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The social face of local economic development

Managing demand for our public services cannot be served from the transformation of a service alone. Neither can it be served by hoping the problem will go away. Instead, we must tackle the inequality and economic conditions which give rise to high levels of social need in the first place. Economic development needs to get a social face.

It is welcome that local government is now seeking to transform services with reducing demand as key. It’s now accepted that in the past we perhaps overly focused on ‘failure demand’ – i.e. dealing with social need when it occurs rather than preventing the demand in the first place. In the future, dealing with cuts has to be about reducing demand. If we can stop people needing public services in the first place we will reduce spending on them.

However, as a local government frontline social service director said to me last week, ‘I can transform and innovate as much as you like, but even if I do it well, lots of need still won’t be served’. This statement goes to the heart of the issues our public services face and the transformation agenda. For her, there’s a problem with an inward-looking service transformation approach. Unless we have a focus on place and a context which tackles the underlying social issues of unemployment, lack of jobs, local income flows and inequality then service transformation – no matter how effective – will ultimately falter. Economic development is key to these underlying issues.

Can we hope that the work on economic development and growth by local enterprise partnerships (LEPs) and others will reduce demand on public services? Their usual focus on three or four key sites and prioritising of growth is appropriate and could work. Indeed, a growing economy, with a focus on trickle down of wealth and a rising tide which will lift all boats, could increase general prosperity and help to reduce demand on public services.

However, the growth strategies (even if there is a more favourable Eurozone and global context) are in no way guaranteed to deliver. As I have blogged before, economic development in some of the poorest areas, where demand on public services is very high, is little more than voodoo when it comes to tackling the deep systemic economic issues. There’s very poor consideration of what is really required to return some places to economic health.

Furthermore, even if we do get growth it is unlikely to address issues of growing spatial inequalities or connect securely to the many local areas where high levels of local service demand have endured for the past 20 years. Those who need public services the most are usually the farthest from the benefits of growth and the job market.

In many instances the economic strategies are far too narrow and disconnected from wider service transformation plans. Without something better, the likelihood is that in some of the poorest areas the economic strategies will, at best, merely assist the people who are already doing well and aren’t demanding public services anyway.

To reduce demand in public services, economic development must play a clearer and embedded role. That means:

Above all, economic development thinking needs to be imbued with questions of social need, inequality and how it can help address service demand. Economic development needs a social face.

Neil Mclnroy
Neil McInroy is chief executive of the Centre for Local Economic Strategies (CLES)
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