Inclusive growth for more dynamic, resilient economies

Two years ago the RSA’s City Growth Commission kick-started the most far-reaching devolution of power and budgets for a century or more.

There was the Northern Powerhouse, Transport for the North, Midlands Engine and Great Western Cities, as well as devolution of Greater Manchester’s NHS budget to the city-region. Today we look to go a stage further, launching the new RSA Inclusive Growth Commission to develop a practical plan to make cities and towns across the UK more economically inclusive. 

Devolution has opened the way for places to create new opportunities for local economic growth. The challenge is now to ensure as many people as possible are able to contribute to and benefit from that growth. Places need to be able to tackle persistent inequalities that drag down economic performance and isolate families and communities. Further waves of devolution need to have people at the heart of their push for productivity and prosperity.

Building on the success of the RSA City Growth Commission, the new Commission will examine how the state needs to change - centrally and locally - to enable different parts of the country fully to realise the potential of devolution. A key focus will be geographical inclusion: making sure that the benefits of the place-based approach to growth are widely shared.  

The City Growth Commission set out to ensure cities were free to reach their economic potential. Despite rumblings of discontent or disinterest surrounding the election of metro mayors, these innovations have been greeted with commitment and excitement, even hailed in Manchester as “the greatest thing that has happened to [the city-region] since the birth of the Industrial Revolution”. The difficulty is that the job the RSA began through the Commission is a job unfinished. Devolution deals raise a number of important questions which have no generally accepted answers, and it seems likely that we need to find some consensus if the Northern Powerhouse and other city-or ‘super city’ -regions are going to really thrive.

The tools we have to help cities succeed economically lack the ability to involve their whole populations, undermining their long-term potential and making them more dependent on the centre (through welfare and redistribution of household income). In fact, it has become increasingly urgent to understand how we can tackle entrenched inequalities within and between neighbourhoods that act as a drag on growth, both locally and nationally. We need to make sure that the benefits of this place-based approach at the heart of devolution to city and county-region are more widely shared.

A new, inclusive approach to growth will be a driver for productivity and prosperity. It will shake the foundations of current orthodoxy, according to which economic growth somehow comes first, and that investment in the people, places and policies that are the basis of this growth comes second. 

The devolution deals are far reaching, but they are just a start. We fool ourselves if we believe the work is done: public services and welfare remain fragmented, and economic and social policies often seem to pull in opposite directions. Growth is happening and unemployment falling, but large sections of the population are still not benefitting. Huge wealth inequalities mean that the costs to the state are still high, growth is lower than it should be, and genuine prosperity remains the privilege of a few.

Nor is just the UK. This is the key policy question worldwide. The IMF has called for a more ‘inclusive capitalism’ and the OECD is leading a campaign to promote ‘inclusive growth’ in cities.  It means that city leaders across world now need to answer questions like: how do we create dynamic, resilient, inclusive local economies? What institutions, incentives or investment opportunities are needed to help places tackle the source of income, wealth, health and wellbeing inequalities? How might central and local government financing allow public interventions to support each one another more effectively?  How might we ensure decisions are made with longer-term time horizons in mind? 

To these questions and more, we are launching a new RSA Inclusive Growth Commission, chaired by Stephanie Flanders, JP Morgan’s Chief Market Strategist (Britain and Europe), and former BBC economics editor. You can download our prospectus from the Inclusive Growth Commission project page, which sets out what we are trying to do and how you can get involved.

Find out more about the Inclusive Growth Commission

Read our prospectus of inquiry online (via Medium)

Follow Charlotte on Twitter @calldritt