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Can involving the public in economic policy-making help the UK tackle the cost-of-living crisis?

An innovative new project sought to answer that question by offering a group of UK citizens the opportunity to create their own fiscal policy recommendations addressing the challenges of soaring living costs.

The Citizens’ Economic Council on the Cost of Living saw 39 members of the public come together for a series of workshops over a three-week period, drawing on insight from leading economic experts to support their discussion. They worked through various policy scenarios on spending, taxation and public investment and developed principles that they felt were important for government to factor in to decision-making.

The Council’s final recommendations included:

· Crisis-response spending packages should focus on outcomes for the most vulnerable first;

· Windfall taxes are an appropriate response to windfall profits, but investment and small businesses should be protected;

· Taxation should be made fairer by rewarding work and focusing the burden more on unearned income and wealth;

· Targets for national debt/deficit reduction should not stifle state investment strategy.

The study, designed to test the potential of deliberative democracy in UK economic policy, was led by King’s College London and Ipsos.

Dr Christopher Holmes, project director, said: “Economic policy decisions taken now will affect every UK citizen for years to come. That’s why it’s important to find new ways for citizens to be properly represented in the debate.

“In our current era of populism and political polarisation, it’s urgent that we try to rebuild trust in the policy-making process. The Citizens’ Economic Council showed how we might actually do this at a national level.”

Reema Patel, project manager, said: “The democratisation of economic policy is crucial if people are to feel part of the important decisions economists make. Deliberating about issues such as the cost of living, tax, spend and investment is central to creating a more inclusive and participatory future for economics.”

Deliberative democracy seeks to strengthen democracy by embedding ordinary citizens in decision-making processes, and the research team hopes that experiments such as the Citizens’ Economic Council will become a permanent feature of the political landscape in the UK. Experiments in other countries including Ireland and France have shown that such approaches can increase trust in democracy among citizens and foster greater openness to the views of others. The project has received funding from the Friends Provident Foundation and Barrow Cadbury Trust and is overseen by an advisory board which includes Sir Robert Chote, chair of the UK Statistics Authority; Lindsay Judge, research director at the Resolution Foundation; and Geoff Tily, senior economist at the Trades Union Congress. Find out more about the project.

 Conrad Parke from CLES blogs about community wealth building in Birmingham.

The Economic Justice Action Network pulls focus on community wealth-building and how we might amplify this approach in our efforts to tackle the root causes of economic injustice.  

Introduction 

In our Action Network meeting on 4 October we adopted the lens of community wealth-building as a route to engage with the topic of economic justice. We began the session in small groups, orienting ourselves around how we might collectively define economic justice. These included:  

  • Equality of opportunity and access to services and resources 
  • Allowing people to function in a society regardless of their circumstances 
  • The importance of treating people as of equal worth – everyone has value and insights 
  • ‘Allocative efficiency’ – using resources fairly and wisely 
  • Economic justice must link to other areas of justice  
  • No matter who you are you should have dignity and a fair life 

(These contributions and definitions will be collated and shared publicly as part of our suite of Action Network resources).

We then moved onto the topic of community wealth-building, where I introduced this progressive approach and its potential to re-model the economy in the city of Birmingham. During the meeting, many questions surfaced about community wealth-building (CWB). I have tried to provide some answers to those questions in this blog. 

What is community wealth-building? 

Community wealth-building is a progressive approach to economic development which sets out to retain more wealth and opportunity for the benefit of local people. It is a system-changing approach that works to produce a greater sharing of economic prosperity by ensuring that a greater proportion of wealth is retained and re-circulated in the local economies so that everybody benefits (also known as the ‘Local Multiplier Effect’, see below).  

This approach is an alternative to simply letting money drain away into the pockets of distant shareholders and the vaults of off shore banks. It is also an approach that recognises that there is more to the economy than the private sector. Community wealth-building sees the public sector, voluntary sector, social care sector and all other ‘sectors’ as having equal importance to the private sector, in terms of both keeping the economy moving and creating economic opportunities we can all benefit from.  

Why community wealth-building? 

