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Stop the mess: we need an economic development reset!

neil strelka photo 1I recently participated in a round table debate on growth, with northern business leaders in Manchester. Inevitably, the key vehicle for local economic growth came up – local enterprise partnerships (Leps). Starting with a few shakes of the head and the odd raised eyebrow, that bit of the debate was summed up by one participant who said: ‘I am not sure Leps are fit for purpose in the drive for local economic recovery’. He was understating it, but spot on. They are many different types of Leps, but overall, we have an institutional and functional mess. Perhaps an economic ‘Eton’ mess.

In the recent Smith Institute/Regional Studies Association publication, a collection of essays revealed how, after three years, with great intentions, the potential of Leps remains in doubt, and is weakening the prime minister’s stated aim for Britain to start winning the ‘global race’. Indeed, the essay from a team at the Centre for Urban and Regional Development Studies (CURDS) at University of Newcastle, who undertook a survey of Leps, statedas a way of organising the institutional arrangements for economic development, the Leps in England look small and seriously underpowered for the task in an international context’.

Meanwhile, far too little is being done to address the systemic economic problems and social divides. The dominance of London, the south east of England and financial sectors continues unchecked. Even the good stuff, like the long overdue, pro-regional city policies such as city deals, could be seen as merely bolstering cities which have decent prospects anyway. Non-metropolitan areas are feeling more and more cut adrift.

No. It has to be said. Economic development in England is broadly failing. It’s a series of half-hearted efforts, from a coalition which deep down does not seem to wholeheartedly believe in economic development, which – if truth be told – is fundamentally Keynesian.

But the messiness continues. A few weeks ago, we saw the spending review and the disappointing details of the single local growth fund. The £2bn of single local growth funding annually from 2015 is meagre, compared to Lord Heseltine’s review, which proposed £49bn over four years. Also a few weeks ago, Nick Clegg announced the latest means of putting some weight behind economic development, when he announced a Whitehall cabinet committee for local growth, as a means of breaking ‘down the silos that exist’ in Whitehall.  This seems to add further muddle to a messy set of economic institutions which are making up for their lack of heft and muscle with chatter.

But there can be another way.  We can make the best of these Leps.  In our Smith Institute essay,  we argued for a progressive ‘place based’ economic development.  In our recent summit we argued for an ‘economy for all’.  Economic development needs to become more coordinated, more embedded in ‘whole place’ principles, where the public economy of local services and the social economy sit alongside commercial economy.  Public services and civil economy are inputs into place and wider economic success.  We need a reset.

  • Aim for a progressive economic development. We must aim for business success and private gain with social justice. They are not mutually exclusive.
  • Give local government a stronger role. The real truth of the matter is that local economic development in England will only makes sense when local government makes sense of it.
  • Converge economic and social growth.  It is evident from the recent fairness and poverty commissions and work in local authorities around social inclusion that there is need to match economic development with social growth.
  • Create a statutory duty or function around economic development
  • Restate elected members as key place leaders not just representatives of councils.  Elected members effectively have a stewardship role when it comes to economic development, influencing priorities, engaging with strategists, and fostering and scrutinising delivery activities. There is therefore a key democratic accountability role for local elected members when it comes to the Leps.
  • Stop the horsetrading between Whitehall and town hall and process: Devolve! Whitehall holds all the cards.  We must realise the promise that the treasury will relax its grip of central departments and will devolve budgets and competencies to local government.

Without this reset, government economic growth objectives and progressive social outcomes of growth will not be realised.  Indeed, without this many of our local economies will remain bedevilled by the problems which have plagued them for a generation.

 

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