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“Include the excluded” – a recasting of the economic growth model

 

Read on for our latest blog from the Chair of the Institute of Economic Development, Bev Hurley.

Earlier this month I spoke at the Westminster Social Policy Forum Keynote Seminar: The future for Local Enterprise Partnerships (LEPs) and delivering regional projects alongside policy-makers, local government officials and academics.

Before we get into the main question posed at the event, and the related topic of inclusive growth, it’s important to first acknowledge and understand the ‘on the ground’ economic development challenges that we are facing as a nation:

  • The majority of households living in poverty are in work but in low paid/low status jobs.
  • Two thirds of UK workers produce below industry average productivity.
  • There is a chronic low skills problem, with low employability investment and poor management within business.
  • Policy is currently focused on labour market entry – a job/any job mentality rather than access to and progression into quality jobs.
  • There are low levels of investment and success rates in addressing employability, infrastructure access/affordability and ill health.
  • Income pressures disproportionately affect the socially excluded (especially BME, women and people with disabilities).
  • It is a far more complex challenge than a ‘North-South divide’ – healthy life expectancy within the North East is almost as large as it is between the North East and Surrey.
  • Many UK cities lag behind their EU competitors (e.g. Barcelona, Frankfurt and Munich).

The opportunity, as I see it, is for devolution to enable a recasting of the growth model. If we are to drive productivity, we must reduce dependency on the welfare state and ensure the sustainability of our public services. We need to integrate economic and social policy – skills, education, employability support, mental health, childcare; connect people to physical infrastructure assets (e.g. housing, transport); and support businesses to move up the value and productivity chain, and create better quality jobs. If we could get this right it would have a massive impact on productivity and living standards. 

Inclusive growth must be at the heart of all public investment. We need to ensure it leverages social, economic and financial return on investment providing quality Gross Value Added (GVA) and tackling inequalities. It’s about improving outcomes through increasing access and uptake and removing barriers to participation. Inclusive growth challenges (and opportunities) will often be at a very local level. Regional level GVA is a poor guide to social and economic welfare, and doesn’t tell us anything about how the opportunities and benefits of growth are distributed across different areas and different social or income groups. So we need to measure the right things – such as household incomes, earnings distribution, levels of economic activity and unemployment, and growth of quality employment. Importantly, we need to share what works, and equally what doesn’t.

So, what is the future for LEPs and delivering more inclusive projects? In my speech I gave my perspective that LEPs have a leadership role, if they have the capability, of bringing together different groups (formally and informally) to drive this change. We need to mobilise the full force of local resources and all stakeholders to build on existing assets and opportunities, as well as developing new creative solutions – from both inside and outside.

Therefore, we must also include the excluded – a bottom up and top down approach is needed to build local legitimacy. Without involving those who have no voice, how can you understand their needs? There needs to be a clearly defined, shared clarity of vision, but not just a strategy – proof of the pudding will come from action – the courage to experiment, iterate, fail and learn. So stakeholders must all be cohered to one agenda, a common narrative, how it can be achieved, with clarity of roles and commitment to actions that will make the greatest difference. Prioritising is vital. Where is the significant unexploited potential for increasing productivity and increasing inclusion? It’s not a fringe activity – inclusivity has to be mainstreamed. For example, why not mandate equality of access in all training and business support? Why not have equality of service uptake? It’s all achievable.

We should focus on two areas going forward: Improving productivity and quality jobs are at the heart of inclusive growth. So firstly, we need to tackle the UK’s small business profile i.e. 5.3 million SMEs, 75% sole traders and 60% of employment by increasing the quality and targeting of support at key stages – at all levels, from pre-start, sustainability and growth to help ambitious companies scale. We must have much better quality, tailored and targeted support for different stages of the journey. We need to incentivise growth training – especially management skills, commercial acumen, and dealing with the biggest barriers to growth – access to markets (skills in sales, marketing, business development and procurement) and access to finance (investment readiness).

We also need investment in training those with lower skills and other disadvantages as this offers big returns for growth and inclusion. We must develop the capacities and capabilities of individuals, families and communities to participate more fully in society and economic growth, and achieve more equitable outcomes. Their voices are usually unheard, or at best mediated through others, but you have to find ways of involving them in this agenda. They are not ‘hard to reach’ – go where they go and you will find them.

Bev Hurley is Chair of the Institute of Economic Development. Click here to find out more about the IED’s Inclusive Growth CPD workshop and email us at admin@ied.co.uk to book your place - there are not many places left, so please hurry!

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