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Why the new government needs to be clearheaded on local growth

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new government - Westminster

There are lots of local disparities in the UK. Health, education, levels of crime, employment rates and more diverge significantly across places. These disparities came into focus at the time of the 2019 election, where ‘levelling up’ was a cornerstone of the Conservative victory. That policy has sought to address these disparities in one overarching approach – the 2022 Levelling Up White Paper defined 12 missions covering topics from living standards and R&D to wellbeing and pride in place. Subsequent funding streams covered the range of these issues.

Separating these important, but different, issues into separate strategies could provide a clearer and more focused approach to addressing them. Local economic growth will be a key area.

Getting more specific

The central economic mission of the new government is to achieve the highest sustained growth in the G7, with this to include “good jobs and productivity growth in every part of the country”. Growth is vital for an economy that has stagnated on a per-person basis since the 2008 financial crisis, where wage growth has been flat over the same period, and where public services need more investment.

All growth is local to somewhere, and to achieve success at the national level the new government will have to solve the problems we face in local economies. Addressing the disparities in productivity that hold back large parts of the country will be an important part of the solution. But doing this requires focus on what aspects of local economies government wants to improve. As they start their term, the government has an opportunity to take a clearer approach to local growth based on clear policy objectives.

This is important because the government has said they will develop a new industrial strategy and require places to develop long-term local growth plans in keeping with it. Cohesiveness between these two levels, clarity for local leaders, and policy stability to ensure these plans really can be long-term, mean that government must set out a clear set of local economic outcomes which they want local economic policies to target, and for these to be the core focus of local economic policy.

Local outcomes for better targeting

A smaller set of key local growth outcomes would make it easier for central and local government strategies to target policies and achieve better results. For example, the fact that the UK’s second largest cities lag behind the national average on productivity gives a clear indication of the need to increase their productivity, in order to meet national ambitions on growth.  Focus would also give local leaders clearer direction on how to fit new local growth plans with a national industrial strategy.

Beyond strategy, focus on specific local outcomes makes delivery more effective since it will be easier to understand what types of interventions are needed, and to ensure these interventions work. Good policy comes from a clear understanding of the logic by which intended outcomes can be achieved. Too often policy fails due to the intended outcomes being unclear, or due to the policy trying to cover too many issues at once.

Clearer outcomes can make evidence-based approaches easier too, since identifying evidence-based policy requires clarity on the intended policy outcomes. Common, clear outcomes also help with learning across places and the sharing of evidence to reach them. Finally, generating new evidence from evaluations will be easier the more specific policies are in terms of their objectives, because measuring the impact of policy requires clearly defined outcomes to measure against.

Local outcomes for better understanding

Ultimately, for growth policy to work, it needs to be consistent over a long time-period – beyond a single parliament.

A clearer focus on growth outcomes in local economic policy – productivity and incomes – would help with this because most parties agree we want both to be higher. Strategies that bundle local growth with other local outcomes to try to be transformational across multiple policy domains at once generate confusion and are vulnerable to changes in priorities.

On top of this, linking local outcomes to the national mission for the highest G7 growth can make that mission more relevant to people’s lives. National-level GDP growth is, at best, abstract to the daily realities of most people. But knowing that your area has added 3,000 new jobs, or that average pay there has gone up by £80 per month, gives a more tangible idea of what is being done for you and your community, and why policy on local growth is important for improving people’s lives.

The task for the new government

The new government have a big task ahead of them in delivering economic growth. Success on this will require real precision, which should start with a streamlined approach to local growth. This can make policy more effective and more understandable, both of which are vital.