I would argue we need CWB because we live in a city with some of the most disadvantaged neighbourhoods in the country, some of the highest levels of unemployment nationally, plus a multitude of other significant indicators of economic inequality. This is despite Birmingham experiencing almost uninterrupted economic growth for the past 20 years. In fact, if you could take Birmingham’s GDP (gross domestic product – read the previous blog for reference) and divide it amongst every working person in the city it would result in an average income over £58k per person whereas the real average income is more like £28k per person*! This suggests that about half the wealth created in Birmingham is then leaving it. Where does it go? Mainly to shareholders, profits for big businesses, people who work in Birmingham but live and spend their money elsewhere, and the inflated salaries of the already super rich. Or, to put it another way, the problem underpinning Birmingham’s economic injustice is not a problem of needing to create yet more wealth, but a problem of where that wealth flows. That is why we need Community Wealth Building. * *Economic Output in Birmingham 2020, Birmingham City Council. 

 

 

 

 

 

 

What is the ‘Local Multiplier Effect’? 

The local multiplier effect is the additional economic benefit generated for an area by increasing the amount of money spent, and is then recirculated, in that local economy. For example, it occurs when money is spent through local businesses and then those businesses, in turn, use that money to either buy locally themselves or pay wages to local people. In other words, a chain reaction in local economic activity.  

How does community wealth-building work in practice? 

CWB works in practice by thinking a bit harder about the economic assets we have at our disposal and then working (‘sweating’) those assets harder to create greater local benefit. For example, the largest employment sector in the city is health with over 91,000 jobs* and yet we rarely look at the NHS as an economic asset. In addition, University Hospitals Trust Birmingham alone spends £1.5b a year on goods and services.  

A community wealth-building approach asks the questions: 

  • How can we help these organisations become economic assets for the city?  
  • How do we direct more jobs within these organisations to communities where they will make the biggest difference?  
  • How do we direct more of these organisations’ spend to local businesses, thereby adding the greatest social value? 

*Workplace Employment in Birmingham 2021, Birmingham City Council 

What are the other benefits? 

As well as all the recognised wider social benefits of addressing poverty (improved health, reduced crime etc.) the CWB approach also aims to develop much stronger local economic ecosystems which, in turn, can help build stronger communities, and create greater social cohesion and stability. In addition, by actively working to source jobs and spend locally it reduces the carbon miles spent on travelling to work and increases the likelihood of participation in ‘active travel’ – both of which are good for the environment. 

How do we measure community wealth-building? 

The big picture for CWB is to measure how much money is being retained in the local economy. I currently estimate that about half the wealth created in Birmingham leaves the city, amounting to  approximately £15b a year. An increase in the wealth retained by the city of just 10% would mean an extra £1.5b for the Birmingham economy, which translates (very roughly!) to about 50,000 more jobs. A different way to measure is to look at the spend and recruitment patterns of large institutions (health trusts, local authority, universities, colleges, housing associations) to see what proportion is ‘staying local’ and whether this proportion is increasing.  

How do we monitor the social value of community wealth-building? 

I would advocate for a simple approach. So for jobs I would monitor whether recruitment rates are increasing in communities where people are traditionally seen as being trapped in low income and insecure employment. Then, we need a rebalancing in the workforce with more people in work from traditionally under-represented groups in terms of age, gender, disability, ethnicity etc. As for spend, I would track whether an increase in local spend is also being reflected in an increase in spend-through to businesses that represent greater social value by their very nature – i.e. small or micro businesses, social enterprises, co-operatives, etc. 

Which cities are doing community wealth-building well?  

CWB has been adopted as national policy by the devolved governments in Scotland, Wales and N. Ireland. In England it is being adopted at local authority level with two of the leading authorities being seen as Preston and Greater Manchester Council. In Europe I would recommend taking a look at Rotterdam in the Netherlands. But the real home of CWB is actually Cleveland, Ohio in the USA. Here is a link to Cleveland’s Evergreen initiative, where the aim is to create meaningful jobs, employee ownership and profit-sharing opportunities in the locality.  

How do new arrivals into areas impact community wealth-building? 

I cannot claim to be an expert on this issue but from my own experience I think new arrivals frequently add a real dynamism to a local economy by creating businesses that serve the specific needs of that community (food, fashion, legal services, etc.). They can also bring much needed skills. I was involved in a project that in just three years found 350 new arrivals in Birmingham with overseas health qualifications such as nurses, midwives, paediatricians and even an eye surgeon.  

