How to do inclusive growth - Step 2: Identify local barriers, levers and metrics

7 November 2018

By The Centre

11 minute read

In our last blog – step one of this six step series - we argued that a shared, binding vision is required to make inclusive growth the focal point of all local leadership and decision making.

In this blog, we encourage stakeholders to work out what matters for inclusive growth in each area and to consider what is required to measure the outcomes.

The objective here is to work out what the barriers to inclusive growth are in each place and then develop a clear set of actions with defined outcomes against which to track progress. This will also facilitate open and informed dialogue with residents that might involve tough, political choices in how to achieve the shared mission of inclusive growth. There is no inclusive growth blueprint, so each area must assess their own barriers, drivers and measures accordingly.

Identifying specific local barriers to inclusive growth

This year’s Joseph Rowntree Foundation annual anti-poverty lecture took on a different format. Chief Executive, Campbell Robb, made a short, impassioned set of opening remarks before screening ‘A Northern Soul’ at BAFTA in the heart of London’s Piccadilly. Afterwards the Director, Sean McAllister, was joined on stage by the film’s real-life protagonist, Steve, and several other talking heads, including CPP’s Director, Charlotte Alldritt. Surely, Charlotte was asked from the audience, the film was a powerful way of showing there is culture and creativity in the north whilst exposing levels of poverty and deprivation people living in our wealthy capital could not fathom. This would have come as news to the 1 million households living in London where the average household income after housing costs is as low as the poorest parts of the whole country.

The need for more inclusive growth is shared between economies – whether advanced, middle- or lower-income countries at a global level, or more locally, within and between cities and regions. Regional inequality in the UK is particularly acute compared to most OECD countries, but the complexity of our economic geography means that this is not an issue of ‘North vs South’ or ‘London vs the rest’. Each place has its own story to tell where the fabric of health, wealth, income and education inequality is different and so too will be the drivers for change.

Deep, data-driven analysis is needed to understand the barriers to inclusive growth in a place. Are education and skills levels low across the board, or certain communities excluded from opportunities available to others? How have local employers responded to and exacerbated the structural economic conditions of a place? Have we seen a growth in low-skilled, low-value added sectors? To what extent are growth sectors connected into deep, sustainable supply chains which also present a range of opportunities for people to learn new skills and access quality jobs? What proportion of economically inactive people are long term sick, and how did this come about? Is quality and availability of housing a major problem, who is it affecting and how?

The Inclusive Growth Diagnostic, developed in North Ayrshire and since being applied to other local places in Scotland, is an example of systematic analysis to inform the development of policy and investment decision making. Inclusive growth requires system-level analysis of the full breadth of social and economic factors, as well as – crucially – the interdependencies between them.

However, understanding the barriers and drivers of system change cannot rely on data analysis alone. At CPP’s conference last week the importance of policy makers listening with humility was a sustained theme of the day. What are people’s experiences of the local economy? What are the assets they bring to make a change? In shaping a vision and shared binding mission, places create space for ongoing dialogue – gathering qualitative data to augment and contextualise local or comparative statistics – and ensuring inclusive growth is both an outcome and a process for systemic, structural change.

Ways of monitoring and measuring inclusive growth

The link between mission and measurement must be clear. In the West Midlands, Sandwell is using the inclusive growth monitor set out by the Joseph Rowntree Foundation and the wider combined authority is grappling with how to incorporate inclusive growth metrics into its overall performance framework. Bristol is exploring a dashboard approach, with indicators ranging from increases in GVA per head through to reduced absenteeism from schools.

There has also been some important thinking about measurement via the Metro-Dynamics Inclusive Growth Assessment Framework, which provides a tool to assess the impact of potential investment. The framework is designed to work alongside the Treasury Green Book and encourages people responsible for generating inclusive growth to ask a series of questions about the impact of interventions on skills, jobs, housing, transport or business. Will it, for example, result in additional, high quality jobs for those at the lower end of the income scale? If not, are there other benefits (to whom?) that might nevertheless justify the approach? The breadth and sheer complexity of inclusive growth – requiring whole-system change to shift the underlying structural conditions of the local economy – will demand difficult trade-offs and decision making along the way.

