A progressive post-Brexit economic development

As we move towards Brexit, there are three possible paths for local economic development, says Neil McInroy.

For many years the dominant approach has failed to build a local economy for all. Brexit makes the challenge harder and it needs to make a huge step up.

Under the auspices of devolution, mainstream economic development has followed traditional lines around investment in hard infrastructure, civic boosterism, city centres, planning relaxation and post-19 skills. Overall it has slotted into and complied with the Treasury economic model – favouring agglomeration economics and narrow wealth concentration. All this has meant that mainstream economic development has been socially failing, and presided over growing economic imbalances.

This failing partly fuelled the Brexit vote. On the one hand, economic growth passed many by. The despairing have-nots lost hope. Come the referendum, they had nothing to lose and many voted for the change of Brexit. On the other, the wealthy haves had a (what was for them) risk-free Brexit vote, secure in the knowledge that their wealth would insulate them against any adversity post-Brexit.

So as we move toward Brexit, where does economic development go next?

We can be fairly sure that the Brexit negotiations will be fraught. This will create a turbulent and possibly paralysed Whitehall, slowing up any future devolution, and negatively affecting wider economic and investor confidence. In this there could well be a decline in general inward investment and our local economies will stutter, with the poorer areas likely to suffer the most.

In this scenario, there is a good, a bad and an ugly option.

Firstly, the ugly. Brexit is already being seen as an opportunity to liberalise the economy more and economic development may think it should just get fully behind this. Brexit could mean the freeing up of the UK from EU regulation and there are hopes to forge free trade deals with non-EU countries. Economic development activity would start to crank up its traditional inward investment and competitiveness approaches, taking advantage of the any abandonment of EU employment protection and other social and environmental regulations. If Brexit can be done quickly and this type of response happens rapidly, there may be some pockets of economic and social benefits. However, I fear this will be outweighed by a general increase in social disadvantage.

Secondly, the bad. There is and will be growing concern for local poverty and disadvantage. In this, the ‘inclusive growth’ agenda, and the government’s Inclusive Economy Unit will seek to ameliorate some of this, and economic development will take its lead from there, with small genuflections toward social issues, perhaps with a focus on jobs and labour market, not the wider systemic social and economic issues. No doubt local economic development in devolved areas and new mayors in combined authorities will try their best, but economic development’s longstanding compliance with Whitehall and its timidity in advancing alternatives would mean that only small improvements in the social fortunes of communities are likely to be made.

Thirdly, the good. Economic development could use Brexit as an opportunity to grab opportunities, build resilience and a better future for all. Thus, economic development would not follow the lead from Whitehall and Treasury. Rather, local economic development in our cities, counties and towns would go on the front foot, using devolution and existing policies at its disposal to pursue bespoke progressive local economic development policies. For this to happen, economic development would need to break out of the narrow confines of what it does and thinks about.

This task should start now. Economic development needs to conform less and imagine more – think less about an economy of the pre-Brexit past, and much more about the post-Brexit future. And work for this to be fairer, more socially just.

Furthermore, longstanding issues of productivity and inclusion should be seen as being addressed on the back of place based innovation with greater public, social and commercial collaboration. A new local social contact should be built.

Local business success and new ways of encourage business citizenship is key. In this, using the advantages of Brexit – like freedom from European procurement law – could mean that economic development can more readily densify local supply chains, developing the capacity of local places, people and local small businesses. Economic development could look more closely at servicing local demand, with a focus on more local and ownership of utilities, care and food. We should also look at the growth of local ownership and community cooperatives, and other models which lock wealth in.

None of this is pie in the sky. There is a local progressive economic development alternative, already being advanced in many places by CLES among others. This is waiting to be scaled up and accelerated.

As we move toward Brexit, there are choices for mainstream economic development. It can replicate it’s recent timidity, slot behind national direction and follow tried and failed recipes of the past. On the other it can be bold, use place based alternatives through devolution, take up advantages and build a socially just and progressive agenda.


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