We want the freedom to do things differently in the UK. There were plenty of mixed messages in the result of the EU referendum, but that one came through loud and clear.
We do not know yet how Theresa May will translate this vote against the status quo into sensible policy. In her first speech as Prime Minister she said she wanted “to make Britain a country that works for everyone”. This could be a powerful uniting theme for policymakers in this parliament and beyond - and a great way to use this moment of radical uncertainty to start to do things differently. But if we are to take these words seriously, they must be backed by a concrete strategy for delivering inclusive growth.
The UK is far from the only country grappling with the challenge of creating a more inclusive economy. It is a nation in 2016 with a golden opportunity – in the wake of the Brexit vote – to question old assumptions and re-cast old relationships to put that challenge centre stage. The Chancellor has promised to ‘re-set' fiscal policy. That would be welcome but it needs to be part of a wider re-orientation of government to achieve not just more balanced growth, but a more inclusive kind of prosperity. This is a universal takeaway from the evidence the Commission has received, including from the deep dive research it is conducting across the UK.
Not everything needs to be re-set. Both the City Growth Commission and the decentralising policies associated with George Osborne’s ‘Northern Powerhouse’ initiative have offered encouraging – sometimes inspiring – examples of devolved policy-making which really does “work better for everyone”, including Whitehall mandarins. But we need to make sure that all parts of the country are included in this agenda for growth – and we need policy makers at all levels of government to do a better job of bringing the economic and social dimension of policy together. We do not have all the answers in this Interim Report, but I think we do offer some powerful signposts to that more inclusive nation which so many would like to see – and which Britain's bruised and disrespected establishment needs to start now to deliver.
Our four proposals are:
- A road map for inclusive devolution. There is a political head of steam behind city-regional devolution, but there is a danger that this will only be offered to – and will only benefit – those places that have the narrow characteristics of places that are already succeeding. The government needs to make sure new devolution deals have inclusive growth at their core, and should use the forthcoming Autumn Statement to channel additional resource to localities as part of the Chancellor’s ‘fiscal re-set’.
- Investment in social as well as physical infrastructure. Over the longer term, we emphasise the importance of investment that builds social infrastructure as well as physical infrastructure and transport connectivity. If the government is serious about inclusive growth, it needs to invest (rather than simply accrue cost) in social infrastructure in the same way that it does now in physical infrastructure, assuming the same long-term multiplier effects about the nature and size of economic growth. It needs to redefine as investment the work we need to do to bring people and places up to the level where they can take part equally in the economy.
- Inclusive industrial strategies. The change of UK government in the summer of 2016 has led to a rediscovery of the importance of industrial strategies as a way of shoring up the business and economic base of the country, a policy approach about which the previous Chancellor of the Exchequer was sceptical. Combined with a continued commitment to place and the process of devolution to city regions by the new Prime Minister, there is potential for the government to drive inclusive, place-sensitive growth.
- More accurate data and measurement of ‘quality GVA’.One of the most obvious reasons why inclusive growth has not been at the heart of policy making before now is that the ubiquitous GVA measures, before and after investment decisions, do not measure it. This is not a criticism of GVA, but it is a criticism of only using GVA as a basis for decisions and investment.
Read the Inclusive Growth Commission's interim report for our full recommendations (on Medium).
Download the interim report.
Find out more about the RSA Inclusive Growth Commission