Understanding economic inclusion

Why can some areas pull themselves up while others remain rooted in poverty? Katie Schmuecker provides some clues

Some confusion and cynicism continues to surround David Cameron’s vision of the Big Society, but the aspiration for active and engaged citizens taking responsibility for their communities is an important one, which ought not be lost in the debate.

These of course are not new ideas, and it must be recognised that there are already many people working tirelessly for their communities across the country. But the idea that there should be more of this is a good one, and what is more, it has an important part to play in helping to drive improvement in deprived neighbourhoods.

New research from the Institute for Public Policy Research North (Ippr north) finds that while economic growth is vital for improving deprived neighbourhoods, alone it is not sufficient. Looking back over the period of economic growth up to the onset of the recession, the north of England has been transformed in many areas.

Post-industrial towns and cities were revitalised, new businesses formed, and places reshaped and regenerated. But not all neighbourhoods shared in the benefits of this growth, and the rising tide did not lift all boats.

The report, Rebalancing Local Economies: Widening Economic Opportunities for People in Deprived Communities, asks why some areas improved while others lagged during the economic good times. It looks in detail at three pairs of neighbourhoods with similar levels of economic deprivation at the turn of the century, and similar characteristics, but contrasting trajectories in terms of economic deprivation.

For 14 months Ippr north, in partnership with the Joseph Rowntree Foundation and the pan-regional economic development body the Northern Way, carried out a detailed comparative study of three pairs of deprived neighbourhoods from three city-regions in the north of England – Tees Valley, Liverpool and Leeds.

In each case the pair of neighbourhood shared a number of characteristics, including similar levels of economic deprivation in 1999, but over time one neighbourhood improved while the other lagged.

The research sought to identify the factors that influenced improvement, and to consider how people living in deprived neighbourhoods can be linked to economic opportunities in their wider city-region.

Overall the research has four key findings:

1. Economic growth is necessary but not sufficient to improve deprived neighbourhoods

2. The specific context of the functional economic area where a neighbourhood is located has a significant influence on improvement

3. Two factors consistently emerged as having explanatory power for improvement – or decline – in deprived neighbourhoods:

– Residential sorting

– The internal and external relationships of a neighbourhood, or ‘community outlook’

4. Other factors – such as approaches to tackling worklessness – are also important, but do not provide a consistent explanation for differences between improving and lagging neighbourhoods.


As one of the most significant problems facing people living in deprived neighbourhoods is worklessness, the availability and accessibility of entry level jobs is of course vital. But the research found that it does not always follow that having seemingly good access to economic opportunities results in improvement.

Indeed, the reality can be quite counterintuitive, with neighbourhoods with jobs on their door step or excellent public transport connections to multiple centres of employment in some cases lagging, while neighbourhoods with less good links improved.

It is clear that to understand why some neighbourhoods improve while others do not we need to understand more than how many entry level jobs there are, and where they are, vital though that is.

Two key factors consistently emerged that differentiated the lagging and improving neighbourhoods. The first is population change and changes to the housing stock. In the lagging neighbourhoods this was characterised by a process of ‘residualisation’, whereby those moving out tend to leave behind the poorest members of the community, and those moving in have high levels of need. This resulted in a self-reinforcing spiral of decline and reputational damage.

By contrast, in improving neighbourhoods there is some evidence that changes to housing stock and tenure, along with good quality facilities and environment attracted new people to the area and reduced the concentration of deprivation.

This should not simply be dismissed as a process of gentrification, as the housing built has generally been at the affordable end of the spectrum, and there is some evidence of improvement to the economic deprivation rates among the ‘original’ population too.

In terms of population change, what matters is not so much whether a neighbourhood is growing or shrinking, but the characteristics of the people moving in and out of the area.

Where policy focuses only on individuals, and not places, the risk is that individuals with more resources and more choices will move to other neighbourhoods unless there are positive reasons for them to stay.

This will result in an increasing concentration of workless individuals. In order to avoid storing up problems for the future, this is something policymakers should seek to avoid.

The second factor that consistently differentiated the lagging and improving neighbourhoods is what we refer to in the report as ‘community outlook’.

Improving areas had more active and well-connected voluntary sector and community organisations and proactive community leaders working to secure improvements to the local neighbourhood. Their residents also tended to have wider travel horizons and were more likely to look for work across a wider geographic area.

While it is difficult to establish cause and effect here, there appears to be a nexus of interrelated issues that together have explanatory power for why some areas improve while other – seemingly similar – areas do not.


There are of course dangers in generalising too widely from just six case studies. Indeed, there were many similarities between the neighbourhoods: for example they all had strong ‘bonding social capital’, with a majority of people speaking to their neighbours on most days.

