Wishful thinking in a winter of discontent

As the Government make their first major economic announcement this month, there will be many questions asked about the extent to which Liz Truss’ government is committed to addressing the deep challenges facing communities this winter.  Whereas Boris Johnson’s slogan was ‘levelling up’. Liz Truss’ mantra will be growth.  At any cost and with any means possible.  

The Government have already set an annual target of 2.5% aggregate growth for the UK economy and are betting on a raft of national deregulation and tax cuts help them deliver on that target.   Pundits predict that this will mean cuts in income tax, corporation tax, a U turn on national insurance hikes, removing the cap on banker bonuses, a return to fracking, tearing up the energy strategy, obesity strategy and so on.  

However, this isn’t about growth as synonymous with progress on jobs and small business growth, its about ideology. A particular set of assumptions about economics along with a large dollop of wishful thinking.  The first assumption, as articulated in the levelling up white paper, is that that if you just grow the pie more people will get a slice.  However, the evidence over the last fifty years shows that after a certain point, the story of growth is one of diminishing returns and environmental crisis.  

There is no automaticity that increases in aggregate national growth (as measured by GDP) will result in improvements in peoples lives locally, and especially when that growth agenda is based on another assumption, namely that the state is an impediment to a good economy. Arguably this can actually do more harm than good because it underestimates the importance of public services – education, health and social security in providing the foundations of an effective economy and a decent society for people to live in.  And these assumptions often go hand in hand with the idea that deregulation is the enemy of business and economic activity. Despite evidence to the contrary, for example, the fact that without sound local plans, housing markets falter.  

We’ve been here before.  When George Osborne published the ‘plan for growth’ back in 2010, the mantra was the same.  Reduce the state, deregulate and this will usher in a new era of private sector led growth.  But what it actually produced was an era of austerity from which there has been little respite. Billions has been taken out of local economies with little sign of private sector investment crowding in to pick up the slack.  The push for deregulation has led us to Grenfell and a private rented sector which places the power in the hands of landlords rather than tenants. 

Similarly, living standards have stagnated.  Wage levels in the UK haven’t recovered since before 2007 and are falling faster at the moment than at any time since records began.  The metrics on social and economic inclusion are also going in the wrong direction with record levels of child poverty, health inequality and educational attainment across many areas of the UK. 

An assumption that the market (as opposed to the state) will provide has left the most vulnerable people in our communities at the mercy of profit driven providers. Children in care, young adults with disabilities, the elderly become little more than commodities in a bid to squeeze unit prices down in the interests of shareholder profit.  
The devaluating of Local councils has left organisations increasingly reliant upon bidding rounds for special funds from Westminster ranging from town centre regeneration to public toilets.  In an era of recurring crises, whether its Covid-19, cost of living or climate change, Local government lacks the long term stable funding which would enable it to plan for the needs of local communities particularly when it comes to social care, children’s services and net zero. 

But there is an alternative.  Local councils working with their partners to understand what might be possible if they were brave.  If they were willing to dispense with the well worn cliches of growth and boosterism and focus instead on a different mantra; inclusion.  A local economy which not only generates economic activity but enables wealth to flow more readily into local communities through jobs, ownership and generative businesses. 

Many areas are using the collaborative structures established during the pandemic which often brought together anchor institutions from within the public sector including hospitals, colleges, universities and councils to work together to explore what could they could do to deliver economic inclusion at scale through effective use of procurement, commissioning, recruitment and land and assets.  As in the last recession and the pandemic, it is up to local government not only to shape place but to shield communities from the harsh winter that is coming. 
If Westminster isn’t interested in local government, then why should we put any faith in the tired old assumptions of growth that have failed communities repeatedly. This is what real levelling up looks like, not waiting for the slow machinery of Whitehall but the public sector, taking a place-based approach to change and rewriting its own economic future from within.