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Macro growth must be blended with micro growth

Over the last few weeks, there have been several announcements and commitments to major mega-infrastructure investment, including the HS3 northern rail link. Mega-infrastructure is always welcome, provided that it will add value to the regional economies and national sustainability. And even if the economic benefits of many schemes will take many, many years to come to fruition, there is nothing wrong with this and a political commitment to long-term projects and benefit is most welcome.

It is ‘generally’ accepted there is an urgent need for more major investment programmes in: transport (especially public transport); housing (especially social housing); energy (especially renewable sources); and education building (to restart and extend the previous government’s Building Schools for the Future programme).

Such investment will inevitably generate employment and both short and long-term economic benefits. It will inject much needed economic action into an economy, which is still very fragile – and carefully geographically targeted – it could have its greatest impact on a regional and sub-regional basis.

It is to be hoped that the current and any future government will be willing and prepared to embark on further major public sector-led investment programmes. They should also work in partnership with private sector investors too, who can make a tangible difference to the future of public infrastructure in ways that are more socially valuable and financially viable than PFI. Accordingly, the business sector should be energetically encouraged and facilitated to invest in local and regional economies, but again, only when this investment leads to sustainable social and environmental benefits, and not simply short term private profit alone.

It is important to bear in mind that private and public investment are ‘contributors’ to wider social, environmental and economic strategies – i.e. they are enablers and not ends in their own right. They should be subject to transparency and public accountability if and when they are going to impact on communities and the public economy.

We need a blended approach: of national macro-growth and local micro-growth;

of infrastructure and business investment and community investment.

Economic and infrastructure investment is essential for growth, but on its own, will always be insufficient to address the country’s social, economic and environmental needs. It must be accompanied concurrently by significant investment in social and human capital.

This can and should come in many forms including:

  • building community capacity
  • strengthening the local voluntary community sector
  • fostering user and employee co-operatives
  • investing in social enterprises
  • enhancing early years’ services, including reversing Sure Start closures and extending the services
  • improving educational opportunities at school and post-16/18
  • tackling long term worklessness more effectively than the current discredited schemes such as the Work Programme, and enable people to benefit from holistic services, support and ‘real’ employment, skills and training opportunities
  • addressing poverty, especially in-work and child poverty, and reversing growth inequality
  • stopping harmful cuts to social security and welfare programmes to enable people to self-support and be more economically active
  • raise the minimum wage and move towards a universal application of the living wage; and eliminating involuntary ‘zero hours’ contracts
  • encouraging and facilitating local entrepreneurship and the growth of smaller SMEs and micro-businesses
  • better public health services including more health prevention and other health provision such as mental health services

The neo-liberals and some others will read this list and react with a loud ‘this is all unaffordable and anyway these are not matters for the public sector and the state’. I must disagree on both counts.

It should be possible to implement some of this investment in social capital by re-directing current spend, for example by paying people to be in work, and not on benefits; increasing tax take through greater employment; targeting current expenditure better within localities and, in and between services; etc.

It should also be possible to use existing public buildings as hubs and bases for other services, e.g. community health services and Sure Start centres in schools or centres for start-up businesses and social enterprises. There could be more transfer of public assets to communities and the community sector to create social and community anchors.

There is a strong case for fairer and more progressive income, wealth, property and corporate taxation. Fiscal policy should be aimed at supporting both investment in economic infrastructure, and human and social capital – as should public expenditure.

If a government embarks on an ambitious course such as I have outlined above – or even some of it – it will be vital that its strategies and individual schemes are aligned. For example, there is no benefit in investing in and supporting community development if at the same time a major infrastructure project is about to destroy the neighbourhood in which the community resides. As ever, policies and implementation need to be joined-up and the tragedy of unintended consequences avoided.

The years form 2015 to 2025 could be a decade of investment to build a stronger, more sustainable economy, and stronger and more sustainable communities.

Government obviously has a major leadership role here, but if it is to secure these goals, it has to be ready and willing to: listen to the views of all sectors; be challenged by and partner with the voluntary and community sector; and work with businesses and social enterprises. In particular, it has to let local people take control, and allow them a voice that reaches national as well as local ears. It will also have to be ready to redistribute income, wealth and power between people and between regions, sub-regions, places and communities.

Economic growth alone – without redistribution, investment in social and human capital, and local democratic control and activism – will simply add to the country’s social woes. On the other hand, a strategically integrated approach could have a huge and positive impact.

We need a blended approach: of national macro growth and local micro growth; of infrastructure and business investment and community investment; and national, regional, sub-regional and local initiatives.

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