Andy Burnham has put place at the heart of his economic agenda. Setting out “a new political model and a new economic model”, he has made rebalancing Britain’s economy – and reviving places left behind by deindustrialisation – a defining ambition of his premiership. But what would that actually look like, and how will we know if it is working?
GDP can tell us whether the national economy is expanding, but less about how prosperity is distributed between and within places. If Burnham wants to rebalance Britain’s economy, different measures may be needed.
Spotlight asked leading figures from politics, policy and economics which indicators we should use to judge whether place-based growth is working.
John McDonnell – Labour MP for Hayes and Harlington, former shadow chancellor
Lasting political success is not achieved by a checklist of economic policies. The much-admired Attlee government succeeded because every policy aimed to create a society built upon solidarity and collective action in tune with the values of a community that experienced the necessities of war.
The success of the Burnham government will be determined by whether every policy measure is seen to be clearly based upon a new set of founding principles that people see as their own.
Potentially, there is a progressive majority whose experience of frozen living standards and successive crises has demonstrated that uncontrolled, aggressive individualism is creating a society of grotesque inequalities in the distribution of wealth and power and a planet going up in flames.
An opportunity has opened up of securing support for a new set of economic foundational principles: based upon things like collective action, mutual aid and community wealth building.
An economy in which basic universal basic services – education, social care and health treatment, a decent home set in a secure environment – are provided as a right. An economy where investment is funded by a redistribution of wealth.
An economy of true value, where the distribution of rewards is based upon the social value of the contribution a person makes to society and notsolely the market value, rebalancing economic power in the workplace and in the community.
Visibly laying these foundations will be the critical task of this coming period.
Mohammad Jamei – Director of economic policy, CBI
Britain’s cities, towns and regions have different strengths and will play different roles in our national economy.
The defining measure of the new Downing Street administration’s place-based growth agenda should therefore be whether places are fulfilling their economic potential, and whether that translates into better living standards and opportunities for the people who live there.
If we want one metric, then growth in real disposable income per head often provides a useful test of whether people are becoming better off. But how places achieve that will differ in different regions. For our strongest economic clusters, that means removing barriers to investment and enabling productive businesses to scale.
Elsewhere, success may mean better connectivity to centres of employment, thriving high streets, affordable housing and communities where people want to live and work.
Devolution can help. Local leaders should have greater freedom to experiment, learn from success and failure and develop approaches suited to their economies. But greater powers must be matched by greater delivery capability. Businesses already encounter too many slow decisions, unclear responsibilities and hand-offs when navigating government. Further devolution cannot simply mean more complexity and more touchpoints. Government should invest in local institutional capacity alongside devolving power.
Success is not making every place economically identical. It is giving every place the foundations to succeed on its own strengths – while ensuring prosperity and opportunity are shared more widely.
Mirte Boot – Principal research fellow and head of regional growth, IPPR North
Growth in every postcode is not about building a Silicon Valley everywhere. It’s different in Manchester, Cornwall or Dumfries – that’s the point. It means drawing on the strengths places already have: a focused industrial strategy that identifies each region’s competitive advantage, and a state that backs them long enough for it to pay off.
The measure of success isn’t only increasing investment, though this is essential, but also changing where it goes.
Investment needs to move beyond London and the south-east to address a regional growth gap that costs the UK economy £47bn a year. It needs to move into the hands of local leaders everywhere through giving them tax, borrowing and spending powers, so they can back projects they know will drive long-term growth.
But this is slow. Closing gaps in productivity, jobs, transport and health takes decades, and when people can’t afford the weekly shop and pass decaying high streets on the way home, they naturally run out of patience. No government gets 20 years to be proved right.
So we need to rebuild communities as well as attract investment. When everyday services improve – libraries staying open, buses running on time and parks are cared for – people can see that decline is being reversed. The everyday economy builds the support needed for the big stuff, and we need a plan for both.
Mark McVitie – Former director, Labour Growth Group
The Prime Minister has brought a very welcome emphasis of the politics of production back to the heart of the UK’s political discourse, where it has been absent for too long.
It is in his ambitious pledge for “growth in every postcode” though that I would urge going beyond it – the measure of success for this agenda will not be anything so bloodless as whether every area in the UK is shown to produce more gross value added (GVA).
I believe the hard metric is real wage growth, something the average Brit has seen precious little of for going on 20 years. This is the technical measure of the central political question of whether doing an honest day’s work once again leads to the promise of a better life, a core part of the bargain upon which our system of democratic capitalism rests.
Ultimately then, success for the PM here rests on whether people in every part of the country can build a better life by working hard, contributing and putting down roots where they call home.
People must be able to look around the place that they live – at its high street, parks, schools, public spaces, local institutions – and sense being bound together by more than sharing a space, but also by a sense of community, and say, “this place has a future, and I want to be a part of that”.
Julian Hartley – Chief executive officer, Joseph Rowntree Foundation
Over a century ago, chocolatier and philanthropist Joseph Rowntree advocated addressing the “underlying causes” of poverty, not just the symptoms.
He instructed the trustees of his charity not to give money to hospitals, almshouses and institutions that directly helped the poor, but instead to those who could “master the question” of why such poverty exists.
Today, Andy Burnham faces a similar challenge. Living standards are flatlining and, in many cases, falling. As a result, households and communities feel economically insecure – too busy fighting fires and juggling bills to plan for the future.
At the same time, economic growth remains stubbornly weak. This is not a coincidence. A country where millions are unable to absorb a financial shock, save, retrain, take a risk or move for a better job is unlikely to achieve sustained prosperity.
This is also why a place-based growth agenda matters. JRF’s research shows that many neighbourhoods are doubly disadvantaged, facing both higher levels of economic insecurity and weaker social infrastructure – the local institutions, networks and support that help people weather setbacks and seize opportunities. Prosperity can’t trickle down if communities lack the resources to catch it.
Economic security is often seen as the outcome of growth, but it is also a necessary foundation for it. The real test of Burnham’s success won’t be found in growth figures. It will be whether communities and families can look beyond next week’s bills and begin to have confidence in their futures.
This article first appeared in Spotlight on Economic Growth: Rethinking New Paths to Prosperity
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