New Report on Strengthening Local Capacities for Economic Rejuvenation:
Why it gets it better (than currently), but still gets it wrong*
By Jeffrey Henderson, Professor of International Development, University of Bristol
Early July saw the publication of Andrew Adonis’ Labour Party commissioned report on how to deal with Britain’s badly lop-sided and under-productive economy. It’s a report that’s potentially important not merely for what it has to say, but because some of its ideas are likely to form the basis of government policy should May 2015 see the election of a Labour government.
For those interested in economic rejuvenation in the North of England, the Report contains some good ideas and proposals. These range from how to assist the local clustering of companies in the same or cognate industries so as to strengthen knowledge transfers and technological synergies, to improving technical education and delivering more and better skilledworkers. There’s a strong emphasis on the need to help the growth of small companies and to work with business to help drive innovation. It’s also good to see a senior Labour Party figure – probably for the first time since Robin Cook was Shadow Minister for Trade and Industry (1992-94) – argue strongly and cogently for the need for industrial policy. However, it’s the report’s focus on the role of cities and ‘regions’ in ‘mending’ our economy that’s likely to receive most attention.
The report recognises that the current Local Enterprise Partnerships (agencies led by local councils that incorporatebusinesses to help promote economic development) and Combined Authorities (legally constitutedamalgams of local councils in the same region focussed on the improvement transport and economic development)are an uncoordinated mess. For instance, each local council can be part of more than one Local Enterprise Partnership (LEP) and the boundaries between LEPs and Combined Authorities (CAs) do not coincide. Having little institutional coherence and lacking control over the financial resources they need to help drive development, LEPs and CAs have little autonomy from central government (in spite of Westminster pronouncements to the contrary). Rather than re-work the structure of regional economic governance, however, the report argues that the current arrangements can be rendered fit for the purposes of rejuvenating local economies.
Adonis and his colleagues seek to expand the numbers of CAs from the five current ones and render the LEPs coterminous with them. They argue for a greater devolution of resources from central government and for the CAs to be allowed increased autonomy over their tax base (specifically retaining 100% of business rates) and the use of those revenues. They seek to encourage coordinated forms of cooperation between business, universities, local governments, central government departments and other agenciesin the interests of formulating locally targeted industrial polices designed to drive innovation, create jobs, boost exports etc. So far then, so well intended. Unfortunately, for all the report’s good intentions, they will be insufficient to pull the trick of substantial economic rejuvenation – given the extent of the problems in the North and similar regions – and sustainable development from then onwards.The reason stems from four major concerns on which the report is deafeningly silent.
The first concerns democratic participation in the institutions that will help drive local economic development. Adonis and his colleagues – quite rightly – incorporate into the report, ‘a view from business’ (to which a whole chapter is devoted). In tune with the New Labour priorities that dominate the report, however, one searches in vain for a ‘view from organised labour’ or from community organisations. Indeed,while the report’s researchers interviewed representatives of manufacturing companies, banks, universities, colleges, local governments etc., the only trade union agency that anyone appears to have bothered with was Unionlearn: the TUC’s skills training initiative. Clearly, unless a consensus among all interested parties on both the means and ends of economic transformation is built at local and regional levels, the likelihood for conflict, during the transformation process, will be high.
Also missing from the report is engagement with other centrally important issues that current arrangements fail to address. For instance, it does not discuss the potentially vital issue of who – institutionally – coordinates industrial policy formation across the regionally proximate CAs and LEPs and adjudicates the conflicts of interest that will inevitably arise between them (say, between the Greater Manchester and Liverpool CAs); who, in other words, will be responsible for the region-wide economic planning that will be necessary? Additionally there is no acknowledgement in the report that under its proposals, local (sub-regional) economic development will continue to rely largely on financial disbursements from central government as even the entire business levy is unlikely to generate the level of funding necessary given the enormity of the economic problems that confront some of the regions. What is more, the report pays no attention to the fact that however successful its proposals might be, were they to be implemented, they would still be vulnerable to the ideologies and preferences of whatever Party was in office in Westminster (just as the Regional Development Agencies – founded in 1998, abolished in 2012 – were). As the British state works informally, without a written constitution, such initiatives would have no guarantee of long-term continuity.
The ultimate problem with the report, however, is that its authors do not understand (or refuse to countenance) that building the ‘smarter’ state they desire cannot be achieved in the context of the Westminster dominated state that the report’s proposals would do little to transcend.In Britain we are lumbered with a fundamentally pre-modern state. Consequently a smarter state requires the formation of a different state. In a nutshell, the vision of a better economic future that Adonis and his colleagues look forward to, cannot be delivered without the re-formation of the British state as a Federal state; a state which by definition would be grounded on a written constitution.
* Adonis Review (2014), Mending the Fractured Economy: Smarter State, Better Jobs. London, Policy Network.