Where in Birmingham feels ready for action and change on community wealth-building capacity? 

I have written about the need to look at the big institutions in the city (hospitals, universities, colleges etc) as economic assets. These are sometimes referred to as ‘anchor institutions’ because they are not going anywhere. However, to unlock these assets for a local community it is essential to also have ‘community anchor institutions’ that can act as the link between local people and opportunities that exist within big institutions. By ‘community anchor institution’ I mean the type of local organisation that has the reach and trust in local communities that big institutions do not have. Therefore, areas in Birmingham that are ready for CWB are those areas that are rich in local community anchor institutions. 

You can read more about community wealth-building here and you can contact Conrad if you’d like to discuss community wealth-building further via email. If any of this content piques your interest then you can join us at the next Action Network meeting, taking place on Wednesday 29 November, 11.30-2.30pm in Birmingham. Refreshments and lunch will be provided. Please sign up via this link if you would like to attend. 

 

“I’m less scared to discuss the economy in Birmingham and the local area.” Fiona

“Brilliant facilitation and complex ideas delivered in a simple and accessible way.” Emma

Shift Birmingham- a course for changemakers

On a sunny day in June, an inspiring group of changemakers from across Birmingham gathered at Soho House in Handsworth for the last session of People’s Economy’s Shift Birmingham. Over the last year this diverse group from across the city has met monthly to explore how power and resources in the city can be rebalanced to help their communities thrive. Apply now for the next Shift Birmingham, starting in January.

We’ve played ‘GDP bingo’, and learned from each other about different ways to keep money local. We’ve puzzled over how to address Birmingham’s housing crisis, and marvelled over what other cities and countries are doing to provide better quality jobs to their citizens.

Learning, getting confident, and making connections

Learning about the economy can sound daunting, boring, or even pointless, but even participants who had their doubts at first, really enjoyed getting a general grounding on these crucial issues that affect them and their communities. They found the special focus on what’s going on in Birmingham very helpful, and they’ve told us that the approachable style of facilitation made it easy to engage.

They also found it invaluable to meet and share experiences with others from across the city with different backgrounds and experiences. Getting together in person in the few face-to-face sessions was definitely worth battling with Birmingham’s traffic! Chatting over a coffee and a cake meant there were plenty of opportunities to share ideas and experiences.

“It has been uplifting to meet others working toward a fairer society.” Clare

Crucially, participants’ understanding and confidence leapt up after the course. See below for a snapshot of this.

“I feel I now hold a better understanding of how economics affects us as individuals and as communities.” Florence

Taking action

The group have started to use what they’ve gained in the course to make change in their communities.

“It’s tough to explain to decision makers how they should be doing something different, if you don’t have the grounding that the course provides – to be able to explain to them that sometimes they should be trying something different.” James

Bonus sessions supported them to translate their learnings into action, for example on how to craft stories about their work and engage with journalists. They had the opportunity to work with the West Midlands division of Global, a major radio broadcaster. One participant was interviewed about the impacts of the 2023 Spring Budget and five of the cohort are due to appear in a week-long special about Shift Birmingham and the connections they’ve built within the programme.

In April the cohort got a chance to meet with the leader of Birmingham City Council and put their ideas for a better Birmingham to him, and they were invited to a special performance of the play “All Our Money” by Stan’s Cafe, about how the council spends its budget.

People’s Economy is now supporting the group to continue to meet to translate the course learnings into action. With the extent of Birmingham City Council’s financial crisis now very clear, this work is more needed than ever.

People’s Economy is grateful for funding from Barrow Cadbury Trust and Birmingham City Council’s Neighbourhood Development Support Unit that enabled us to offer this course for free.

The future of Shift Birmingham

Following the success of the course, People’s Economy is running Shift Birmingham again from January 2024. Find out more about it here. The deadline to apply is November 2nd.

Clare Birkett is the Editor for the People’s Economy.  This blog is cross-posted with Clare’s permission.

Individuals and communities in Birmingham are coalescing around the theme of economic justice and seeking to build a local economy that truly serves the people says Anna Garlands of Huddlecraft – the Network’s facilitator – in this cross-posted blog.

