A manifesto for local economies: 15 minutes with Neil McInroy

The Centre for Local Economic Strategies has published What Needs to Be Done, its manifesto for local economies. Chief executive Neil McInroy spoke to New Start about the need to build local common wealth whoever comes into power today

On why economic and social progress need to be ‘joined at the hip’
The problem we have for local economies and the economy in general is that economic activity is seen as distinct from the social when in fact they are one and the same. In local places economic progress needs to be joined at the hip with social progress and the two things thought of in the same breath. We need economic activity that puts people and community first rather than wealth accumulation.

On the failures of local economic development
Local economic development has focused too heavily on economic growth without connecting that growth to real people in real communities. In most local economies there is wealth, so the challenge is not about an absence of wealth but about where it is and who gets it. It’s about connectivity. Economic development has followed the trickle-down path where economic return all too often not benefitting local place and people. Growth and wealth have been extracted rather than connected. Economic development has thinned, particularly in England, where it has become synonymous with growth. So we now talk about ‘good growth’ and ‘inclusive growth’. You can have economic development with meagre levels of growth or no growth. Growth can be good. But what we need to aim for is an inclusive society.

What Needs to be Done: the four steps
An economy is a social construct and we can make it work for us. In the manifesto we set out four elements needed for a ‘deeper local economic reset’. The most important of these is to build common wealth – to create a deeper connection between the economy, wealth creation, environmental limits and the people. To do this we need a broader and deeper focus on accelerating social gains from the economy as well as a more effective means of harnessing existing wealth in a locality. We need to make the market work better for local people and create advances in the interest of the community rather than the few.
The second step is enabling a socially just devolution. There is a great opportunity to create devolved areas where the local economy can be more readily advanced than at nation state level. But the current process has downsides: it’s framed by austerity and locked into the trickle down economic model proscribed by the treasury. We need places to use those new powers and resources to advance a more socially just market where social and economic are not separate but one and the same.
The third element is to fund decent public services. Our economic approach has forgotten the value of public services, which have a direct input into business success. Businesses need infrastructure, good education and housing and happy productive people living in decent communities. We are less economically productive because that investment in social infrastructure hasn’t been there. Public service austerity is a false economy. The fourth element is investment in skills and decent work. Our skills system is complex and characterised by technical skill deficiencies particularly for the new future economy. Employment is precarious and often based around poor employment practices. We require a modern industrial strategy that fits the needs of the future as well as a much more localised approach to skills.

How new mayors are leading the way
There are good things happening in the UK but what needs to happen now is for it to scale up and for a national policy context that allows it to sing. In terms of devolution the local mayors recently appointed have been encouraging by linking the economic, the social and public services and thinking clearly about the relationship between those three things within places.

On the limitations of inclusive growth
My problem with the inclusive growth agenda is that it’s not about social justice and reorganising the economy. It’s still focused on growth with inclusion added in. It doesn’t address the financialisation of the economy or environmental limits or ownership issues. What if there’s no growth? What happens then?

On the need for cities to take this agenda forward
Regardless of who comes into power this week, cities are realising that social growth, economic success and decent public services should work together. We need to stop thinking that economic growth will cure all of our ills. Public service reform that is under the cosh of austerity won’t solve the problems. National government needs to trust local government and devolved administrations and not stall devolution processes but deepen and broaden them. That intimate relationship that public policymakers have with place allows them to think of the social and the economic at the same time. That’s the beauty of the local. A local mindset and that way of thinking collapses national boundaries and silos around what is economic and what is social.

• Read What Needs to be Done: the Manifesto for Local Economies here.