The Centre for Progressive Policy (CPP) and the All-Party Parliamentary Group (APPG) on Inclusive Growth are launching the CPP Inclusive Growth Communities Index. The index provides a robust alternative to traditional economic metrics that have failed to reveal the true impact of the economy on people’s lives up and down the country. _­­­

The index ranks local and combined authorities based on their inclusive growth score, combining data on five key indicators: healthy life expectancy, consumption, leisure, inequality and unemployment.

The analysis reveals that healthy life expectancy is the biggest driver of differences in inclusive growth between local areas. With a range of more than 16 years between the top and bottom local authorities, healthy life expectancy varies within the UK by as much as it does between the UK and Sudan. The variation in consumption, the next biggest driver of the community index, is similar to the difference between the UK and Russia.

When exploring the importance of detailed local area characteristics to inclusive growth rankings, having a vibrant labour market characterised by high levels of good work and low levels of benefit claimants, is related to a higher ranking.

Having higher levels of vulnerability characterised by more people going through the justice system, higher levels of fuel poverty and more children in care is related to a lower ranking.

The research finds that traditional economic metrics, such as Gross Value Added (GVA) and Gross Household Disposable Income (GDHI), are only weakly related to an area’s inclusive growth score and so are poor indicators of broad-based economic progress.

CPP and the APPG on Inclusive Growth are calling for measures of inclusive growth to guide economic policymaking at the national and local level in the UK and abroad.

This is the second in a series of three reports from the CPP and the APPG who are responding to the urgent need for new compelling measures of shared economic progress at the country, community and company level. The country index was published earlier this year and the company index will be launched at the CPP’s annual inclusive growth conference on 26 November.

Rt Hon. Liam Byrne MP, Chair APPG on Inclusive Growth

“There is a growing need to shift once and for all away from a model of trickledown economics, and towards a new model of inclusive growth. If current trends persist we'll continue making the same mistakes; prioritising the quantity of economic growth and forgetting the deepening economic divisions that are splitting our society apart.

New economic measures that can command cross party support, such as the CPP Inclusive Growth Community Index, are essential for focusing minds on what really matters for our local economies and inspiring action. But this report goes further, helping to demystify how inclusive growth is achieved and equipping local leaders with a toolkit to help create better policy.”

Jeremy Lefroy MP, Vice Chair APPG on Inclusive Growth

“Driving inclusive growth must be the key priority for leaders at both the national and local level, going beyond GDP to redefine economic priorities for communities across the country. But we must also build an in-depth understanding of inclusive growth as a process so that local leaders can chart a course towards delivering shared prosperity.

This report helps us achieve this, developing a new metric that assesses how progress on achieving inclusive growth varies from place to place and championing best practise. Metrics such as this will be vital as we start to build a new economic model.”

Andy Norman, Research Analyst, CPP

“The UK has one of the most regionally imbalanced economies in the Western world. But just as damaging are the disparities within local areas, with prosperity too often sitting side by side with deprivation.

If we are to tackle these inequalities, we need a new measure of local economic performance to refocus minds. This community based index does exactly that, revealing that economic progress would be better served by focusing on good health and quality jobs rather than GDP.“

Key findings

1. Variations in healthy life expectancy are key to understanding how broad-based prosperity differs across local areas in the UK. Our index suggests healthy life expectancy is more important in explaining differences between areas than any other single factor. The range in average healthy life expectancy across local authorities is 16 years. This is the same as the difference between the UK and Sudan.
2. Combined authorities tend to have lower than average inclusive growth scores, but with significant variation within their boundaries. Cambridgeshire and Peterborough is the only combined authority that has an above average IG score. Yet within these areas there is significant variation. For example, in Greater Manchester some local authorities have more than double the IG score of others. These new levels of regional government have an opportunity not only to raise average levels of prosperity, but also to ensure that no areas are left behind.
3. Building vibrant labour markets is important for ensuring inclusive growth. Vibrant labour markets, defined as having high levels of ‘good work’ and low levels of benefit claimants are positively correlated with our inclusive growth index. This adds to the evidence of the importance of good work in achieving broad-based prosperity.
4. Inclusive growth is closely related to the Index of Multiple Deprivation (IMD), but only weakly correlated with traditional economic measures at the local level. Gross Value Added (GVA) and Gross Household Disposable Income (GDHI) are poor proxies for the broad-based economic progress local areas are seeking to achieve. Our index is more closely correlated with the IMD than traditional economic measures, signalling its ability to provide a broader assessment of economic progress.
5. More prosperous areas are more unequal, and less prosperous areas are less unequal. Poorer areas tend to have fewer people at the top end of the consumption spectrum, meaning their greater equality is due in large part to equality of deprivation. With a growing body of research showing inequality is a drag on growth, we must find ways to make the more prosperous places more equal and the more equal places more prosperous

Notes to the editor:

1. Measuring Inclusive Growth at the Country, Community and Company level: This report sets out the second in the series of three inclusive growth metrics that this project will deliver, following the publication of the CPP Inclusive Growth Country Index in June. We now have two metrics capable of describing progress on this agenda at the national and local level that are consistent with each other. The next metric will maintain the same ethos of inclusive growth, while moving to the company level. Once complete, this package of three high level metrics will be able to guide decision-making at the national and local level, driving inclusive growth across the country.
2. Good Work: Good work here is defined as jobs that fulfil all the following criteria: those employed on a permanent contract or are employed on a temporary contract but are not seeking permanent employment, earn at least two thirds of the UK median hourly wage, work less than 49 hours a week and are not unwillingly working part-time. In sum, jobs that have sufficient stability, good pay and not excessive hours
3. For interviews, please contact Thomas Hauschildt (THauschildt@progressive-policy.net), 020 7070 3370