Having identified barriers and drivers for local inclusive growth based on robust data analysis, a framework to measure and monitor progress will help focus minds and hold individuals and organisations to account. But learning the lessons of the recent New Public Management past, a delicate balance is needed between development of success metrics and the risk of over measurement. Similarly, as places develop their own metrics, tailored to their local vision and context for achieving inclusive growth, so too will balance be needed between place-specific and place-comparable measures.

There are other ways to capture the quality of growth being generated. Instead of a dashboard of metrics, or to supplement them, we might also specify proxy qualitative outcome measures that capture the complexity of the idea more simply: the police accountability metric (do you feel safe?) or the NHS Friends and Family Test (would you recommend this ward or hospital?) are good examples. The RSA Inclusive Growth Commission suggested the idea of a Community Confidence Index that sought to identify whether people felt a part, and had confidence in the future, of their place. Several local authorities are exploring whether existing data (collected through the Community Life Survey, for example) or public engagement (such as citizens’ juries) might provide useful supporting evidence.

Evidence of which policies, institutions and interventions are working, with what impact, upon whom, provides a basis for transparent assessment of the nature and pace of change. This is important for engaging people in decision-making and trade-offs, as well as investment appraisal and public sector accountability for inclusive growth outcomes. Companies will also need to be held to account for providing quality jobs, including training and progression opportunities, that they may have promised the politicians during a bidding process. A good jobs pledge, such as those launched at a national level in Scotland and in development in Liverpool City Region, Greater Manchester and North of Tyne, is one example of how to put this into practice, particularly when used to as a condition of investment or grant support. However, other ways (such as legal claw backs) still need to be being explored as to give ‘teeth’ to these as yet voluntary arrangements.

Finally, understanding local financial flows can help reveal how investment could be boosted in a local area, to the benefit of inclusive growth. Birmingham has been involved in an ambitious project with the Centre for Local Economic Strategies (CLES) to map where the money is going across the city region and what impact it is having. Similar exercises include Oldham which mapped where the council spend its money and who they employed.

There are also examples of money purposefully being kept locally, such as the use of local currencies like the Brixton pound, or the UK’s biggest local currency, the Bristol pound (£B). Moreover, several organisations, including Local Trust and the Democracy Collaborative, are putting forward the idea of Community Wealth Funds, similarly designed to grow and retain capital in the local economy.

Until recently, mainstream economists found it hard to accept the reality of local, or even city regional economies. But both the Bank of England and the Office of National Statistics (ONS) are now gearing up to provide statistics on a much more local or regional basis. The ONS is recruiting a bigger team to cover cities and regions and new powers under the Digital Economy Act (2017) will allow them to request data from any public authority or Crown body and from larger UK businesses and charitable trusts[1], and then to make them available at various regional levels: NUTS1, 2 and 3, LEP (Local Enterprise Partnership) and where possible, broken down to local authority level.[2] Even the big banks have been publishing lending data down to postal district level since 2014.

Potential pitfalls

To understand what the specific issues are locally to address inclusive growth is not a straightforward task. Inclusive growth requires a deep understanding of the whole system, and the interactions between the individuals, households, the public sector, business, investors and civil society. The complexity of inclusive growth is such that it spans policy and institutional boundaries, demanding a level of integrated governance and thinking that pushes against the norms, structures and incentives of national and local government and the wider public sector. Funding and accountability structures must therefore cut across a range of organisations with different regulatory regimes and varying degrees of financial resource and financial control. This is where a shared mission for inclusive growth and agreed metrics can help to drive joint decision making and accountability; but it is not an easy task and – as Greater Manchester has experienced in its efforts to integrate health and social care, and in starting to extend this to other public services, achieving it requires ingenuity and persistence.

Other potential pitfalls include not getting the balance right between under and over measurement. Should places measure everything, in which case they are in danger of surrendering inclusive growth to the technocrats, and undermining commitment to a shared mission for inclusive growth that resonates with local people? Or do places focus their efforts on a handful of measures – perhaps median income – which could skew attention and efforts or hide a multitude of disappointments?

Wrap up

It is clear, that no amount of measurement of outcomes will take away responsibility from local politicians to take what are likely to be tough decisions about economic and inclusive priorities. But it will help them to take the decisions if the consequences and reasons for those decisions are as transparent as possible. The purpose and justification of measurement is to make things happen. It is barely worth doing for its own sake.