The case for an inclusive state

6 Jun 16

Inclusive growth could help the poorest benefit more from economic expansion. This will require a state that invests in new infrastructure and backs local initiatives to support communities

Inclusive growth is the new concept in town. The RSA have recently announced their Inclusive Growth Commission. They seek to identify practical ways to make the UK more economically prosperous and inclusive.

This is welcome. It is important that we start to work through how we make the poorest benefit more from any growth. We also need to go further and make sure we make local economies and society more inclusive and fair. Whilst inclusion is not just about money and finances, we need to firmly place this aspiration for inclusive growth within the context in which it sits. In this we need a cold hard stare at the social recession caused by public sector austerity and its effects on our local economies.

Cuts to public services have contributed to poverty and exclusion, with a reduction in the social inputs to inclusion, including social care and children’s services. We know that nearly £20bn has now been lost in local government spend. In addition, as CLES has shown through an array of work it also has had significant effect on local economies through supply chains, jobs and wealth.  This is a significant block to inclusion.  Furthermore, the areas where poverty is most prevalent is where the cuts have been most severe. For example, Blackpool which is in the top ten most deprived authorities in the UK is also in the top ten authorities greatest hit by cuts.

We do not doubt that that in a few exceptional areas of buoyant and resilient growth, inroads into inclusion are likely. Business growth and success could lead to an increase in business rates, which the public sector could harness for public services and social inclusion. Also where public investment in city centres and new infrastructure has triggered new private investment and jobs, we can reasonably aim to ensure that new jobs will reach the poorest. We are sure that the many successful and profitable businesses want to do more socially, ramp up their corporate social responsibility and philanthropic activities. These are things to work on within this agenda.

However, if we are serious about inclusion we should not be focussing on growth alone. As it stands, many places do not have growth anyway and tellingly no Local Enterprise Partnership area has returned to the rates of growth experienced pre-recession. What is on offer to those non-growth areas?

Some may well say that we must be pragmatic, and work within the financial context we have and the political choices that have been made. But let’s not fool ourselves, the idea we can have significantly higher levels of inclusion whilst maintaining the public service and public economy straightjacket, is unrealistic and will surely fail.  We are setting a much too high a hurdle if we think we can create inclusion in areas with no growth, or think we can bend clunky old growth and selfish old wealth to advance inclusion, without some help from the public economy. 

In this, the progressive, socially innovative and truly inclusive agenda is to ease back on public sector austerity and let many inclusive flowers bloom. Across the country there are thousands of micro projects and activities that work on inclusion. They can be found within the ‘third sector’, in local government, on the innovative edges of mainstream public services, in businesses and in all the spots in between. They cannot be categorised by sector. But many of them share the same problem – their innovation survives on a shoestring and they lack scale, heft and most importantly resource. Without financial nurture, they will wither, replaced by another limp flower, only to wither again. They need the public economy to step up. This step up is not as a big state, but as a nurturing inclusive state.

It is clear to us that public austerity has been too deep, too fast and is too unfair. We can put our hopes for inclusion on growth alone, but poverty is too serious to be left to that. We need an inclusive state.

  • Neil McInroy and Matthew Jackson
    Neil McInroy is the chief executive and Matthew Jackson is the deputy chief executive at the Centre for Local Economic Strategies (CLES).

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