The pursuit of regional growth is not translating into local prosperity

Published: 5th Oct 2015

rachel‘Growth deals will be a partnership between the government and local enterprise partnerships (Leps), where the government will respond to the offers made by Leps in pursuit of the shared objective of growth’. This is the government’s guidance issued to Leps in 2013.

The City Deals and Growth Deals are relatively recent mechanisms for negotiating allocation of funding to regions. The funding is to be spent on infrastructure investment, housing, and skills development – and above all, growth: the deals are supposed also to secure ‘better use of local authority assets to unlock resources to be invested in growth’; ‘commitments to pro-growth reforms’ and ‘greater influence over key levers affecting local growth and freedoms and flexibilities’.

So what growth, exactly, is this referring to? Sat in a gleaming but largely empty office block in Cardiff’s shiny ‘Cardiff Bay’ business district at the New Start/NEF event on Activating Local Alternative Economies, I watched a group of social enterprise sector, academic and local authority actors in Cardiff frown over this question.

We struggled to pin down the link between the prospective City Deal the Cardiff region will soon be producing, and the outcomes we’d just collectively identified as top priorities for Cardiff’s local economy.

The emerging question is whether and how the pursuit of

regional growth actually translates into prosperity, sustainability and local control.

The standard measure of regional growth looks at the total income generated in the production of certain goods and services, in terms of wages and profits, and then divides that by the number of people in the region to come up with a figure for the ‘Gross Value Added’ (GVA) to the national economy, by that region.

Yet our group had agreed that the most crucial outcomes Cardiff’s economic strategy needed to deliver for its population were:

  • Greater control over local economic strategy by local politicians, enterprises, and the community
  • Sustainability: Not just in an environmental sense, but in the sense of the resilience of the local economy, the legacy that investment programmes leave behind, and the match between new economic opportunities, and the existing local skills base.
  • The distribution of wealth across the local population – spreading the financial benefits of economic development (income through jobs, ownership of capital assets, stakes in businesses etc) efficiently across the population, ensuring new wealth is not concentrated either at the top of the income spectrum, or in a small number of geographical areas in the region.
  • A clear route for individuals into the economy: A plan for how local residents will be able to access jobs, business opportunities etc; designing in from the outset the connection between the resident population and the various sections of the economy that the economic strategy is seeking to develop

These outcomes didn’t seem easily expressible in terms of the standard measure of growth – GVA.

The discussion turned to whether, and how, the City Deal format could fairly be expected to cover off the four outcomes we’d just identified as priorities. Was it about first setting out how to grow Cardiff’s economy to increase GVA, as demanded by the City Deal process, and then adding a section on how this GVA increase could be managed to ensure the four outcomes above would also be achieved? Or could it be flipped round, to set out the mechanisms and strategy to achieve local control, sustainability, distribution of wealth and an individual’s route map into the local economy – and then indicate how far GVA growth might help deliver any of these?

These views are being fed back to the group putting together the City Deal for the Cardiff region. The social economy sector in Cardiff will now be waiting to see how far the City Deal process actually supports the growth of the kind of economy they feel delivers real benefits to people and the environment in the region.  Around the table there was a sense of hope that it must be possible – but also frustration that years and years of successive economic and regeneration strategies just didn’t seem to have established an economic system that delivers well-distributed, sustainable, locally controlled prosperity.

This discussion, though Cardiff-focussed, felt like a neat summary of the challenge presented by the general current approach to regional economic development in the UK. It has become particularly relevant in the debate about devolution, and the ‘northern powerhouse’. The ‘alternative economy’ sector, which New Start and NEF are exploring this year, is proving a rich seam of new perspectives and possible answers to some of these questions. The repeatedly emerging question, though, is whether and how the pursuit of regional growth actually translates into prosperity, sustainability and local control.

Comments (1)

markhooper

Enjoyed the post, Rachel

I think it needs a region to stand up and say, “NO, not on these terms” before the Treasury will realise their pressure to be powerful may not be the best for local economies. In fact it may actually have a detrimental effect on the overall wellbeing of that community.

Which region will be brave enough?

Mark

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