How cities can reduce poverty through local growth

It’s time for cities to move away from orthodox approaches to economic development and prioritise combating poverty within their growth strategies.

With a new wave of city deals imminent and overwhelming government support for Heseltine’s local growth review we are entering a potential new dawn of cities managing their own economic growth. Joining up local growth and poverty alleviation agendas provides perhaps the best opportunity for managing burgeoning demand on local services.

With growth so hard to come by, local economic strategies have reverted to trickledown economics. Poverty and social inclusion objectives are being parked in the ‘too complicated box’. Yes, high growth, high-value employment in a local economy is a good thing but it is not enough in itself. As Richard Florida put it: ‘Not only is Silicon Valley the home of great economic wealth; it’s also one of the most innovative and creative regions in the world. If ever a rising tide of prosperity were going to lift all boats, you would expect it to happen here. Yet it doesn’t.’

The question is not about whether growth trickles down, but whether it trickles far enough. Persistent poverty demonstrates the realities and limitations of this policy.
Joining up local strategies and services is the holy grail that requires a cultural shift in both Westminster and within city halls. The community budget pilots have demonstrated the scale of efficiencies that can be achieved – it has been reported that bringing together funding streams for troubled families has resulted in a reduction in the budget of 80%.

There needs to be a shared understanding, within a city, of the costs and benefits of tackling poverty. The social costs and benefits are clear. Developing a more accurate understanding of the potential financial costs and benefits would provide further incentive. Poverty places a significant burden on city services. Reducing poverty through targeted growth initiatives will help manage demand and save money.

A good starting point would be to review existing economic strategies against a poverty filter:

• Are poverty reduction objectives a priority? Does the strategy focus on people or places in poverty, or both (or neither)? How, for example, are skills or transport initiatives targeted to reduce poverty?
• Does it include a clear understanding of the relationship between high-value growth and the local economy? What does high-value growth mean for job creation and poverty? Is it simply a high-growth strategy based on ‘trickle down’ or does it include specific measures for tackling poverty?
• Does it recognise the issue of in-work poverty? What policies are in place to ensure lower-value jobs become better quality – in terms of pay, conditions and progression routes?
• Are local anchor institutions (including local authorities) taking a lead? Are procurement and supply chain policies in place to maximise local economic impact and specifically seek to tackle poverty?

Bringing poverty into the growth equation makes it more complicated and there are more questions than answers, but it is worrying how few people are even asking the questions, let alone doing something about it.

• JRF would like to hear examples of how growth strategies have linked successfully to poverty reduction, to inform possible new research on cities, growth and poverty. Please email josh.stott@jrf.org.uk or tweet @Joshjrf