Network
April 24th 2012
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:
- ensuring public sector commissioning strategies link into economic development, e.g Manchester
- making ideas around social growth and growing social capital part of local authorities’ ‘leadership of place’ strategy, e.g Knowsley
- focusing on low skills
- adopting living wage policies
- having local place and neighbourhood economic strategies which sit below the LEP growth strategies
- focusing on place, economic and community resilience
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.
IMO the “trickle down” arguments only have potential to be valid in communities and nation states where the wealthy purchase goods & services from within that environment, and the society experiences economic stability. Unfortunately for the exponents of this theory, the wealthy have a tendency to place greater importance upon gratifying their immediate needs at the lowest possible immediate price. Thus the wealthy in boom times buy imported goods and services, and the finance sector rushes to lend them money to fund this. Domestic industry that might have the potential to serve this demand is in competition for finance with the very market it seeks to serve. To compound this the long term deprived areas in UK have lacked the facilities to attract substantial tourism. By the time the remaining resources could have trickled down to the bottom, UK has generally entered another recession and thus the benefit is lost. Long term decline also has the tendency of stripping those communities of the human capital it needs to recover as the bright & the skilled leave for better opportunities elsewhere. This has a negative impact on every aspect of society.
There needs to be a fundamental reform to the management of the national commonwealth to ensure that each person within the constraints of the economy can reasonably obtain food, clothes & shelter and have sufficient resources to explore & exploit opportunities for advancement. Until we break the cycles of bust, bust & bust that hit those at the bottom hardest, then there will be no change.
As one of the many 1970’s Economic Refugees from Sunny Birkenhead, I have become far too cynical to imagine that those with wealth will share any meaningful proportion with the disadvantaged. The political parties have abandoned them for the most part, as the poor often don’t vote. There is desperate need to re-empower local communities through decentralisation of power to the lowest level possible, and re-vitalise local government.