Places can drive inclusive growth – but government has to do its bit

The Inclusive Growth Commission’s interim report sets out a framework for resetting social and economic policy in the lead up to the Autumn Statement. Our supporting ‘deep dive’ report suggests that inclusive growth can reinvigorate places, but it will require a big effort from both local and national government. Inclusive growth can’t be done on the cheap. 

Case study research that we conducted in Bradford, Cardiff city region and Newcastle-upon-Tyne reveals a plethora of place-based initiatives that are supporting economic inclusion. The flexibilities afforded by devolution are helping them go further. Each case study area pursued inclusive growth in its own unique way, but we identified three common elements of this place-based approach in practice:

• Economic leadership and connectivity;
• Public service reform and investment, and;
• Inclusive growth through community anchors.

Economic leadership and connectivity

Cities and towns are becoming much better at leveraging their unique economic strengths and identity; building more positive connections with their regional economies, including through devolution processes; and harnessing local leadership and collaboration to connect more people to economic opportunities. Get Bradford Working, for example, is a £13.5 million investment from the council and other partners that brings together skills and employment support within the district to promote inclusive outcomes across the labour market spectrum, in a way that aligns with local economic needs. The programme ranges from directly connecting long term unemployed people to jobs created by city centre regeneration, through to matching high skilled residents to local growth sectors. It has helped over 2500 people into work.

Public service reform and investment

Places are also tackling the multiple barriers to economic inclusion that arise from a fragmented system of public support, where the most disadvantaged groups often fall between the cracks of siloed, centralised, confusing and impersonal services. They are doing this by leading efforts to create a more integrated and locally rooted skills and employment system, as well as connecting the skills and work agenda to a wider set of measures around health, housing, care and prevention in order to join up support and help to create the social conditions for inclusive growth. Newcastle Futures, a special purpose vehicle created by Newcastle City Council and Jobcentre Plus in 2007, joins up all the employability activity in the city and links with other services to achieve sustainable employment outcomes for disadvantaged groups.

Inclusive growth through community anchors

Community anchors, such as social enterprises and charities, play an important role in ensuring that greater opportunities flow to local residents and disadvantaged neighbourhoods. Evidence from social businesses in Wales suggests that they fill gaps that the private sector won’t: enabling people that would otherwise be detached from the labour market to access jobs, create and grow businesses, and directly contribute to the local economy. Connect Assist, in the south West valleys, is a strong example of this. Local authorities and other place-based institutions (such as hospitals and universities) are also using their spending power and local clout to ensure more of the economic value of public procurement and development is captured locally. This can also be seen in places such as Preston that are following ‘community wealth building’ strategies.

Taking inclusive growth forward

The deep dive research also highlights the constraints that are imposed on places’ ability to promote inclusive growth, reflecting in large part the high degree of centralisation of power in the UK and the impact of policies made by national government – something the City Growth Commission as well as the current Commission have identified.

We heard about the “multiplier effect” of austerity on the economy of a place as well as its social infrastructure (such as housing and social capital), which weakens the conditions for inclusive growth. Substantial cuts to local services, working age benefits and local growth and regeneration funding, at a time of growing need, have also constrained the capacity of places to pursue inclusive growth. In terms of Newcastle, the investment fund of £30m a year over 30 years offered to the North East Combined Authority as part of the devolution deal (which was recently rejected), is dwarfed by the £828m of service cuts experienced by councils in the sub-region between 2010/11 and 2014/15 as well as the £491m loss of income for working-aged people per year by 2016 resulting from welfare reforms since 2010.

As well as much reduced resources, the fragmentation and centralised nature of the skills and employment system was also identified as a challenge, as well as the lack of enabling support from the centre. There is a strong argument that more significant up-front investment to tackle labour market exclusion (the budget of the forthcoming Work and Health Programme is very small and prevention services are weakly resourced), more devolution of power and finances, and a stronger partnership between central and local government can give places the tools they need to drive more inclusive growth and address the sources of sub-optimal productivity.

But it is also important that places recognise that growth is not inclusive by default. Our interviews with place leaders and local stakeholders (as well as evidence hearings, including our most recent one in Plymouth) suggested that city region and regional growth strategies shouldn’t just focus on a few sectors that might raise their GVA, but also look into parts of the economy where many more people are employed (such as retail, care and hospitality) and where there is potential to raise productivity, wages and job security. Equally, agglomeration policies need to consider how hinterlands and not just city centres achieve their economic potential, and how disadvantaged groups and not just mobile, high skilled workers benefit from increased labour market connectivity.

Read the report online: Inclusive growth for people and places (on Medium)

Download the report: Inclusive growth for people and places 

Find out more about the Inclusive Growth Commission

_{Atif Shafique is a Lead Researcher for the Inclusive Growth Commission. He is particularly interested in local place shaping and the role of councils, grassroots social action and community leadership in building the capacity and resilience of communities and tackling social inequalities.}