New Start, CLES and the New Economics Foundation, with funding from the Friends Provident Foundation, are travelling the UK during 2015 and 2016, visiting its eleven core cities to map what a ‘good’ approach to local economics looks like.
In each place we are seeking out examples of a different approach to local economics and holding an event with local business, government and community leaders to discuss the state of their local economy and how it could work better.
Since May this year we have travelled to Manchester, Birmingham, Bristol, Cardiff and Newcastle, bringing together local leaders in each place.
Here are ten things we’ve learned:
- Trickle-down is not working: UK cities may have a good story to tell in terms of economic growth and attracting inward investment but that growth is not reaching far. ‘Doughnuts of deprivation’ persist around many cities, in areas where the economic story has not changed for 30 years. South Wales, for example, has been a Tier 1 Assisted Area since 1934. If local economic policy continues to prioritise economic growth through policies such as inward investment, then poverty and inequality will continue to grow.
- Economic decision-making is not representative. In the cities we have visited so far, local economic decisions are being made by a small set of people, usually from big business and the public sector. There are few mechanisms to include the views of small business and local communities. Local collaboration has worsened since the closure of Regional Development Agencies and the breakdown of local strategic partnerships. Greater effort is needed to ensure that the needs of all local populations are considered in local economic strategy.
- There is a mismatch between the needs of local communities and the dominant economic model. During our Cardiff event this mismatch came through clearly. Delegates struggled to align the needs of their communities – sustainable jobs, a greater distribution of wealth, more control over economic decisions – with the economic model they are being asked to fit in with, namely the pursuit of regional growth (GVA).
- There is no common narrative about what a ‘good’ local economy looks like and how to create one. Local practitioners are frustrated by competing aims that hold back progress. When the focus of economic strategy is on maximising regional growth at all costs, it is difficult to fight for a broader approach, one that benefits the common good. As one delegate in Birmingham said: ‘We have to switch perception from maximizing GVA to thinking about who benefits.’ RESO in Montreal is an example of a collaborative local partnership that brings together the public, private and social sectors around a vision of ‘good local economic development’.
- Social and economic aims are rarely aligned. Local economic policies are often not directly connected into efforts to reduce poverty or inequality. Plans to boost economic growth – be it through a new shopping centre or Enterprise Zone – are rarely joined up with plans to tackle local unemployment or used to create training opportunities. A ‘double dividend’ approach could ensure that all economic policies are linked to social outcomes.
- ‘Alternative’ approaches to local economics can lead to gentrification and further marginalisation. Bristol is rightly proud of its strong ‘alternative’ sectors – large green and social economies – but is seeing inequality rise as the middle class jobs those sectors create leads to gentrification. A true ‘alternative’ to mainstream local economics focuses efforts on poverty reduction, tackling inequality and bottom-up job creation.
- Small, locally-led businesses create stronger, healthier economies. Locally-led businesses help circulate money within a place and unlock greater economic power than big business, according to research from Localise West Midlands, which is working to make the case for greater levels of community economic development. Despite this, local economic policy tends to favour and support big business.
- ‘Grassroots economics‘ provides an alternative to mainstream job creation. In each city we have travelled to we have found examples of organisations that are focused on understanding local needs, unlocking the resources of people and places and building upwards. In Manchester, asset –based community development is mapping and connecting the assets of local communities; Black Country Make in Wolverhampton and Knowle West Media Centre in Bristol are providing training in digital manufacturing and using local assets to set up micro-businesses.
- Anchor institutions such as hospitals, housing organisations, councils and colleges are becoming economic actors, by localising their spend and supply chains. The Midlands Metropolitan Hospital in Sandwell plans to root itself in its local community in a similar way to that of Cadbury’s in Bourneville, and in Manchester the council has analysed the impact of its spend on its local economy and is using progressive procurement policies to make that spend work harder.
- There is an alternative. In many localities in the UK the economic picture has not shifted for many years and in some places it is going backwards. We can carry on doing the same thing over and over again, each time expecting different results. Or we can try a different approach. The last forty years have shown us what a policy focused on economic growth does to cities; now it’s time to see where a different approach might lead. Our work so far has uncovered an appetite for an alternative and glimpses of what that looks like on the ground. Cities now need pioneers to take that vision forward.