Time to “include the excluded” and ensure full participation in economic growth

June 22, 2018

Bev Hurley, Chair of the Institute of Economic Development (IED) argues that now is the time to “include the excluded” and ensure their full participation in economic growth

Given the on-the-ground economic development issues that we face as a nation, with the challenge being far more complex than the stereotypical ‘North-South divide’ and many UK cities lagging behind their EU competitors, the opportunity – as I see it – is for the devolution agenda to enable a recasting of the growth model.

We really must face up to the situation where the majority of households living in poverty are in work, but in low paid/low-status jobs and two-thirds of UK workers produce below industry average productivity. There is a chronic low skills problem, with low employability investment and poor management within business.

Policy is focused on labour market entry – a job/any job mentality rather than access to and progression into quality jobs – and there are low levels of investment and success rates in addressing employability, infrastructure access/affordability and ill health. Income pressures disproportionately affect the socially excluded (especially BME, women and people with disabilities).

If we are to drive productivity, we must reduce dependency on the welfare state and ensure the sustainability of our public services. We need to integrate economic and social policy – skills, education, employability support, mental health, childcare; connect people to physical infrastructure assets (e.g. housing, transport); and support businesses to move up the value and productivity chain and create better quality jobs. If we could get this right it would have a massive impact on productivity and living standards.

Inclusive growth must be at the heart of all public investment. We need to ensure it leverages social, economic and financial return on investment providing quality Gross Value Added (GVA) and tackling inequalities. This is about improving outcomes through increasing access and uptake and removing barriers to participation.

Inclusive growth challenges (and opportunities) will often be at a very local level. Regional level GVA is a poor guide to social and economic welfare and does not tell us anything about how the opportunities and benefits of growth are distributed across different areas and different social or income groups. So, we need to measure the right things – such as household incomes, earnings distribution, levels of economic activity and unemployment, as well as the growth of quality employment. Importantly, we need to share what works and equally, what does not.

There needs to be a clearly defined, shared clarity of vision, but not just a strategy – the proof of the pudding will come from action – the courage to experiment, iterate, fail and learn. So, stakeholders must all be cohered to one agenda, a common narrative, how it can be achieved, with a clarity of roles and commitment to actions that will make the greatest difference. Prioritising is vital. Where is the significant unexploited potential for increasing productivity and increasing inclusion? It is not a fringe activity – inclusivity has to be mainstreamed. For example, why not mandate equality of access to all training and business support? Why not have equality of service uptake? It is all achievable.

We should focus on two areas going forward: Improving productivity and quality jobs are at the heart of inclusive growth. So firstly, we need to tackle the UK’s small business profile, that is the 5.3 million SMEs, 75% sole traders and 60% of employment by increasing the quality and targeting of support at key stages – at all levels, from pre-start, sustainability and growth to help ambitious companies scale. We must have much better quality, tailored and targeted support for different stages of the journey. We need to incentivise growth training – especially management skills, commercial acumen and dealing with the biggest barriers to growth – access to markets (skills in sales, marketing, business development and procurement) and access to finance (investment readiness).

We also need investment in training for those with lower skills and other disadvantages as this offers big returns for growth and inclusion. We must develop the capacities and capabilities of individuals, families and communities to participate more fully in society and economic growth and achieve more equitable outcomes. Their voices are usually unheard, or at best mediated through others, but you have to find ways of involving them in this agenda. They are not ‘hard to reach’ – go where they go, and you will find them.

Bev Hurley is Chair of the Institute of Economic Development, the UK’s leading independent professional body representing economic development and regeneration practitioners; and Chief Executive Officer of YTKO, which provides support for start-ups, SMEs and larger companies seeking expansion.

Bev Hurley