Delivering inclusive growth through a Local Industrial Strategy
The Local Industrial Strategy (LIS) is an important opportunity to think about how economies can support more inclusive outcomes – including: better access to good quality employment, better workplace progression, and better employment stability for local people.
This module outlines what inclusive growth is, why it matters and what it means in the context of a LIS. It concludes with case studies from Greater Manchester, San Antonio and the Crossrail project, along with links to further resources.
Inclusive growth is economic growth which benefits all segments of society and particularly those who are poorest and most disadvantaged. Behind the use of the term ‘inclusive growth’ is the notion that the distribution of the outcomes of economic growth is as important, if not more so, than the scale of economic growth.
Inclusive growth is therefore not a new concept per se, but the increasingly widespread use of the term reflects a few key observations about recent UK economic trends, namely:
- The ‘productivity puzzle’ that has affected the UK economy since the 2008 recession, and the longer running trend of slower wage growth.
- The rise of in-work poverty and the spread of zero-hours contracts and other forms of relatively precarious employment.
- Slowing social mobility.
- Persistent wider social challenges that are indirectly related to economic and employment outcomes – e.g.: housing, health and crime.
In the context of these trends, the idea that an economy should ‘grow first, redistribute later’ is less tenable than it was prior to the recession. Rather, the notion of more inclusive growth is important because it aims to directly address the kinds of challenges noted above. It is also important to note that inclusive growth is not intended to mean slower growth that is more equitably shared. Rather, inclusive growth is seen as enhancing overall growth by increasing the incomes, economic resilience and spending power of poorer people.
Inclusive growth as an idea or set of policy prescriptions is still being developed, but what is clear is that inclusive growth will mean different things in different places, and places need to decide what it means within their local context.
The emphasis in Local Industrial Strategies is on raising productivity and improving living standards. An inclusive growth approach to Local Industrial Strategies would not assume that the result of this productivity increase will necessarily benefit all local people. Accordingly, an inclusive growth approach could build in policies and initiatives that:
- Increase the opportunities for local businesses, particularly SMEs, sole traders and co-operatives.
- Create good quality jobs for local people that pay the real living wage (as set by the Living Wage Foundation), have regular hours / shifts (rather than zero hours contracts), provide training and create a supportive working environment for those with health issues or are carers.
- Increase the likelihood of income increases for local workers, beyond the likely outcomes of standard market mechanisms.
- Increase the opportunities for learning high-value skills, and the opportunities for workplace progression.
- Better link local people to local working opportunities where barriers currently exist (e.g. poor transport links).
An inclusive growth approach could be focussed on specific sectors, on cross-sectoral themes / skills (e.g. digital skills), or on a whole economy approach. In practice, elements of all three will probably be important to most places.
Importantly, incorporating inclusive growth into Local Industrial Strategy means focussing on those parts of the economy that tend to employ lower wage / lower skilled people at least as much as those parts of the economy that are high productivity and higher value. This suggests that Local Industrial Strategies that aim to promote inclusive growth should:
- Also look at sectors that are high employment, low wage – e.g. care, tourism, retail.
- Focus on entry level skills as well as higher level skills.
- Ensure that the differences in local places are recognised in the Local Industrial Strategy.
Each of these points can be made within the framework of a Local Industrial Strategy with a focus on raising productivity and living standards with it. It is also important to remember that inclusive growth is a broader agenda than will be covered in a Local Industrial Strategy. Therefore, whilst the role of the Local Industrial Strategy is important, local places will want to address the challenge of inclusive growth in other ways – through policies around housing, education and skills training, public transport, etc.
Working Well is Greater Manchester’s initiative to tackle long-term worklessness. It aims to help people it describes as having ‘chronic employment problems’ – having been out of work for at least two years and gone through the ESA WRAG (Work Related Activity Group) programme without finding employment. Originally focussed on 5,000 people, it has now been used to support 25,000 people. Of these, over 17,000 have been formal ‘attachments’, of which 2,800 (17%) have become job starts.
