Consigning ‘trickle-down’ to the dustbin of poverty

There’s some excellent debate being generated at the moment about economic growth and poverty, with Joseph Rowntree Foundation, New Start Magazine and Centre for Local Economic Strategies leading the way with some excellent reports and blogs over the last few weeks. Whilst I’m not sure I can add much more to what has been said, there are a few key points just worth pulling out and exploring in a local context, to illustrate where we might learn something from this important discussion.

What much of this debate boils down to are the following key observations:

• trickle-down doesn’t work
• economic growth and poverty can’t be tackled separately
• gap between rich and poor is widening

Perhaps the biggest issue that needs emphasising is that trickle-down just doesn’t work – disputed by some, but more accepted now than ever before, is the notion that if we create enough jobs and prosperity then everyone will benefit eventually is a myth. A myth supported and promoted by those that do benefit, by those that wouldn’t understand poverty as they have never experienced it and/or by those that actually just do not care – it’s an easy cop out for decision makers and politicians, it’s easier just to see economic growth as the solution without having to worry about other things, that are all too complex! So the focus is on economic growth, as a separate policy, without looking at difficult things like poverty and inequality of opportunity as these are dealt with by others in different policies and strategies.

But, as Neil McInroy of CLES points out “what’s the point of local economic development if it does not deliver social outcomes or address poverty” – exactly, what is the point? Growth for growths sake, that marginalises issues around the distribution of benefits is pointless, it merely serves to increase the wealth and prosperity of those that already have wealth to begin with, rather than address the very real issues of poverty experienced by many people in our cities, towns and rural areas.

Seems pretty obvious when you distill the debate to such simple concepts doesn’t it? So why is the government still entirely focused on approaches to economic growth that retain obvious silos around jobs/GVA/GDP?  Perhaps it’s a continuation of an approach that seeks to demonise those in poverty, who may not have a job (although many do), and who dare to claim benefits from the state or seek ‘handouts’ in the form of food and housing? Or maybe it’s just a natural fall out from our national political focus on austerity and Plan A, with all activity centred around reducing the deficit by hitting those hardest who actually have the least? Whatever the reason our government seems to be ignoring the obvious, that is doesn’t work, and not only that but they are imposing their views and approach on us at a local level. Councils and Local Enterprise Partnerships (LEPs) are producing economic strategies that focus on jobs and GVA growth, because that’s what’ll get the money from government and that’s what they’ll be assessed against.

Some areas, though, do seem to have the ambition and critical thinking ability to go beyond the government brief and to draw the connections between growth and poverty and to bring their own local agendas to their economic plans. For example, as discussed by Josh Stott of JRF in New Start Magazine, the Leeds area seems to be doing something different by working in partnership to address poverty as part of the economic strategy, by linking the two agendas together and acknowledging that poverty reduction is very much on the agenda of the council, city region partnership and others. Manchester is doing something quite interesting too, by working with CLES to look at how to build a local civil economy, in a report which outlines the importance of civic leadership where it is everyone’s responsibility to shape the destiny of the city by working together – difficult to argue with that but so often not how decision makers and politicians see things.

However, not everywhere seems to be embracing this agenda or taking the opportunity to challenge the government over the narrowness of theirs. I’m sorry to say that, to me at least, it looks like Bristol and the West of England are following the silo mentality of government and through the Strategic Economic Plan developed by the LEP and supported by all four local councils, are merely seeking to grow jobs and GVA in the hope that this will eventually, somehow, benefit all those in need. The plan has a heavy focus on ‘return on investment’, mentioned endlessly as perhaps our biggest selling point – if the government give us the money we’ll make more money for them and the UK economy than anywhere else outside of London. So we draw up a strategy that does that, focuses on high growth sectors, where productivity is high and can be further improved, where multiplier effects are greatest.

But, and this is a huge but, so what? What benefit does that provide us with locally and more importantly who will benefit? Not those in the most poverty, not those in low quality jobs and not those who need it most. And, of course, anyone who dares to challenge this is accused of lacking ambition, or being uncomfortable with growth and change and not wanting the best for Bristol. Some of the business community have very strongly promoted the notion of critical mass and the need for growth and prosperity, which of course we will all eventually share in. Sadly they seem to be missing the point – this just doesn’t work and the evidence is there to clearly show that it doesn’t work. So why do business leaders, the West of England LEP and some of our politicians constantly fall back on this outdated, irrelevant notion? Is it because it serves existing implicit agendas, suits those already in power or those who are doing quite nicely out of the way things work at the moment, or is it just they don’t care or don’t understand? I can hazard a guess at the answer, as I’m sure you can!

So the question remains, what needs to change to make this work better? The report by the Smith Institute (the subject of a recent blog) talks about the need to reform LEPs and focus on ‘good growth’ which at least would be a start. But, change needs to happen quickly, before these plans get set in stone and form the future of our economic policy locally and nationally. I’d like to see business, politicians, LEP members take the economic growth and poverty agenda on board properly, with ambition and clarity, because why wouldn’t you?