Forget Rishi Sunak’s Whitehall orthodoxies – a new, progressive economy is already being built locally

The disastrous Spring Statement demonstrated that the Treasury is still tied to its old ways, but an alternative economic strategy is emerging in regional and local authorities all over the UK

By Tom Lloyd Goodwin

In the midst of a cost of living crisis, the Chancellor of the Exchequer Rishi Sunak has been widely criticised for the lack of financial support on offer in his recent Spring Statement (Photo by Leon Neal/Getty Images)

As energy, food and fuel prices continue to soar, there is mounting pressure on the Chancellor to go further than he did in the much-maligned Spring Statement to ease the increasing burdens on consumers. The Treasury’s paltry measures to relieve the biggest squeeze on household incomes in decades were met with consternation from Rishi Sunak’s critics, as substantive interventions such as a windfall tax on oil and gas firms were notably missing from his mini budget.

The most powerful corrective to declining living standards, as Boris Johnson himself has recently argued, is to have a strong economy, with good high wage jobs. But the Prime Minister’s prescription exposes a deeper sickness in the system that no amount of tax tinkering can remedy.

While our economy may have produced strong growth figures over the last 40 years – save for the anaemic recovery from the 2008 crisis – the raw GDP figures disguise the fact that growth hasn’t delivered widespread benefits for everyone. The number of billionaires in the UK has almost doubled over the last 10 years, but these gains have not trickled down. Insecure work – which had reached a record high before the pandemic – continues to plague our economy, with the most pernicious impact being felt amongst young people. Record levels of poverty continue to persist, with the latest data showing a big rise in destitution – affecting 2.4 million people, including 550,000 children. Modelling suggests that this has only worsened during the pandemic.

But below the radar of UK policy debates, and in spite of the market orthodoxies and fiscal conservatism of an over-powerful Treasury, a truly progressive response is already being forged which foreshadows the approach we so urgently need to build a strong and inclusive economy – an economy that could provide resilience in the face of our current adversity.

In Scotland we are seeing the rapid implementation of community wealth building practice to redirect wealth and power to local communities. Local economic strategies are being adopted to counter the marketised, privatising, developer-led model of local economic development that has taken hold for decades. This means that the wealth generated by local economies stays in those areas rather than boosting asset prices or being siphoned off into the bank accounts of corporations in the City of London or elsewhere. Local authorities are working with other “anchor institutions” like colleges, hospitals and universities to focus on social value and community benefits when it comes to procuring services externally, meaning local businesses, cooperatives, and unionised companies paying a living wage with high environmental standards are given priority. This work is bolstered by a strong and conducive national policy framework, which features in the Scottish Programme for Government, and there has also been the appointment of a new minister for community wealth.

There are plenty of positive examples of this approach south of the border too. In England, large public institutions are taking purposeful action to bring employment opportunities to individuals who are currently furthest from the jobs market.

The Northern Care Alliance NHS Foundation Trust have bypassed the advert and interview process for many of their entry level roles and they are now reserving these positions for the recipients of targeted pre-employment training programmes. Having mapped their employment profile, they have identified deprived postcodes where they are not employing people and have designed specific pre-employment training packages to help these local residents to enter their workplace. These programmes have been developed in conjunction with the local community to help traditionally hard to reach groups get ready for work.

In the West Midlands, the Birmingham & Solihull Integrated Care System is leading a programme across all of its employing providers. The programme will deliver a minimum of 100 entry level job opportunities each year for three years for unemployed and young people, targeting economically disadvantaged areas across the sub-region. It includes the provision of tailor-made “get into work” development and support programmes, with careers, interview, application support and a programme of post-employment mentorship. The programme commenced during November 2021 and is now seeing its first successful applicants employed.

Through programmes like these, and by using their power as employers to tackle the social determinants of health and create a more just society, these health institutions are starting to change the narrative around their role within their local economies. It is no longer about just wanting the best person for the job, but also about using the job to do the best by the people who make up your economy.

Despite funding problems, a number of English local and sub-regional authorities are using community wealth building to build an alternative to austerity governance. In Greater Manchester, the combined authority is looking to establish a community wealth hub to support and grow co-operative, mutual, social and community enterprises in key sectors of the everyday economy such as childcare. In addition to providing business support, the hub could bring together communities to take over empty shops or buildings. It would also seek to work with credit unions and other finance organisations to unlock community investment, providing the funds needed for small organisations to scale and compete in commercial markets.

But although these place-based initiatives are starting to transform our economies from within, their adoption at scale remains fettered by years of austerity and the evisceration of the local public sphere. This year’s Spring Statement, coupled to the long overdue Fair Funding Review, represents yet another missed opportunity to ensure a proper financial settlement for local government, which has seen central government grants cut by 37 per cent in the ten years leading up to 2020.

Two years ago, when the government announced the furlough scheme, the Centre for Local Economic Strategies argued that the intervention of the state to support its citizens during a period of national emergency should be extended to intervene in the crises that many experience every day. The dogma of leanness and efficiency that has left us so ill-prepared must now be dropped, with proper funding for local government to help equip our economy with inbuilt resilience and adequate contingency. We said it back then and we say it again today: we need a generous state forever.

Tom Lloyd Goodwin is Director of Policy and Practice at the Centre for Local Economic Strategies.