This article originally appeared in the LGC, marking the release of Devolve, redirect, democratise: The future of local economic development in the UK
Just over a year ago, our organisations – the Centre for Local Economic Strategies (CLES) and Development Trusts NI (DTNI) – jointly penned Time to build an inclusive local economy – A Charter for Change, setting out a community wealth building approach to local economic development in Northern Ireland.
A lot has changed since then. Theresa May no longer occupies Number 10; Leo Varadkar is no longer Taoiseach; Stormont is back; Brexit is happening – bringing with it disruptions to trade in Northern Ireland. And we have suffered, and continue to suffer, the enormous social and economic turmoil brought about by Covid-19.
“For all too long, the economy in NI has not been working well for people and place.”
Amidst all this change, some things, however, have remained constant. Northern Ireland’s economy – even prior to the onset of coronavirus – had still not recovered fully from the financial crisis. For all too long, the economy in NI has not been working well for people and place. Poverty and inequality remain stubbornly entrenched, and NI suffers from the highest rate of economic inactivity across the UK – an unenviable record it has held for over three decades.
This article originally appeared in The Municipal Journal
Levelling up is the latest buzz phrase being bandied about to address the stark divisions and variations in economic performance across the country. Whilst it is welcome that the government seems to be concerned by this unacceptable state of affairs, we must view with some scepticism a new phrase landing upon a problem which has deep and longstanding roots.
We have indeed fallen far – research undertaken by CLES has shown that many of the regions and nations of the UK have spent time in recession through recent years. We need to get real about levelling up – the scale of the challenge facing us, and the structural factors that underpin the problem.
This post originally appeared on the website of Compass – an organisation that fights for a more equal, democratic and sustainable society.
In 1934 the political historian RH Tawney said that the UK is ‘the oldest and toughest plutocracy in the world’. Our democracy has been unjust for a very long time – too ready to doff its hat to privilege and wealth.
We have had years of scandals as regards cash for questions, the power of lobbyists, and dubious parliamentary expense claims. The recent Brexit debate and paralysis has further revealed the deep problems. Brexit has seeped into the rotten cracks of our democracy and parliamentary processes and made them chasms. Our democracy and ‘mother of all’ parliaments is in bad shape, it has now been fully exposed: arcane, archaic and addled. Unable to represent properly and inchoate. It sets the tone for our wider democracy and it is increasingly discordant.
The UK2070 Commission has released its first report: fairer and stronger: rebalancing the UK economy. The first of three reports, it represents the latest in a long line of policy efforts which have sought to tackle the deep spatial inequality which has plagued the UK as far back as the Barlow Commission of 1940. Does this report – or the Commission as a whole – offer a genuine, much-needed step change?
The starting point for UK2070 should be an acknowledgement that we live in unprecedented times: profound social, economic and democratic crises continue to unfold with a terrifying backdrop of ongoing climate emergency. Spatial imbalances are framed by this, as such we need a fundamental redress to the UK social contract – this is not a 1979, 1997 or 2010 moment, this is more like 1945.
With the recently coined ‘northernfail’ hashtag now trending on Twitter, social media is awash with real time reminders of the unacceptable levels of service being provided by the Northern Rail franchise.
Anyone who’s used the service recently, or has talked to colleagues or friends who have, will immediately see why it’s been branded as a fiasco. Serious delays and cancellations are now ubiquitous; disruption, upset and misery are the everyday reality for users of this service.
At the Labour Party Conference in Brighton last month, CLES and APSE launched their report looking into ‘The impact of devolution upon frontline services’. This report set out to look at why Frontline services have been absent in devolution rhetoric to date. A surprise given the ‘localise’ ethos is key to the devolution deals.
A lot has changed since the post-war founding of the welfare state, and the social contract that went with it is eroding. Austerity has undoubtedly changed things, and so has devolution. CLES CEO, Neil McInroy argues that to build social justice, we need a new social contract: and that this includes one that is local to place and community; one that balances the strengths of the private, public and social sectors; one in which we make sure businesses do their bit.
Devolution is an opportunity yet to be fully realised. Devolution to some areas of England has been broadly focused on local economic growth and managing austerity through public sector reform. But with more power to local areas and the advent of Metro Mayors there is potential to forge a new relationship between business, the local state, social sector and citizens—a new local social contract.
CLES’ Senior Researcher, Victoria Bettany, joined Dena Ryness, host of the ‘Divas Up North’ radio show, to discuss the challenges of successful devolution and the potential of the Northern Powerhouse to truly benefit women.
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.
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.
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.
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.