Nonetheless, the observed differences between the improving and lagging neighbourhoods offer an interesting insight into the importance of community characteristics and outlook. These were in relation to the identity and social norms of the neighbourhood; the quality of community leadership and partnership working and the travel horizons of residents.

Residents in lagging areas tended to be very attached to the local area, and often projected a defensive – and sometimes isolated – identity, developed in opposition to the negative views of others towards their area. Informal social pressure to upkeep the area was also less evident.

In improving neighbourhoods, by contrast, there was a greater willingness to intervene to improve the area. This was animated by active and well-connected voluntary sector and community organisations, along with visible and proactive community leaders working to secure improvements to their local neighbourhood.

Improving neighbourhoods were not only internally networked, but also had a sense of connectedness to, and interaction with, ‘the outside world’. Survey evidence indicates residents in the improving neighbourhoods tend to have wider travel horizons.

Those that were looking for work were more likely to be looking across a wider geographic area, and residents were generally more likely to visit places in the city centre and in the wider city-region for a range of activities such as shopping or a night out.

While cause and effect is again difficult to determine, the wider travel horizons of residents in improving areas is likely to enable them to access information and opportunities not available to residents with shorter travel horizons.

An important message in these findings is that the aspiration of the Big Society for more active and engaged citizens is not simply an end in itself. If done right, building the Big Society could contribute to tackling disadvantage in deprived neighbourhoods. More confident and organised communities with effective leaders, as demonstrated by some of the areas covered in the research, are in a better position to improve their neighbourhoods.

Conversely, neighbourhoods with very localised identities, often formed in reaction to an area’s negative reputation, can have an impact on people’s confidence. And when combined with short travel horizons, it can prove a barrier to some people seizing economic opportunities.

Policymakers should identify neighbourhoods where high levels of worklessness combine with a number of other factors, including: strong attachment to place, negative reputation, tight social networks, weak community leadership and relative isolation.

It’s clear these places are least prepared to embrace the Big Society agenda. If we are to ensure that all neighbourhoods benefit as the UK economy returns to growth, it is these neighbourhoods that should be the priority for action and the recipient of what investment there is.


Experience in the case study areas demonstrates the symbiotic relationship between public sector support and positive community outlook.

In improving areas, the quality of relationships between community leaders and public sector service deliverers was notable. Working together they were able to identify emerging problems early and put in place actions to address them.

Furthermore, for many groups, public sector financial support has been essential. In one lagging area, many voluntary and community sector groups disappeared when single regeneration budget funding came to an end.

The danger is an unsupported Big Society will prove to be a ‘small society’ in some areas. The state has an important enabling role to play.

Some things to do to support positive community outlook:

  • Focus on the most vulnerable areas: in a context of reduced public resources support should be concentrated on areas with increasing levels of worklessness and more negative community outlook.
  • Build networks: groups and organisations need to be well networked both among themselves and, crucially, with decision makers and service providers to win improvements for their area.
  • Transfer assets to the community: to support the establishment of community hubs, and enable to move community groups and organisations onto a more sustainable footing
  • Procurement: ensure public procurement opportunities are accessible to neighbourhood organisations
  • Mentoring: match people working in neighbourhoods with positive community outlook with those working in areas where it needs to be developed
  • Tell good stories: share and promote stories of successful community action to build confidence and a sense of achievement within neighbourhoods.

And some things not to do:

  • Withdraw support: groups and organisations – especially in vulnerable areas – need support, and the public sector has played a critical role in providing it. Local authorities should regard community leaders as integral to neighbourhood improvement.
  • Concentrate deprivation: neighbourhoods where the most vulnerable with multiple needs are concentrated are more at risk of spiralling decline.

Much of the recent debate about welfare reform and spending cuts has slipped into a discussion about the ‘deserving’ and ‘undeserving’ poor. Too often this is not only demoralising but also wide of the mark.

Rather what this research emphasises is the need to understand the context of deprived neighbourhoods. This means not only the economic context but the social context too. Understanding the internal and external relationships that shape the neighbourhood – and some of the people that live within it – is particularly important.

Traditionally, community development and economic development specialists might not have been comfortable bedfellows, but this needs to change. Economic development and building positive community outlook must go hand in hand.

  • Katie Schmuecker is an expert in areas including regeneration and social capital and is senior research fellow at the think tank Ippr north,

To find out more about the research contact her on tel: 0191 233 9052, email:

The full report, Rebalancing Local Economies: Widening Economic Opportunities for People in Deprived Communities, can be downloaded at


Comments are closed.

Help us break the news – share your information, opinion or analysis
Back to top