We asked six experts to give their verdicts on the events of 2012 and suggest ideas for progression in 2013. In our first instalment Neil McInroy sums up the local economic development landscape and argues that an alternative narrative is needed.
Britain has and continues to change for the worse. We should fear the future. For many it is going to be miserable. The global economic implosion in the autumn of 2008, had and will continue to have long lasting social and economic repercussions. Our economy will never be the same again and the good times are long gone. So today we are in the midst of an economic transition with destiny unknown. We desperately need a new economic narrative.
Inequality knows no compass points in this new Britain. The policy of rebalancing is failing many locations, as a weak and demand-deprived private sector are unable to absorb all of the public sector job losses. Spatial rebalancing from rich to poor is also failing. A growing complex patchwork quilt of haves and have-nots and division between places is likely to be long-lasting.
There is no clear path to new jobs. Unemployment in many areas remains unacceptably high, with an increase in part time and underemployment a growing characteristic of many local labour markets. The working poor are here to stay. Women and young people have been disproportionately affected.
There has been too little thought given to how major restructuring will affect our local economies, places and people in the future. The scale of austerity has meant that networks, connections, collaboration, expertise and services, built up over many years, have been irreversibly eroded. There has been a serious lack of appreciation that efficiencies in the short term may well be outweighed by an increase in social and economic costs in the long term. We are stoking up problems and costs.
The ‘promise’ of a Big Society was not even that. It has been exposed as a wonderful but cruel strapline. We have seen cuts to voluntary sector and a pressure to compete on price for public service contracts. This has weakened civil society – less activist, free, able and resourced to play a role in building social capital and reducing upstream demand on public services.
Local government is poorer, and the poorer areas (which have lost more resource than the affluent areas), have less capacity to do anything about it. It was silly to suggest that public sector just needed to ‘get out of the way‘. Great resilient and enduring local economies are made up of a patchwork of social, public and commercial activity. They are all interconnected and dependent on each other.
The important role local government plays as facilitator and broker within locations is being overlooked by central government. This could have lasting consequences. The end result will be weakened place leadership, greater fragmentation, and less capacity to make the local place connections vital for local economic health.
Local economic development is often unreflective of wider Eurozone and global woes. Much economic development thinking is voodoo, trying to impossibly marry austerity with economic growth, with genuflections toward low carbon and resource depletion. However, it will need to start to grasp that part of the answer may well be an entirely new approach to economic development.
Necessity may be the mother of invention, but it would appear in national policy terms that this is not the case. The big questions about the need for a new economic model are left unaddressed. National policy debates are narrowly confined to discussion around scale and speed of cuts. Efforts to stimulate the economy are similarly confined to policy debates about the scale.
However, in this sorry tale, there are glimmers of hope.
Firstly, there are hopes for more powerful cities. City Deals offer the opportunity for cities to have more powers (and devolved central resource) to better steward the economy and place. They may even manage to make the economic model more socially inclusive. However, we should be cautious about overstating the boldness of city deals. This is ‘baby step’ localism. The treasury and the central Whitehall state machine remains supreme. Any change will be incremental and take time before a significant rise in local economic wealth and health occurs.
Secondly local enterprise partnerships (Leps) are finally starting to grow some buds. The government seems keen, belatedly acknowledging the importance of local, sub regional and regional economies. Thus the government continues to direct some funding through them, and as the autumn statement reveals, will have a beefed up strategic planning role. However, their single focus on growth is often too generic and not bespoke to the characteristics of place – simplicities around ‘trickle down’ and ‘rising tide will lift all boats’ remain. Leps are often not thinking about wider local economic health and reducing demand on public services or the role of social sector in economic effervescence.
However, much more positively, there are a small, but growing band of citizens, individuals and organisations across the social, public and commercial sectors who are part of a new local economic narrative. They know that global uncertainties are the new normal, Britain has changed for good, that crude capitalism fails places, that economic wealth is not the only value, that big public sector largesse has gone forever, and that there are alternatives.