As summer drew to a close this year, a group of bold and curious individuals came together in a room in Birmingham to participate in a “Kick Off” session for the Economic Justice Action Network. This Network, initiated and curated by Barrow Cadbury Trust and facilitated by Huddlecraft, seeks to tackle the root causes of economic injustice in Birmingham and beyond, pulling focus on the systems that perpetuate and amplify inequality within the city. The room was packed out with folks with varying associations with the theme of economic justice, all eager for meaningful change, all ready for action and all keen to learn more about how the Action Network could facilitate the systemic shifts we want and need to see.

When we talk about economic justice within this space, we are referring to a sense of economic fairness. Everyone having enough money to live. Everyone having access to the essentials of life: clean air, good public services, suitable housing, positive health care experiences, access to green spaces and, ultimately, equal life chances. Economic justice is about changing our social and economic structures so that people aren’t disadvantaged by their position in society, for example gender, ethnicity, class or disability. Economic justice is ensuring that the decisions that are made by those with power and the money that is generated in Birmingham, benefit everyone, not just those with power. It is about protecting the environment for future generations and it is halting the trend of the growing gap between rich and poor.

The Action Network has emerged because we recognise that the way Birmingham’s economy is structured does not deliver economic justice. There are areas of persistent poverty, wide disparities between the most and least affluent sections of the population and, as in other areas, structural racism, sexism and other–isms prevent many people attaining a decent standard of living and others being ill-rewarded for the work they do. Statutory agencies recognise the long-standing problems of economic exclusion and their strategies reflect a desire for change. However, things are not moving far or fast enough, and new solutions are needed.

Because we are all part of the economy, we should have a say in how it works and be able to challenge those in power on their economic choices and values. But what do we actually mean when we talk about ‘the economy’?

In his presentation at the Kick Off event, Joe Earle from People’s Economy shared that the economy is a relatively modern invention. It gives value to items that fit into the gross domestic product (GDP) framework — a monetary measure of the market value of all the final goods and services produced in a specific time period by a country or countries. Within this GDP framework, much essential work is ignored, for example unpaid care work, key workers and ‘low skilled’ workers. GDP also fails to provide a good measure of health, wellbeing or justice. It is crucial that we broaden our view and consider the economy as a system. It is about resources; money, buildings, land, food, energy, people’s time, it is about how they are used for different purposes, and how decisions about distribution of those resources are made.

It is also crucial for us to consider interconnected economic systems at different scales. How and where is the Birmingham economy impacted by broader UK economic systems? How do global economic systems affect the UK? We need to understand and examine how Birmingham’s economic system is shaped by government and corporate decisions, as well as by cultures and behaviours formed and developed outside of the city.

Birmingham’s economic system is like an iceberg. The unjust outcomes are visible but much of how the system operates and the conditions that uphold it, are hidden below the surface. In order to create the change we want to see, we first need to understand the system to explain why the system operates in a particular way and then develop interventions which can bring about change.

When thinking about the entrenched power and ideas which uphold Birmingham’s economic system, working for change can feel like a daunting and unlikely prospect. The good news is that systems are not static, they are changing all the time, and there are already many people doing important work to change our economic systems in all sorts of ways. We want to amplify and build upon this work.

The Action Network is a place for alliance-building, learning, developing ideas for change and action.

The Action Network is folk coming together to build a shared, working understanding of the economy - learning about how the current system perpetuates inequality; how adopting an intersectionality lens can widen our approach; how alternative economic models and systems can be imagined and implemented in Birmingham. The Action Network is people coming together to dissect, examine and map out the existing economic landscape in the city, identifying and engaging levers of change. The Action Network is seeding and cultivating an interconnected web of citizens, grassroots activists, change-makers and disruptors from across the city, all sharing a common view that change is possible and the need is urgent.

We recognise that no single sector  -  the public sector, private business or civil society  –  can change things alone, but that we need to work together, harnessing the ideas, experience and energy of individuals and organisations to make Birmingham a city that works for everyone.

