Opinion Piece - Blog

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. Nothing wrong with all that, but lets be honest – mainstream economic development has been socially failing, and presided over growing economic imbalances.

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.

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.

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.

We must accelerate the alternatives

The economic crisis has turned into a social crisis and local economic policy is failing.  Poverty, inequality, affordability of housing, low wages, insecure work are now ingrained in our cities.  We need a new radical urbanism so that we address these issues and deliver better social outcomes at scale.

However, there is an irony.  There is no shortage of wealth in our cities.  Whilst a few people and areas enjoy the huge benefits of economic success, many people and areas do not. Take a walk from any city centre.  Once you leave the global chain stores, buzzy restaurants, glorious public spaces, new urban living and high end retail, you will get to the district centres.  In these places, there is a different story.  You cannot always see the poverty and despair, as many areas have undergone a physical regeneration, but the signs are there.  Speak to people or an NGO and the daily hardship of surviving on low wages, youth unemployment and increasing housing costs, become evident.  This is not acceptable.  The future has to be about making existing and new wealth work better for local people and communities.

Community Wealth Building through Anchor Institutions

Places across the UK are striving to find new ways of attracting wealth, enhancing economic growth and addressing poverty. For the Centre for Local Economic Strategies (CLES), the attraction of wealth through inward investment is important; but of more importance is understanding and harnessing existing wealth for the benefit of local economies and communities.

The Importance of Social Value

Over the course of the last ten years, Manchester City Council has been at the forefront of progressive policy and practice around procurement. With an annual spend of over £600million, Manchester City Council has sought to ensure that every procurement decision it makes brings maximum benefit for the economy of Manchester and its residents. This means working with and utilising Manchester businesses to provide goods and services and ensuring that organisations providing goods and services (regardless of where they are based) bring social value including through creating jobs and apprenticeships, creating volunteering opportunities and reducing carbon footprint.

The work of Manchester City Council around procurement has involved a number of activities. First, they have developed a procurement policy statement which not only considers traditional factors such as cost and quality, but also ensure bidders for contracts consider social value. Second they have embedded the city’s corporate priorities into the procurement process, so that suppliers are actively encouraged to contribute towards achieving them.