Opinion Piece - Blog

An industrial strategy that works for all places?

Theresa May has advocated stepping in to repair markets where they are not working, but will the first industrial strategy in a generation really deliver an economy that works for all places?

We wrote back in January about how a modern industrial strategy needed to be backed up by a greater spatial and redistributive drive.  This advocated direct investment toward areas of the country, which were not just the ‘winners’ but were also being left behind. Indeed, the Confederation of British Industry (CBI), British Chambers of Commerce and the manufacturers’ organisation EEF urged the Government to boost living standards and improve productivity in the country’s poorest regions, adding that we must avoid the outdated ideas of “picking winners”. [1]

Metro mayors: three ways to reset local strategy

Next week, on May 5th, newly elected metro mayors in six combined authorities begin their first day in office. This is an historic opportunity to reset policy and address longstanding economic and social issues, as Neil McInroy and Victoria Bettany outline below.

To date, policy opinion and mayoral manifestos have offered a laudable, but often limited, set of tactical policy innovations, including cheaper transport for sections of the population, actions around a living wage, housing affordability and tackling youth unemployment. Given the scale of the challenge, these may not be enough to successfully reset strategic policy. Rather, three key things need to happen.

1. Re-organise the economics of devolution

Financial investment and return has dominated the economics of devolution, hence the focus on property development and land value appreciation in city centres and other hotspots. Indeed, this focus has been over-egged in devolution deals through economic agglomeration and ‘earnback’ on growth. If this trickle-down approach is retained, we can expect the deepening of geographic divides across the combined authorities, with little significant increase in new or decent jobs. Of course, a focus on financial return is a universal component to city success but it should only be a part of the mix, and not take undue precedence over other forms of economic development and social investment.

Video: Community Wealth Building

What is Community Wealth Building? Why is it important, and what has CLES been doing about it?

Over the past 10 years, CLES has amassed a body of work around Community Wealth Building and Anchor Organisations in Greater Manchester, Preston, Birmingham and 11 cities across Europe. This pioneering work is focused on building an economy where wealth – including the spend of local anchor organisations – is recirculated locally for the benefit of local communities.

10 ways to engage SMEs in procurement

Historically Small to Medium Sized Enterprises (SMEs) have faced a range of barriers in accessing procurement opportunities and in winning contracts. These barriers include: contracting authorities being unaware of SMEs and the types of goods and services they can potentially provide; SMEs viewing the procurement process, often rightly, as overly bureaucratic; SMEs not having the capacity to bid for opportunities and compete with large business; and the process of procurement often being undertaken on the basis of cost thus ruling out the ability of SMEs to demonstrate their wider value.

Whilst these barriers still exist, the European Procurement Directives of 2014 have a specific focus on supporting SMEs to engage with procurement processes. There is a specific emphasis upon: contracting authorities simplifying the process of procurement; contracting authorities breaking opportunities down into smaller lots; and reducing the levels of turnover required to participate in tendering exercise. At the last meeting of the Procure network held in Koprivnica, Croatia in March 2017, we wanted to explore how the above principles were translating into reality at the city level and what activities could be undertaken by cities to more effectively engage SMEs and local organisations in procurement. Collectively we identified 10 key ways which relate to common barriers:

A progressive post-Brexit economic development

As we move towards Brexit, there are three possible paths for local economic development, says Neil McInroy.

For many years the dominant approach has failed to build a local economy for all. Brexit makes the challenge harder and we need to take a huge step up.

Under the auspices of devolution, mainstream economic development has followed traditional lines around investment in hard infrastructure, civic boosterism, city centres, planning relaxation and post-19 skills. Overall it has slotted into and complied with the Treasury economic model – favouring agglomeration economics and narrow wealth concentration. As a result, mainstream economic development has been socially failing, and presided over growing economic imbalances.

The Spring Budget: Robin Hood in Reverse?

In the Budget, wealthy businesses in thriving parts of the country were granted a smoother transition to their new higher business rates bill. This easing-in period for successful businesses will be subsidised by a “fair” increase in National Insurance Contributions by 1% to 10% for the self-employed – raising £145m a year by 2021/22.

Whatever happened to economic development?

Budget day for the Centre for Local Economic Strategies (CLES) used to be one of intrigue and relative excitement. In the 2000s, the Budget was supplemented by a specific annex focused on economic development and regeneration. Indeed, the Budget was where we saw exciting new renewal initiatives announced; reviews of sub-national economic development formulated; and new duties and funding initiated.

Inclusive growth: Making an economy work for a few more?

The report from the RSA inclusive Growth Commission has now been launched – ‘Making our economy work for everyone’. Chaired by Stephanie Flanders, of JP Morgan Asset Management, this work sought to identify practical ways to make local economies across the UK more economically inclusive and prosperous. However, it is arguable that the ideas are limited in terms of wider social justice and economic resilience. Instead of making an economy work for everyone, it’s more likely that it will merely make our economy work for just a few more.

For many years, economic development has been a thin gruel for social inclusion; based overly on economic growth (sometimes at all costs), trickle down and spatial agglomeration. So, it is heartening that the commission seems to have partly picked up on the ideas of CLES and others (you can read our RSA submission here). This includes the understanding (if not a truism) that investment in social institutions and people is as important as investment in economic infrastructure; or, how the spheres of the economic and the social are not separate, but linked. They also highlight the excellent practical work CLES are engaged in: Community Wealth Building and Anchor Institutions.

Inclusive growth is radical – here’s why 

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.

Progressing procurement processes and practice in Manchester

Around ten years ago, the Centre for Local Economic Strategies (CLES) started undertaking work around public procurement. Our interest in procurement was three-fold. First, we wanted to understand more effectively where procurement spend went and the impact in particular it had upon local economies. Second, we wanted to shift the behaviour of procurement officers so that a wider range of factors informed the procurement decision. Third, we wanted to influence the behaviour of suppliers so that they delivered greater benefits for local economies and people through the provision of goods and services.

Fixing the broken housing market with our pensions

We are in a housing crisis, now acknowledged by the government and the only way to address a crisis is to get everybody pulling in the same direction and utilising all available resources. As the housing White Paper pointed out, it should be a moral duty for everyone to tackle the broken housing market head on so all the stop should be pulled out to facilitate greater investment in housing.

Financing house building presents a stumbling block especially for social housing providers, with housing associations and local authorities locked out from accessing mainstream government funds. The £3bn Home Building Fund, the £1bn Build to Rent Fund as well as the hundreds of millions devolved via the Housing Investment Fund to Combined Authorities can only be accessed by private sector companies.