Chris Johnes considers a recent Wales Centre for Public Policy report on inclusive growth and the welsh economy

For much of the last decade the reality, if not the recognition of, a failing economy has been with us in Wales as much as in many other parts of the UK and many other developed economies.

The economy has been failing in delivering greater economic wellbeing for the majority of people. Net GDP figures and company balance sheets may look healthy, but real incomes and job security for many people has been declining for a very long time. And in economically peripheral areas decent job opportunities have been scarce for even longer.

The need for a new approach to economics that delivers stable incomes for more people in a sustainable fashion has been very widely discussed since the Great Depression ended in around 2011. And while the analysis outlined in the WCPP report doesn’t enjoy universal support (critically the UK Government position is certainly unclear), it does enjoy widespread support, from the Scottish Government to the World Economic Forum and the International Monetary Fund. The data for Wales presented in the report underscores the analysis: we don’t face the once familiar scourge of mass unemployment, but we do see very many people in low value work, struggling to get by, with little hope of progression.

However, things are not going to improve purely because we identify the problem correctly. Inclusive Growth in itself, is limited, offering only a modest challenge to an economic model that has demonstrably failed to deliver for many people. We need to make a discernible impact on how economic development is carried out, and create meaningful change upon peoples’ livelihoods. Therefore, the imperative now is to use the principles of Inclusive Growth to go even deeper in transforming the economy and people’s lives. We now need to focus our attention on progressive delivery.

This is why BCT and the Centre for Local Economic Strategies (CLES), with help from WLGA, Federation of Small Businesses, the Talwrn network, WCVA and others hosted a conference on Building a New Local Economy in Wales last October. The conference focused on what needs to be done to build strong local economies in Wales and on what is already being done, and the interest received was unprecedented

Regardless of what policy makers might be saying, people of enterprise from a wide range of backgrounds are already taking steps to build stronger local economies and communities in a variety of different ways. We heard clear examples of community businesses being developed, environmental assets being sustainably used, and community organisations stimulating and supporting a range of social and economic actions in their localities. We also heard how community-based care activities are making communities more cohesive and boosting local economic activity, the role that a clear procurement strategy can play in retaining wealth locally, and a range of examples of the value that small businesses can bring to their localities.

In other words, we heard about a range of the actions that would help deliver not just inclusive growth, but also an inclusive economy and a more social and environmental justice too… and we believe that there is potential for more.

All of this is in part happening with ‘Inclusive Growth’ as an idea rather than a central part of Welsh Government economic policy – though certain strands are emerging in outline in the recently-published Economic Action Plan.

This is especially true for work around the Foundational Economy – where the Welsh Government have identified four priority sectors – and procurement, where the Government has high ambitions which may not be matched by practical capacity: intelligent procurement requires expertise and a willingness to see value in a broad sense that may not be matched by procurers’ abilities.

And while there is increasing talk of the value of asset-based community development, policy papers remain disappointingly thin on what it can achieve and how it could be enabled, despite the real achievements in many communities.

In this area we need to be willing to turn our normal policy and practice loops on their head. We need to recognise that many organisations are demonstrating what asset-based development can achieve and base policy around what would make it more likely for others to follow in their footsteps without expecting crude replication. The wealth of practitioner experience means practice should shape policy in these areas

The same is true for procurement and the foundational economy. Both are areas where experimentation and learning from both successes and failures are likely to enable progress.

However, the biggest challenge is to reconcile the City Region approach (which sits so centrally within Welsh economic policy) with the need to develop inclusive economies. So much emphasis has been put on City Regions as ‘engines of growth’ that their contributions towards wellbeing have been simply assumed by their adherents. However, as the paper acknowledges, equity was the last thing on the minds of their intellectual begetters (Osborne’s Treasury) and there is little evidence as yet beyond rhetoric of the Welsh City Regions becoming more equitable.

If we wish to make progress towards a more inclusive economy we need to recognise that we are challenging several generations of inherited assumptions; new ways of working are required with clearly different goals, with regular reviews and explicit learning of what is working and what is not. But what is working must be judged on its contribution to people’s livelihoods, not simply positive macro indicators which can disguise widespread poverty. Etched on the desk of every wannabe progressive economic policy maker must be the lament from the Newcastle Brexiteer, “that’s your GDP not mine”: if not they will be fated to make the same mistakes time and again.

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