The Action Network is open to anyone with an interest in making our economy work better for local people. What you will have in common is:

  • a willingness to have conversations and work with a variety of people who you otherwise may never encounter;
  • an energy and excitement for learning about the economy and how we can imagine design fairer, regenerative and distributive economic systems;
  • an appetite for action and creating change within the spheres you are affiliated with;
  • the ability to attend Action Network meetings every other month, where possible.

We have been delighted to see so many people from a broad range of sectors and backgrounds attend the Taster event (July) and the Kick Off meeting (August). There is clearly an appetite for spaces to connect, learn and explore these issues and we will be welcoming new members throughout the coming six months.

The next meeting will be taking place on Wednesday 4 October and we would be delighted to see you there. Refreshments and lunch will be provided. Please sign up via this link if you would like to join.

“I want the words and language to argue for change!”

“I’d like the community I work in to know how the economy could change to benefit them.”

These are just some of the reasons participants gave for joining Shift Birmingham, which kicked off at Stirchley Baths in the south of the city in September. The free training programme brings together changemakers from across Birmingham to look at how power and resources in the city can be rebalanced.

The cohort includes 23 people making a difference across Birmingham in various ways- from a nursery manager to a housing campaigner and a community hub manager at a local college. With the first session postponed due to the unprecedented heatwave in July, there was an atmosphere of excitement and anticipation as the inspirational group met face to face for the first time.

The first session set the foundations for a ten month journey where the cohort will be looking at how to improve the local economy and the lives of communities they live and work with, who are being hit hard by the cost of living crisis. They’ll look at opportunities for change that build on the strengths and assets that exist in Birmingham.

Participants will explore pressing economic problems that affect the city – from the housing crisis to the climate crisis — and get confident understanding and talking about their root causes, how they are connected and how to address them. They will also be supported to get their voice heard in the media, and to influence people in positions of economic power to make the type of change this participant called for:

“Jobs for local communities. Skills for local people. Services where we need them.”

Shift Birmingham is delivered by Economy and funded by Birmingham City Council’s Neighbourhood Development Support Unit and the Barrow Cadbury Trust.

This blog is cross-posted from Economy’s recent newsletter.  Many thanks to Economy for allowing us to share it.

Clare Payne, Economic Justice programme consultant for Barrow Cadbury Trust, charts the programme’s eight-year journey and its future course.

Over the last eight years, our Economic Justice programme has been on a journey. In the early days of working with others to reduce the growing gap between rich and poor, we looked at economic inequality through both ends of the telescope. Macro level research on the characteristics of fairer financial systems sat in a portfolio alongside local work on implementing the Social Value Act in Birmingham. We went wide as well as deep, exploring the ways in which people end up with problem debt, how the demographics of urban poverty are changing, and how local authorities and communities were working creatively to minimise the impacts of austerity. We supported colleagues at Scope, to look at the extra costs experienced by disabled people, the Women’s Budget Group and Runnymede Trust to look at the disproportionate impact of government cuts on women and BAME communities; and Fawcett on how gender had been considered (spoiler alert – hardly at all) within devolution policy.

Looking at our back catalogue for this blog has been immensely rewarding. We were asking the right questions – where does power lie; why do some people fall through the gaps; how do you challenge financial systems wired for risk and short term profit; why is it so hard for those in work to build up savings; who needs the most help; what is our impact? But, we were also asking a lot of questions.

Our relationship with Birmingham and the Black Country has, over the last 100 years, provided local connections and networks through which to listen, test, adapt and respond. When, back in 2016, we were considering how to tighten up and progress the programme, we talked with partners in the city and considered how our local grant-making had reduced poverty in communities and influenced those with power.

Although in its early stages at that time, the Birmingham Poverty Truth Commission, convened by Thrive Together Birmingham, was already building a reputation. A listening model designed to create safe connections between those with lived experience of poverty and/or lack of voice, with those in positions of influence and power in city institutions, was immediately valued both by those sharing experience and those with the sway.

Another project, led by the Birmingham & Solihull Social Economy Consortium (BSSEC), was achieving steady progress in assisting Birmingham City Council to implement the principles of a welcome, but rather nebulous Social Value Act. Commissioning as a tool for social good was picking up momentum in the city. An earlier piece of research delivered by the Centre for Local Economic Strategies (CLES), sought to measure the resilience of the public, social and commercial sectors in North Walsall, and how the strength of the relationships between these contributed to the resilience of the place. The local authority embraced the findings, using them to strengthen sectors and partnerships and allocate resources more collaboratively.

