If you define economic efficiency too narrowly, you get narrow prosperity

The final report from the Inclusive Growth Commission is launched this week. David Boyle, a member of the Commission’s team, calls it a game-changer for economic development and regeneration

Revelations in Private Eye about regeneration money going via offshore companies – many of the companies which redeveloped London’s Elephant & Castle were registered in Jersey, the Isle of Man and the British Virgin Isles – throws a spotlight on whether public money is being used in a way that has any chance of spreading prosperity.

It goes to the heart of the basic problem of inclusive growth, which is this: when economic efficiency is defined too narrowly, then prosperity stays narrow too, as it has done now for some decades – it is the long tail of de-industrialisation.

Inclusive growth is defined by Stephanie Flanders’ Inclusive Growth Commission, which reports this week, as broad-based growth that enables the widest range of people and places to contribute to and benefit from economic success.

But it also stands for an approach to local economics that breaks down the barriers, not just between the prosperous areas and the struggling ones, but between social and economic objectives, between local authority departments and strategies – and absolutely between Whitehall departments.

This marks it out as an approach which meets the objectives of a wide range of different players in the regeneration debate, all of whom I encountered recently at the Inclusive Growth in Cities conference run by the Joseph Rowntree Foundation. The cities, the academics, the thinktanks, the OECD, the accounting firms, the radicals and the community activists all find ‘inclusive growth’ a useful way of understanding the basic problems that cities face.

I have been involved in writing about regeneration for three decades now, and ‘inclusive growth’ is as close to a game-changer as I have ever seen.

What makes it fascinating is that it can potentially bring together the idea of devolving power to enterprising, entrepreneurial cities – in a way that can be embraced by the political Right – with a new way of defining ‘growth’ that can be embraced by the political Left.

There have been the occasional murmurs about the word ‘growth’, as if – by using it – we were accepting the narrow measures of success which have so undermined us.

Quite the reverse: inclusive growth implies that choices badly need to be made between investments which siphon prosperity off to the richest and those which have a reasonable chance of spreading it more widely.

It is, first and foremost, a change of definition and a change in measurement.

Old-fashioned economic measures could not distinguish between these – inclusive growth denies that they are the same. It therefore opens up a world where growth begins to mean something different – growth defined so narrowly that you can give public money to offshore regenerators isn’t likely to be growth at all.

• David Boyle was a member of the RSA’s team working on the Inclusive Growth Commission. Its final report is launched tomorrow. 

Photo by Tim Green aka atoach