Time to include the excluded in economic growth

Many UK cities and regions lag behind their EU competitors in GVA and productivity, and there are growing inequalities within and between regions in poverty, health and life chances. The majority of households living in poverty are in work, but in low paid/low status jobs, and two thirds of UK workers produce below industry average productivity. There is a chronic low skills problem, with low employability investment, and policy is focused on labour market entry – a job/any job mentality, rather than access to and progression into quality jobs. Income pressures disproportionately affect certain groups: BAME, women and those with disabilities.

If we are to drive productivity, we must reduce dependency on the welfare state and ensure the sustainability of our public services. We need to integrate economic and social policy – skills, education, employability support, mental health, childcare; properly connect people to physical infrastructure assets; and support businesses to move up the value and productivity chain, in turn creating better quality jobs. If we could get all of this right it would have a massive impact on productivity and living standards.

Inclusive growth must be at the heart of all public investment. We need to ensure public spend leverages the maximum social, economic and financial return on investment for communities, and helps tackle inequalities. This is about improving outcomes by increasing engagement with, access to, and uptake of opportunities, and removing barriers to participation. It is about making additional efforts to ensure the voice of residents, visitors and businesses are heard at the local level, the places where inclusive growth challenges are ultimately rooted.

Regional level GVA is a poor guide to social and economic welfare, and does not tell us anything about how the opportunities and benefits of growth are distributed across – or sometimes completely pass by – different areas and different social or income groups. So we need to measure the right things, such as household incomes, earnings distribution, levels of economic activity and unemployment, and growth of quality employment. Importantly, we also need to share what works, and indeed need to be brave enough to discuss what does not.

We also need to mobilise the full force of local resources and all stakeholders to build on existing assets and opportunities, as well as developing new creative solutions – from both inside and outside. Therefore, we must include the excluded – a bottom up and top down approach is needed to build local legitimacy. Without involving those who currently have no voice, how can you understand their needs and experiences of their place, and ensure they are taken into account? Inclusivity has to be mainstreamed, it is not a fringe activity.

There needs to be a clearly defined, shared clarity of vision, an agreed strategy and action plan. All stakeholders must all be cohered to one agenda, agree how it can be achieved, with clarity of roles and commitment to actions that will make the greatest difference. Prioritising is vital given the harsh financial constraints and continuing economic uncertainty we all face

We should focus on two areas going forward: improving productivity and quality jobs are at the heart of inclusive growth because they provide employment opportunities. So firstly, we need to support the UK’s 5.3 million SMEs, which provide 60% of employment, by increasing the quality and targeting of business support at key stages to help reduce failure rates, increase sustainability, and unlock the potential to scale. We must have much better quality, tailored and targeted support for different stages of the journey; and at the same time provide a small incentive for those investing in growth training, especially management, leadership, commercial and technology skills.

We also need parallel investment in training those with lower skills and other disadvantages, as this offers big returns for growth and inclusion. We must develop the capacities and capabilities of individuals, families and communities to participate more fully in society and economic growth, to achieve more equitable outcomes, to end the waste of human capital, to reduce cost, and unlock their social and economic potential. There are many ways of involving them in this agenda. They are not ‘hard to reach’ – go where they go, and you will find them. 

Bev Hurley is Chair of the Institute of Economic Development, the UK’s leading independent professional body representing economic development and regeneration practitioners. On 6^th December 2018 the IED annual conference, titled Mind the Gap – Productivity, Place and People, will explore a more coherent, inclusive strategy for economic development.