What could we take away from these three initiatives? Accountability feels different if you shorten the distance. Residents’ voices convey gravitas to policy makers if they are local ones and if those listening have a connection with them through locality. Contractors, however large and often isolated from the geography in which they work, always have a local impact – and it is not always positive. There is social, economic and environmental benefit to be had beyond the bottom line. Places becomes more resilient if services and sectors work together with a shared goal of improving the lives of everyone, and crucially, of listening to everyone.

The principles of thinking and being local, of sharing wealth, of co-design and partnership, and using all your assets for the public good, are ones the Trust has embraced within the Economic Justice programme and where we are seeing real leadership and change in Birmingham and the Black Country.

We were thrilled when CLES and senior leaders at Birmingham City Council established an anchor institution network in the city, now in its fourth year, and when the West Midlands Combined Authority in 2018, announced its commitment to growing the social economy sector. And earlier this year we learned that Birmingham City Council will be setting up its own Birmingham Truth Commission, focusing in its first year on housing. It will use the methodology of the Birmingham Poverty Truth Commission to ensure that the process has integrity and is open, safe and accountable. This is a real testament to the city’s desire to hear and learn from the experiences of all its citizens.

With local authorities and many households now crushed financially by COVID-19, and structural inequalities laid bare for all to see, the adoption of such principles – local partnership, listening and involving all communities, and ensuring that investment and money flows benefit all those in an area will be vital for recovery. The salami slicing of budgets is long gone and public services will need to be resourced and delivered in completely new ways. In the coming years, the Trust will be focusing on supporting the principles and practice of ‘community wealth building’, inclusive economies, sustainable local economies – call it what you will – to flourish and grow.

In the last three months we’ve seen the vital importance of community and of local support networks, and the dire consequences of the low wage, low value “just in time” model of building an economy. Community wealth building and inclusive economic approaches provide a structured alternative to those approaches. By supporting the development and spread of new ideas we can help ensure that together we #buildbackbetter.

The blog below is co-written by New Economics Foundation and Community Catalysts

Public understanding of social care is low. Many people are unsure what it is – never mind how to get it, or who pays – until they or someone close to them comes to need support beyond what friends and family can provide. A lot of care work goes on behind the closed doors of people’s homes, hidden from view. When it happens in public places, it’s unlikely to have a social care hat on: a dance workshop inclusive of disabled people or an arts club for isolated older people are not ‘social care’ to those involved – they are just a dance workshop and an arts club. 

Because of this, the sheer scale of social care can be a surprising fact. The workforce is made up of 1.5 million people, bigger than the NHS. It is a major sector of the economy and a foundational sector too, essential to millions of people. By supporting them in diverse ways, social care provides the ‘invisible scaffolding’ they need to live the life they want, regardless of age or disability. 

It is, nonetheless, overlooked by economic policy makers. An obsession with GDP does not favour social care: it’s hard to measure productivity in a sector where outcomes, not outputs, are what counts. The purpose and value of the service gets lost, and it’s treated as a cost rather than an investment. More fundamentally, the people who stand to benefit from public investment in social care are not wealthy. The means test restricts access to those on low incomes, while care workers themselves are generally paid close to the minimum wage. Inequalities in power are central to the undervaluing of care.

The oversight by policy makers is huge, not least because there is vast scope for improvement in social care. The system is failing on many fronts. A market approach incentivises providers to compete to win business, scrambling to undercut each other. Chain companies, whose business models are suited to short-termist, cost-driven, competitive tendering, gain market share. Care worker jobs become more precarious and care itself can resemble a ‘factory production line’, with people needing support having little say or control. 

Locally, there are glimmers of hope. A small but growing number of social care commissioners are trying to shift away from the status quo. Other policymakers in local government are developing strategies to build more inclusive local economies. They should join the dots. As a sector rooted in the everyday lives of millions of people, social care has the potential to drive creative new approaches to economic development. The objective of meeting care needs is connected to a lot of other objectives: building local wealth, lifting up job quality, reducing unemployment, improving health and wellbeing, and supporting more connected, resourceful and powerful communities, to name a few. 

