How can cities deliver more inclusive growth?

In the second part of a blog series on inclusive growth, Josh Stott sets out how city leaders can share the benefits of growth in their city regions – without waiting for permission from Westminster.

Theresa May’s speech yesterday set out the terms for Brexit and the approach she believes will deliver the best economic deal for the country. It’s worth remembering what led us to the vote: driven in part by the frustration of people held back by a lack of opportunities for good jobs in their local areas, leaving many struggling on low incomes.

It’s vital now the government sets out how it plans to reconcile these economic injustices. With 13.5 million people living in poverty, there is an urgent case for action on inclusive growth and it is clear that cities are where the challenges and opportunities are the greatest. In the second in a series of blogs, drawing on our submission to the RSA’s Inclusive Growth Commission and our new report on maximising the local impact of anchor institutions, we set out what an inclusive growth strategy could look like and identify five practical steps cities can take to lead the agenda.

Responsibilities for inclusive growth

Cities are uniquely placed to deliver inclusive growth, but they aren’t the entire solution. Whitehall is taking a lead on developing an industrial strategy to raise national productivity, and this strategy must create opportunities for those on low incomes as well as those who work in high-tech sectors. National policy also needs to address regulation of the labour market, creating the conditions to enable business growth, the tax and benefits system and education and skills provision.

UK cities have limited powers compared to their international counterparts and capacity, political will and powers vary across the UK. Given additional tools, resources and responsibilities, they could do more. But devolution isn’t the only block. Cities can do more now to fill gaps, add value and bring greater coherence to the existing system. By leading the way on inclusive growth, cities can influence central government policy from the bottom up.

An inclusive growth strategy - a framework for cities

An inclusive growth strategy should bind together the local networks of employers, the third sector and public service providers. It should be framed around:

  • Improving prospects for low-paid workers – cities can be more proactive in influencing the number and quality of jobs locally. The traditional focus on high-wage and tech sectors is unlikely to lead to inclusive growth, so activities to raise the productivity and pay of low-skill workers should be a priority. Well-designed business support programmes can be an effective way of supporting people into better jobs, while supporting growth sectors to tackle problems such as skills shortages.
  • Improving education and adult skills– raising attainment levels and closing the attainment gap between children from better-off and disadvantaged households will drive growth and inclusion. Cities can help bring greater coherence to the system from early years through lifelong learning, and can learn from experiences such as the London City Challenge. Supporting young people into the labour market is critical and more could be done locally to help school leavers make informed choices through employer engagement in schools, accessible labour market information and careers advice. There are also opportunities on the horizon for cities to influence the roll out of the apprenticeship levy and take control of the adult skills budget.
  • Connecting people to economic opportunities – cities can improve people’s prospects by connecting them to job opportunities that already exist and better targeting of services to meet individual needs. Childcare, affordable housing and public transport can also be critical to enabling people to work.

Setting an inclusive growth agenda – some practical steps for cities

Inclusive growth is an agenda, not a new policy initiative. It should become an organising principle for cities. We’ve identified five practical steps that cities can take to champion inclusive growth:

  1. Redefining success and measuring it - a more inclusive local economy needs a new approach to measuring and monitoring performance. Cities should move beyond simplistic GVA measures to capture who is actually benefitting from growth. Our Inclusive growth monitor provides a starting point.
  2. Aligning investment decisions with inclusive growth objectives – we need a new approach to appraising the costs, benefits and value for money of capital and revenue projects. Otherwise, the vision and strategy for an inclusive economy are unlikely to be reflected in delivery.
  3. Joining up policy and delivery – moving to an inclusive growth approach will mean addressing growth and inclusion together, rather than treating them as different spheres of policy dealt with by different organisations, teams and individuals. Cities need to develop new capacities and ways of working.
  4. Getting people on board - designing inclusive growth strategies should be an inclusive process and should draw on the ideas and lived experience of local people. Working with the RSA, we are developing proposals around how citizen engagement can be genuinely inclusive, a source of ideas, influential and ongoing. Share your views here on how we could make this happen.
  5. Leading by doing – setting a new agenda requires action. Our research highlights the role anchor organisations such as local authorities, hospitals, universities, housing associations and large private sector organisations can play in delivering inclusive growth. They can use their role collaboratively as procurers, commissioners and employers to increase wage levels, raise job quality and develop the capacity of smaller local business to supply goods and services.

Taking forwards inclusive growth

Our work in the Leeds City Region and Greater Manchester has highlighted that cities are already doing a lot to deliver growth that benefits more of their citizens. We’re calling on city leaders to step up and take leadership of the inclusive growth agenda. Recognising that more can be done locally does not require permission or powers from Whitehall. City leaders, particularly incoming metro mayors, should put their powers to full use to establish vision, raise ambition, inspire action, marshal resources and foster collaboration.

How cities can create inclusive growth will be the topic of discussion at our international conference next week. Speakers include Bruce Katz of the Brookings Institute, the Mayor of Louisville, Kentucky and Judith Blake, leader of Leeds City Council and chair of the Core Cities.