dominated since the 1980s.

To give an example we argue – in no uncertain terms – that the distribution and quality of growth should explicitly be a first-order priority and not an afterthought. We should not be content with just any sort of growth, or fixate on GDP numbers. We call for much wider use of distributional analyses in determining government policy and making investment decisions. We urge policymakers to drop GVA for ‘Quality GVA’ measures.

The impact of these reforms would be transformative. For example, it might lead a city to balance its ambition to become the next high-tech capital (which may be unrealistic and is unlikely to create opportunities for low income households and lower skilled residents) with a much stronger focus on improving the quality of pay and progression in its foundational economy and lower-wage, high employment industries (retail, hospitality, care etc.). It would mean instead of just investing in physical infrastructure such as buildings, roads and railways, there would be much more substantial investment in social infrastructure including early years, skills and employment programmes and community anchor organisations (and crucially these things would be treated as investment rather than short-term expenditure). This, as part of place-based inclusive growth, would spur the grassroots change Neil rightly recognises as vital.

In short, inclusive growth reforms would focus state energy (and the expectations placed on others, including businesses) on creating the conditions for far more people to share (equitably) in the benefits and opportunities provided by the economy. This is a radical break from the past.

There are other bold proposals that would represent a real step-change – from empowering localities to manage the entirety of public spending in their place through to putting quality jobs and lifelong learning at the heart of place based industrial strategies. The Commission is also clear that this should not be a top-down agenda – it is about whole-place leadership, informed by and accountable to citizens. It is on this premise that the RSA is working with the Joseph Rowntree Foundation to explore citizen-led approaches to inclusive growth.

The input from organisations such as CLES has been invaluable through the course of the Commission. Despite the constructive questions about the Commission’s final report, I think it rises to the challenge of offering a truly ambitious proposition that can transform how we do social and economic policy in the UK.

Atif Shafique was lead researcher for the RSA Inclusive Growth Commission. You can find him on Twitter @atif_shafique.