Our report, published today, explores the benefits to local economies of one particular approach to care. Community micro-enterprises are small social businesses that provide support in diverse ways. In places like Somerset, where they have been promoted by the local authority, they have proliferated – with numbers jumping from around 50 to more than 450 over five years. We find that micro-enterprises can enable personalised care, by devolving decision making to people at the frontline. They also spread an accessible form of entrepreneurship, create roles that offer more autonomy and control than a typical care job, and build resilience, creativity and diversity in social care. In doing so they help to draw people into the sector and encourage them to stay. A third of the micro-entrepreneurs we surveyed doubt they would be working in social care if they hadn’t set up their micro-enterprise. Two thirds expect to continue running their micro-enterprise for five years or longer.

Local authorities have a crucial role to play in supporting the development of ventures like these. They can encourage the spread of micro-enterprises as part of a family of care models that promote inclusive economic development, such as co-operatives, social enterprises and user-led organisations. These models are often locally rooted, they are driven by social purpose, and they generally seek to be accountable to the people they support. Policymakers should not see this as a marginal endeavour: the goal should be a bottom-up rejuvenation of communities and the economies that serve them. This will require long-term public investment, along with willingness to collaborate, experiment and learn. 

 

This blog by Charlotte Morgan was originally posted on the New Local Government (NLG) website.

Is a growing economy something to celebrate when the benefits it brings are out of reach to many? While the economy grew as a whole in the 2017/18 financial year, the poorest 20 per cent of the population actually experienced a real terms decline in their incomes of 1.6 per cent. Some two-thirds of the jobs created by Britain’s much-heralded, post-recession jobs boom have come in the form of ‘atypical employment’, such as gig economy work and zero-hours contracts. The Government has started to turn its attention to reducing regional imbalances in economic growth, but years of inaction have given them a mountain to climb – the only regions where productivity is above the UK average are London and the South East.

In recent years, policy-makers have started looking beyond usual growth measures (such as GDP and employment figures) towards new approaches that enable more people to contribute to and benefit from economic growth. ‘Inclusive growth’ is the umbrella concept bringing together many of these approaches. NLGN’s latest report, Cultivating Local Inclusive Growth In Practice, supported by Barrow Cadbury Trust, features examples of some of the projects currently being led by councils throughout England. This animation will give you an overview of the project.

The report is structured around NLGN’s new Framework for Cultivating Inclusive Growth. We designed the Framework to be a practical tool to help councils develop their thinking, no matter whether they are just starting to develop a strategy or are in the process of implementing one.

The Framework identifies the groups councils should work with to promote local inclusive growth:

  • Employers. These are private, public and third sector organisations of all sizes who employ people in the local area.
  • Citizens. These are the people who live and/or work in a local authority area.
  • Partners. These are the organisations that work with councils to deliver public services and other projects, such as the NHS, schools and colleges, and companies that have been awarded a contract by the council.
  • Places. These are parks, buildings, town centres and other forms of physical space and assets in an area.

These are set against the levers councils can use, with the powers and resources currently at their disposal, to promote local inclusive growth:

  • Regulate. This category covers the hardest policy levers at a council’s disposal, including their ability to set rules and regulations to promote inclusive growth. For example, one council uses its procurement process to ensure that only businesses paying the real living wage can successfully apply for council contracts.
  • Incentivise. Councils can offer incentives, financial or otherwise, for employers, citizens and partners to behave in a way that is conducive to promoting inclusive growth. For example, one council offers undergraduates and recent graduates of local universities a wide range of paid placement and training opportunities to encourage them to stay in the area.
  • Shape. Councils can reshape their area to promote inclusive growth, either literally, through things like redevelopment, or in more subtle ways, through efforts to encourage employers, citizens and partners to promote inclusive growth. For example, some councils have created charters setting out socially responsible business practices and invited local employers to sign up to them.
  • Facilitate. Councils can promote inclusive growth in a more ‘back-seat’ facilitative role, by creating the partnerships, institutions and frameworks to enable others to take the lead. For example, one council worked with partners to set up a fund for projects that help local communities access employment, education and training opportunities.

