Theresa May’s government must pursue inclusive growth if Britain is to “work for everyone”

Theresa May will only meet her pledge to make ‘Britain a country that works for everyone’ if she makes inclusive growth the government’s working definition of economic success and gives policy makers at all levels of government a mandate finally to bring economic and social policy together, according to a new report published today by the RSA.

• Read the report: Inclusive Growth Commission: Emerging findings

Chaired by Stephanie Flanders, the RSA Inclusive Growth Commission was set up to explore how the UK could achieve more balanced and inclusive growth. In its Interim Report, the Commission sets out how “grown-up” devolution deals, increased social infrastructure investment and inclusive industrial strategies will be needed if Theresa May’s government is to keep true to her ambitions.

The scale of the challenge is illustrated by the £190bn ‘inclusivity gap’ identified by the Commission, representing how far behind the lowest growth areas in the UK are from the national average.

Inclusive growth is broad-based growth that enables the widest range of people and places to both contribute to and benefit from economic success.  Its purpose is to achieve more prosperity alongside greater equity in opportunities and outcomes.

The report calls for a radical integration of economic and social policy. Its recommendations include:

• The Chancellor must ensure local areas are the major beneficiaries of any changes to public spending announced in the Autumn Statement, so that civic leaders can invest in projects which best promote local inclusive growth.

• Social infrastructure policies designed to enable people and places to contribute to growth – including investment in skills and training - should be put on a par with traditional capital spending, and expanded alongside physical infrastructure spending to promote medium-term growth.

• New ‘grown-up’ devolution deals should devolve social policy, and should provide more funding for social and capital projects. These moves should include smaller towns and cities overlooked by existing devolution settlements, as well as the major metro centres.

• The government should set out in the Autumn Statement how new devolution deals will spread prosperity across social and geographical boundaries, and commit to a place-based Spending Review before 2020.

• New inclusive industrial strategies should prioritise generating jobs and work progression in lower/middle skilled sectors, not just high-tech. They must also incorporate the skills, transport, housing and planning needs which enable people to access jobs.

 Stephanie Flanders, Chair of the RSA Inclusive Growth Commission, said:

The economic system in the UK and other advanced countries is simply not delivering for a large chunk of the population. Theresa May seemed to grasp that fundamental reality in her first speech as Prime Minister, committing to “build a country that works for everyone”. But to achieve this, we need a concrete strategy for delivering inclusive growth. This report explores how policy would need to change - not just in Whitehall but across the country. We would like to see the Chancellor make serious commitments to this agenda in the Autumn Statement in November.

Charlotte Alldritt, Director of the RSA Inclusive Growth Commission, said:

The time has come to create a new model of inclusive growth, so that all people are able to contribute to and benefit from prosperity. As the new government looks to reset its fiscal framework in the forthcoming Autumn Statement we must use this as a chance to reshape local economic development so it works for everyone in all our cities, towns and neighbourhoods in the UK.

The RSA Inclusive Growth Commission is kindly funded by Core Cities UK, Key Cities, Local Government Association, London Councils, Joseph Rowntree Foundation and PwC.

Julia Unwin, chief executive of the Joseph Rowntree Foundation and a member of the RSA Inclusive Growth Commission, said:

This report provides compelling evidence that if we are serious about sharing prosperity and rebalancing the economy, areas outside the biggest cities must also share in the benefits of investment and devolution in the Autumn Statement. Mayors and town hall leaders must have the powers, incentives and capacity to tackle poverty so they can play their part in making Britain work for everyone.

Too many of our small towns and cities have been left behind, despite the success of their big city neighbours, while the rapid pace of change in the economy has left too many people without the skills and opportunity to get on in life. We must act to ensure prosperity reaches all corners of the country, and provide everyone the chance to earn a good wage in a secure job.

Paul Watson, Leader of Sunderland City Council, Chair of the Key Cities Group and a member of the RSA Inclusive Growth Commission said:

This report reminds us that we have to embrace a new kind of economic policy to succeed. The referendum has shown us how many people were left out of the opportunities our economy provides, and this report highlights the damage that causes to our communities, to our society, and to our long-term prospects as a country. We have to seize this opportunity to challenge our old assumptions and develop more inclusive, more diverse economies that reflect the strengths of our people.

Notes to Editors

1. The Inclusive Growth Commission will look to influence policy makers and practitioners in the context of the new Government post-Brexit, the evolving devolution agenda and the combined authority mayoral elections in May 2017. The Commission’s final report will be published in Spring 2017.
2. Analysis for the Inclusive Growth Commission by New Economy found that if each area in the UK had the GVA per capita at least as high as the national average, the narrow economic value would be £191.5bn
3. The Commission will complement the ongoing international debate on inclusive growth. The IMF has called for a more ‘inclusive capitalism’ and the OECD is leading a campaign to promote inclusive growth.
4. For more information contact RSA Head of Media and Communications Paul Duffy on 020 7451 6893 / 07799 737 970 or paul.duffy@rsa.org.uk
5. The Commission can be contacted via Charlotte Alldritt, charlotte.alldritt@rsa.org.uk or 0207 451 6848.