The plight of the poorest: time for a local economic reset?


For too long, we have either turned a blind eye to poverty and disadvantage or hoped that a general rising tide of economic wealth would trickle down. It’s time to reboot prevailing local economic policy – argues Neil McInroy – which is failing the poorest in society.

The vote to leave the EU has opened our eyes wide to the depths of disgruntlement and cast a spotlight on the inadequacies of our economic model. We must now focus; to redouble efforts to tackle poverty and inequality,  and make an economy for all.

In Forging a good local society: Tackling poverty through a local economic reset, I set out what we could do. In this report, I argue that poverty will be solved by resetting local economic development, heralding the unleashing of progressive and innovative social action.

Policy failure

In the work, I am rather scornful of recent local economic development activity. It has failed socially. We currently see an agenda which is almost wholly captured by ideas and resources that focus on competitiveness and economic growth rather than action on tackling inequality and poverty.

Indeed, its orthodoxies extend to the lopsided idea that investment in hard infrastructure (such as rail and airports) ‘generates’ wealth, while the other key generators of wealth – people – are left to experience austerity through public service cuts and reductions in spending on education and social development.

Alarmingly detached

At the centre of this new report, and relevant to the inclusive growth agenda is the need to deeply appreciate that current policy is alarmingly detached from the plight of the poorest. It’s lost its empathy. We don’t need to look very far to see or hear this: it’s in the words of politicians, who denounce the benefit claimant as ‘a shirker’; it’s in welfare reform, which is creating real hardship, but neutralised in some policymakers minds as the ‘necessity of austerity’; it’s in economic policy which advances ‘labour market flexibility’, productivity and competitiveness while underemployment rises and low wages create a growing group of ‘in-work poor’.

The inclusive growth agenda has some way to go to prompt a reset in local economic policy or step change in poverty. Of course, it is a welcome agenda. It focuses attention on the inadequacies of local economic growth agenda which often fails to tackle local social issues. Furthermore, it squarely acknowledges that lack of productivity and inadequacies in the labour market are down in part to poverty, and that this needs addressing.

Progressive reset

However, on the other hand, I believe that to address poverty, we need to confront prevailing economic development policy. As it stands, inclusive growth is a rather nebulous concept, and could be taken as an inoffensive unthreatening discourse.

At worse, inclusive growth could be less a step change or reset, but more a social ‘add on’ – providing some social gloss, to a trickle down economic approach, which is socially failing. This must not be allowed to happen. Equity and social justice cannot be left as by-products of the economy. Inclusion should be seen as a fundamental ‘a priori feature’ of an economy. It must herald a progressive reset in local economic policy and social action.

Taking heart

To prompt a reset, I take great heart in action which has already started and needs accelerating. In many areas, the local state, communities, businesses and many civil society organisations are harnessing their local concern and developing innovative social action and mobilisation of progressive local economics. This foreshadows what is possible.

The work details seven agendas which could mark a reset and a good local society.

PLACE. Instead of top down governance, we need more devolution and decentralised decision making, where decisions are made closer to the bespoke needs of the poorest.

COLLABORATION. Instead of decisions by remote big government and elites of big business, we need plural collaboration across public, commercial and social sectors. Including the advance of cooperatives.

ANCHOR INSTITUTIONS.  We need local institutions, which collaborate and harness their power in terms of local supply chains, recruitment and personnel policy.  Advancing local economies and assisting those most distant from the labour market

BUSINESS.  We need to ramp up Corporate Social Responsibility, with business being encouraged to play a deeper philanthropic role.  We need business as citizens.

CITIZENS.  Should be seen as active players, rather than passive recipients, with an increase in co-production and co-design of services.

WORK. We need an acceleration of place-based employment charters, with commensurate protection of terms and conditions.

WEALTH.  We need an increase in local ownership wealth and new innovations such as community shares, local currencies and progressive procurement policies.

Being more bullish

The Brexit vote tells us we need a local economic reset and I hope inclusive growth can assist this.

To do so, it will need to go beyond its prevailing productivity and labour markets focus and be more bullish. It needs to argue that tackling poverty is much more than a mere downstream outcome of the economy, but an upstream input.

  • The report will be launched in Manchester tonight (28 July) and in London on 7 September.

The original article can be read on the Manchester University website here