This alternative narrative is predicated on a belief that Britain’s economic model must have a fairer national economic plan which decentralises away from the overheating south. It appreciates the importance of nurturing the environment and how an economy must above all work better for people and places. The rise of alternative financial models, appreciation of a social return on investment, new forms of exchange, production and consumption cooperatives, social businesses, self sufficiency and altruistic practices all demonstrate this hunger and energy. National policy needs to catch up with this narrative and be bold. This is the future.
As a father, school governor, volunteer and mortgage payer, this year has been worrying and I am steeling myself for worse to come. As an economic development policy professional, I am maddened by the boomgoggling and stifling orthodoxies that pervade economic development, the lack of a new national economic narrative and the inability to grasp the nettle of systemic change and the alternatives at hand.
However, there is hope, here and abroad – a new economic narrative is growing. This narrative must be helped by Whitehall, but it will be written in communities, businesses, the streets of our towns and in our depleted town halls. I only hope it can be written fast enough.
- Read the rest of our annual round-up: Julian Dobson on the emerging collaborative economy, Phil Baker on the future for public services, John P. Houghton on the need for a third way in regeneration, Keren Suchecki on welfare and poverty and Richard Caulfield on the challenge ahead for the community and voluntary sector
A well written piece Neil, and echoes many of my own thoughts. More of the same neoliberal medicine just won’t deliver the difference so many parts of the UK desperately need; we need a paradigmatic shift. You are absolutely right to point to the spatialized character of the growing gulf in inequality. You don’t need stats put on a map; you only need to get on a train, visit a few different places, and it’s all there in front of your own eyes. I fear we are headed for a great deal more misery, social pain and disturbance before any narrative of alternative gains sufficient strength to seriously challenge the current language and apparent sense of this austerity-driven orthodoxy – Miliband and Balls won’t get close.
Much of the new thinking is taking place in Labour local authorities, especially those recently won from the colaition parties. This provides a new opportunity for CLES to work with a growing band of councils and to promote collaboration between them.
Thanks for the comments. good to hear from you Antony! Language and a new discourse is a key part of the shift required.
Martin: We already work with a number of councils of all political persuasions. I do not believe new thinking is the preserve of any one political party. I think the local government community needs to collaborate across party lines within councils and across different local authority areas.
I like the tone & urgency of the message, as well as the call for a new model, framework, or paradigm.
This will cause us to be more pro-active, focused, and effective — equal to the challenges we face, I hope.
What growth has occurred has been in niche sectors, virtual services and person to person services. Public bodies like the first type- ‘real’ jobs and ribbons to cut, but are very nervous about the latter two. They don’t have conventional supply chains and don’t occupy bricks and mortar in a traditional manner. They don’t fit at all into increasingly meaningless SIC categories, which means, from their perspective , many policy initiatives are irrelevant.
This leads to my very boring recommendations which is for local authorities to focus on their core statutory duties, and get reputations for being efficient and business friendly. This means maintaining the physical infrastructure of their areas, account manage projects through planning, environment requirements and health and safety, support start ups and micros, and deliver flexible and adaptable workforces. Above all drop the bias towards ‘worthy’ jobs.
We certainly need a new economic model, but the problem is that we also need a narraitive for an alternative that doesn’t sound bleak. One of the few things that Miliband said recently that I fully agree with is that Martin Luther King would never had such an impact if he had said “I have a nightmare”. Yet it is a nightmare scenario that we possibly face. The huge failure at global level to deal with C02 emissions is simply airbrushed out of the current discourse. We are on track for a hike in temperature of over 2°C. The overwhelming consensus is that we can allow for 565 gigatons of CO2 to be emitted between now and 2050 if we want to stay below the 2°C target. However, the bad news is that in 2011 we used up 31.6 gigatons of our allowance and will do the same in 2012. Moreover, we have 2975 gigatons of CO2 trapped within known reserves of gas , oil and coal. These reserves will be exploited by 2050 and indeed within our casino capitalism model are infact already being traded on markets. What is the narrative for stopping this? How can we mobilse for a new narrative/paradigm? Politics is broken and how to mend it has to be part of the new narrative.