Social contracts needed to address unequal UK, says growth commission

7 Mar 17

Combined authorities should be given greater power over spending on services to create a more equal UK economy through ‘social contracts’, according to the final report of the Inclusive Growth Commission.

The way the economy and public services are run in the UK has failed, says today’s report.

Central government should agree ‘social contracts’ – deals aimed at taking devolution to the next level – with combined councils.   

This would mean authorities have more control over social and economic policy resources to meet goals agree by central government to ensure a more distribution of wealth [inclusive wealth] in their areas.

Chair Stephanie Flanders said: “The way the economy and public services are run in the UK has failed.

“If we really are going to build a nation that ‘works for everyone’, then we need a reset in Whitehall and town halls which empowers all levels of government to deliver a more inclusive vision of prosperity across the UK.”

Not doing this “would mean a real risk the country becomes more divided outside the EU than it ever was within it”, she added.

A 20-year £76m independent Inclusive Growth Investment Fund should be set up to channel repatriated EU funds into projects that support growth, the commission states.

It also suggests an official indicator of inclusive growth be published quarterly alongside GDP growth.

The idea for social contracts is to build on the approach pioneered in Greater Manchester, through its health and social care deal. The combined authority was given control of £6bn health and social care spend across the county in April last year.

Charlotte Alldritt, director of the commission – set up by the RSA network and launched in April last year – said: “The divide between the ‘haves and the have nots’ was an issue long before Brexit, but the referendum exposed the depth of the problem in the UK.

“And it’s only going to get worse – with a further squeeze on living standards expected as welfare cuts and higher prices bite, and automation threatens ever more jobs. A new model of inclusive growth is needed.”

Core local council budgets in England were cut by 40% in real terms over the last Parliament and by 2019/20 local government is expected to face a funding gap of £5.8bn, of which adult social care alone will amount to £1.3bn, the commission states.

It gives an example that while Sheffield City region secured £900m funding over the next 30 years (£30m a year) it will face a cumulative cut of £1.1bn (£220m a year) from the city’s capital and resource budgets since 2010.

The RSA Inclusive Growth Commission is funded by Core Cities UK, Key Cities, Local Government Association, London Councils, Joseph Rowntree Foundation and PwC.

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