Column: Embedding inclusive growth within local industrial strategies
Britain has been in the grip of political and economic flux in recent years. Divisions are rife, traditional boundaries are being re-drawn and increasingly the notion that economic growth is good for all has been challenged.
This is not entirely surprising given that although the recession occurred ten years ago and record high levels of employment now exist, many communities still do not feel that they have benefitted from recent economic growth. A key contributing factor has been the rise of in-work poverty alongside employment growth.
Four million workers live in households in poverty - and this has increased by half a million over the last five years. The most recent figures on child poverty show that the vast majority (70 per cent) of children living below the poverty line are in working households and this has been growing. It wasn’t supposed to be this way. For a long time, policy makers promoted a simple but compelling narrative that growth benefitted all. Creating jobs mattered as employment was the best route out of poverty. More jobs meant higher household incomes and better living standards. Business-as-usual economic development saw cities pursue investment in commercial and residential property, whilst chasing inward investment from growing high value industries. This was seen as a win-win situation. Highly-paid jobs attract high-skilled workers whose spending on services such as leisure, retail and the night-time economy creates new employment. Some of this new employment might be low-skilled and low-paid but could act as a springboard into better jobs. That was the theory at least. Rising levels of in-work poverty has shone a light on flaws in that theory. A long-term stagnation in wages has occurred alongside a continued programme of austerity resulting in large scale cuts in services and the welfare system. Subsequently, in-work benefits available to top-up low pay have been reduced which exerts a downward pressure on household income . Whilst more people than ever may be in employment, for many, there is a distinct feeling that they are worse off than they were before the recession and that poverty not only persists but is growing. The referendum on leaving the EU has brought the issue of ‘left behind’ people and places into sharp relief. It is no surprise then that the notion of inclusive growth has gained traction. Though slightly fuzzy round the edges, it essentially captures an ambition to enable as many people as possible to contribute and benefit from growth. It challenges trickle-down models of growth and instead demands that a more holistic stance is taken on economic development which should encompass social as well as economic priorities. Policies developed should be underpinned by a concern to maximise the benefits of growth in employment or output across all sections of society. Central government increasingly expects these ideas to filter though into Local Industrial Strategies which Local Enterprise Partnerships and Combined Authorities are now preparing. Guidance mandates these strategies demonstrate how they will allow all communities to contribute to, and benefit from, economic prosperity.
The Sheffield City Region is at the forefront of efforts to embed ideas around inclusive growth in their Strategic Economic Plan and Local Industrial Strategy. Working with researchers based at the Centre for Regional Economic and Social Research at Sheffield Hallam University they are looking to identify strategic priorities and interventions that could support inclusive growth. Research is still taking shape but suggests there is a need to think about the quality of work and how accessible it is to those with lower levels of skills. Strategies might include encouraging ‘middle-wage’ sectors to support growth in relatively well-paid jobs that don’t need degree-level qualifications. Or it might require a focus on improving low-paid jobs through initiatives. There is also growing interest in capturing the value of spend by large ‘anchor’ institutions such as universities and hospitals. It is still early days, but embedding some of these ideas in SCR’s Local Industrial Strategy will not only support job creation but improve the quality of new and existing employment. This will ensure the benefits of growth are felt by a wider range of people. Developing strategies that are inclusive, rather than divisive, is surely the way to go.