Opinion Piece - Blog

Broadening out an economy: making it work for all

The recent report from the Industrial Strategy Commission, ‘Laying the Foundations’ [1], outlined the key foundations for a successful long-term industrial strategy, one which can shape our future economy, and the recent Taylor review of modern working practices [2] is potentially laying the foundations for how we might work in our future economy. But will they make it work for all?

A new lens for industrial policy?

In January, we argued what a modern industrial strategy should look like, suggesting again, in May, that an industrial strategy that works for all places, should present a devolved approach to building a more foundational, collaborative and co-operative economy, developing industrious places and people, not just our traditional industrial sectors. So, it is pleasing to see the Commission advocate more of a place based and a whole economy approach. One delivered locally, where social policy is not separate but intrinsic to any industrial strategy. The Commission agrees that trade-offs between short term efficiency and long-term equity should be considered more seriously, arguing we need to invest in infrastructure to create the conditions for growth in all places. The report challenges the current methods of appraising the benefits of public investments, suggesting they disproportionately benefit parts of the UK where the economy is already strong, so we clearly need to adopt a new lens if we are to deliver an economy for all.

How can we give citizens a meaningful voice in big public decisions?

On 14 June 2017, CLES co-hosted the Manchester launch event for Claudia Chwalisz’s book,The People’s Verdict: Adding Informed Citizen Voices to Public Decision-making, together with the Manchester Urban Institute, The Crick Centre, The University of Sheffield and Policy Network. Below is a key summary of her conversation with Neil McInroy, Chief Executive of CLES.

Introduction: A few thoughts on the problem

NM: The world has many wicked and complex issues. Global finance, climate change. Our problems are system based; we live in a network, not in a hierarchy. In this context, there is also a new questioning of democracy and elected politicians.  Trust in representative democracy is and has weakened.

In the UK, our 19th century or even older arcane and archaic modes of governance, institutions and practice are out of kilter with a networked 21st century.  It’s analogue in a digital work. Centralised in a distributed world. I sense a new hankering for a new type of politics.  People are not anti-politics, they are maybe anti the type of politics we have.

We need a society which is on the up

The Social Mobility Commission has confirmed what many have long known – governments have failed to significantly reduce inequalities. The Brexit vote and the subsequent soul searching has finally brought many of these issues to the fore. The growing sense of disenfranchisement in the country and increasing gap between “haves and have nots” is now penetrating mainstream discourse, prompting a political rhetoric of an ‘economy that works for all’ where the benefits of growth are shared among the ‘many, not the few’.

What we have been doing has clearly not worked

The UK economy has not worked for all for a long time. Indeed our economic models for decades have tolerated, and been somewhat unconcerned, by high levels of socio-economic inequality. What we have been doing collectively to address challenges of poverty and inequality over the past two decades have clearly not worked. In its report Social mobility policies between 1997 and 2017: time for change, the Commission argues that successive governments have failed to make social mobility the cornerstone of domestic policy, and that long-term progress has too often been sacrificed to short-term change. A piecemeal approach has bought some advances, but a failure to develop a holistic policy approach has meant that gains have been lost as efforts have waxed and waned.

After Grenfell: tenant empowerment and the end of cities as markets

The Grenfell Tower tragedy raises huge questions about public sector austerity, growing inequality and the price we pay for treating homes as commodities. Neil McInroy gives his view to New Start on the way forward for housing, community relations and cities

Neil McInroy: ‘If any good can come out of this horror, it will be a rejection of the idea that cities are predominantly a market’

The horror of Grenfell is linked to deepening and widening inequality and injustice in our cities.  The chasm in housing choice and wealth – while particularly brutal in Kensington and Chelsea – is replicated across the country.

The work toward building a local economy for all continues…

Following the General Election the Conservatives are to form a minority government. There is now new uncertainty as to the stability of the new administration and questions as to the extent it will be able to focus on building an economy for everyone. However, whilst national politics and government are important, it’s worth reminding ourselves that that change does not begin and end in Whitehall.

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.