Why its time for the government to get serious about inclusive growth
The realities of the way in which the elecatoral map was redrawn in December mean that Conservative politicians are starting to talk about the economy a little bit differently. Discussions of ‘living within our means’, and the horticultural impossibilities around ‘magic money trees’ seems to have disappeared with the turning of the decade. In their place, we’re hearing a refreshed Tory economic vocabulary around ‘levelling-up’ and ‘left-behind’ places.
But what does this mean in practice? While we must await Sajid Javid’s March Budget for full details, it seems that the key tenets of the new orthodoxy include a renewed appetite for infrastructure spending, a modest loosening of the purse strings for front line services, and a desire to address regional imbalances in the economy. Indeed, it seems this final point will become the central theme, with highly symbolic measures, such as moving the House of Lords to York, already being proposed.
There are, however, a number of problems with this new agenda. To begin with, the focus on regions is potentially problematic. By using such large units for analysis, new Tory economic thinking risks failing to engage with inequalities at the level of local communities and people on the ground.
Furthermore, while pledges on infrastructure spending and money for the NHS are welcome – in isolation they suggest a lack of ambition, and a certain unwillingness to grapple with the true extent of the problems facing the British economy.
To overcome these issues, and to join up economic thinking to engage with the experiences of those who’ve endured a decade of stagnant wages, Boris Johnson’s Government needs to be more radical. And a good first step would be for them to engage more seriously with the idea of inclusive growth.
As an analytical lens, inclusive growth simply means a concern with “both the pace and the pattern of [economic] growth”. However, in the local government sector, inclusive growth, as an agenda, has come to represent something much broader and more powerful.
While it shares the government’s interest in ‘left-behind’ places, local inclusive growth thinking has a much more evolved theory of how to get them ‘levelled-up’ – one that goes beyond simply investing in infrastructure and front-line services. Key areas of focus, which are at present absent from the Government’s new rhetoric, include:
- Community Wealth Building: By re-shaping the role of public sector procurement and anchor institutions, inclusive growth approaches offer ways to kick-start local economies in the kinds of post-industrial towns that the Conservatives now find themselves well represented in
- Employment Practices: By engaging with employers, and using a mix of hard and soft levers to try and challenge them over working conditions, local inclusive growth plans are directly combatting poor practices which have become a major force in decoupling economic growth from living standards in parts of the UK
- Skills: Inclusive growth approaches understand that one of the key ways in which people get ‘left-behind’ is through changes in the economy. Infrastructure and NHS spending will not stop people from being left behind, but things like locally targeted re-skilling schemes will
These ideas form the basis of our forthcoming report on inclusive growth, which offers a practical guide on how to transform local economies in practice.
If the Conservatives really want to see change, they would be best served by embracing this idea of inclusive growth, and empowering councils to deliver plans at the local level. This would require them to go a step further on their journey to embracing a new kind of economic thinking, but frankly, the scale of the challenges facing our economy mean that they can’t afford not to.
NLGN’s practical guide to inclusive growth in practice, ‘Cultivating Local Inclusive Growth’, will be published on 12 February.