Each section of the report contains many more practical examples and case studies.

We are very grateful to the council officers and think tank/academic researchers whose experiences and insights generously shared with us through interviews and workshops were invaluable to our research. If you have any questions about our research or would like to talk to us about our inclusive growth research, please get in touch with us at [email protected].

 

Pay for the typical FTSE 100 CEO in 2020 has already surpassed the amount the average UK worker earns in an entire year. High Pay Centre argues that much more can be done to achieve a better balance between those at the top and everybody else, in this blog originally posted on High Pay Centre website on 5 January.

FTSE 100 CEOs only need to work until just before 17.00 on Monday 6 January 2020 in order to make the same amount of money that the typical full-time employee will in the entire year.

The calculation for ‘High Pay Day 2020’ is based on research by HPC and the CIPD, the professional body for HR and people development, showing that:

  • Top bosses earn 117 times the annual pay of the average worker
  • In 2018 (latest available data) the average FTSE 100 CEO earned £3.46 million, equivalent to £901.30 an hour
  • In comparison, the average (as defined by the median) full-time worker took home an annual salary of £29,559 in 2018, equivalent to £14.37 an hour
  • To match average worker pay in 2020, FTSE 100 CEOs starting work on Thursday 2 January 2020 only need to work until just before 17.00 on Monday 6 January – just three working days (33 hours)

High pay will be a key issue in 2020 as this is the first year that publicly listed firms with more than 250 UK employees must disclose the ratio between CEO pay and the pay of their average worker. Under changes to the Companies Act (2006), firms must now provide their CEO pay ratio figures and a supporting narrative to explain the reasons for their executive pay ratios. The first round of reporting will be seen in annual reports published in 2020.

Compared with last year, CEOs now have to work slightly longer to make the median UK salary, after their pay fell from £3.9 million. However, the fact that it now takes them until teatime, rather than lunchtime, on the third working day of the year to pocket a sum of money that half of workers did not earn for an entire year’s work in 2019 rather puts this slight fall into perspective.

How major employers distribute pay across different levels of the organisation plays an important role in determining living standards. CEOs are paid extraordinarily highly compared to the wider workforce, reflecting an approach to business that has made the UK one of the most unequal countries in the developed world.

If we want to raise incomes for low and middle earners, measures that will enable them to get a fairer, more proportionate share of the spend on pay distributed by big companies will be of critical importance.

Inclusive growth has gained a firm foothold within the policy lexicon over recent years. Yet, despite much valuable discussion on what it is and why it is important, there remains a lack of clarity as to how it can be distinguished from more ‘typical’ economic growth strategies. Further, there remain gaps in understanding surrounding the practical steps that can be taken to foster inclusive growth. What levers do councils and combined authorities have at their disposal? How can authorities work with employers and public institutions? Which regulatory mechanisms and incentives need to be in place?

A new conversation on economic growth is certainly welcome. Over a decade on from the Financial Crash of 2008 and subsequent recession here in the UK, massive inequality persists, both between and within regions. That the UK economy has the highest levels of regional disparity among OECD nations demonstrates the structural imbalances that inclusive growth seeks to address, to ensure that the benefits of economic growth are shared across every section of society – both across and within regions and places.

How inclusive growth can be developed in practice is the core question underpinning a new NLGN research project we are undertaking in partnership with Barrow Cadbury Trust. We will draw on current practice from the front line of strategy implementation and service delivery. Through a series of peer learning workshops, we will share current experience, including key challenges that organisations pioneering inclusive growth interventions have experienced, and also generate new ideas. These conversations will help to inform practitioners’ approaches. The research will also explore how communities can be placed at the heart of inclusive growth strategy and delivery, following NLGN’s vision for the future of public services as set out in our Community Paradigm report.

Our goal at the end of this process is to have brought some practical clarity to the debate around inclusive growth and to have established concrete steps through which practitioners can develop their own frameworks for action. A final report will be published in January of 2020.

Charlotte Morgan and Trinley Walker

This blog was originally posted on the New Local Government Network (NLGN) website

If you would like to find out more about the project or get involved, please contact Charlotte Morgan or Trinley Walker: [email protected] – [email protected]