The Working Well scheme uses agencies to employ ‘key worker’ staff to give tailored support to individuals. These key workers are deliberately given low caseloads to ensure they have time to invest in people’s lives. Agencies are incentivised to make a lasting difference by only being given the full fee once an individual has been in work for a year. Due to the devolved nature of Greater Manchester, this support is well integrated with health and social work delivery, enabling these barriers to work to be addressed in a joined-up way. Services such as the “Talking Therapies” service, which supports clients with mental health barriers, are included.
The scheme has helped over 3,000 people into jobs – double the success rate nationally – and the experience of many who have undertaken the programme has been positive. Comments show clear evidence of tackling attitudes to work: “[My key workers] actually understood my barriers… [they] encouraged me to aim higher than what my own confidence would allow and helped me to believe that I could”. The most commonly identified severe barrier to work by participants was “General confidence and self-esteem”. 75% of these noted an improvement at the point of the intermediate assessment of the programme. Lack of access to or self-confidence regarding work has also been widely linked to mental health problems (discussed in greater detail below) and Working Well addresses this too – 74% of those who listed mental health as a barrier said they felt it had improved.
In San Antonio, the Quality Employment through Skills Training (QUEST) Project was designed to upgrade and reskill low-income disadvantaged workers for good jobs in high-demand occupations by targeting a cluster of in-demand, well-paying and growing occupations, and working with the community college system to develop degree and certificate programmes suited to these occupations.
San Antonio’s wider economic strategy has adopted a sector policy targeting better jobs in these globally competitive sectors, largely building on historic industrial specialisations in health care, biosciences, life sciences, aerospace, and others.
From the outset, residents of poor neighbourhoods and the business community agreed that Project QUEST must tie-in strongly with the occupational demands of local employers, be selective and target training only for those careers that offer good pay and advancement opportunities. It was also stipulated that they must incorporate intensive client services to help economically disadvantaged participants overcome financial and personal barriers to skill acquisition.
As of 2015, in the 21 years of the Project’s existence, more than 80% of Project QUEST entrants have graduated from the programme and 86% of graduates have been placed into higher-paying occupations.
The Project was strengthened in 2014 with the creation of a Talent Pipeline Task Force (comprising employers, workforce development leaders, chambers of commerce, and post-secondary education and social service providers) to develop a plan to better connect education and training to the labour market in three main targeted industries: healthcare and biosciences, IT and cybersecurity, and advanced manufacturing. The task force agreed a middle skills strategy, targeting jobs that require more than a high school diploma and less than a bachelor’s degree as its core focus.
‘Social Sustainability’ has been a major theme of the Crossrail project, with a strong emphasis on employing local people and involving local businesses. The programme has delivered over 1,000 apprenticeships, 710 of which have come from Crossrail Limited’s tunnelling and station upgrading work, outstripping the original target of 400 by some margin. In total, Crossrail has employed over 5,000 people who were either unemployed previously, or living in close proximity to the new line, or both. To achieve this, Crossrail has taken some concrete steps:
Requiring all Tier 1 contractors to support employment outcomes
Crossrail has designed a metric to ensure its contractors support apprenticeships – for every £3m of tendered contract value, the contractor must deliver at least one skills or employment-based outcome.
Forming strategic partnerships with employment-focused organisations
Crossrail and its contractors have partnered with JobCentre Plus, whose links into local brokerage agencies have been used to connect Londoners to the CrossRail project, by searching for potential applicants, and overseeing shortlisting and arranging of interviews. These practical steps have made a big difference for those who might not otherwise put themselves forward for interview. A partnership has also been set up with Women Into Construction, an organisation first established in tandem with the construction of facilities for the London Olympics. This partnership facilitates the provision of work experience and employment on the Crossrail scheme, in an industry where only 11% of workers are female.
Developing long term training facilities
Due to the large-scale nature of the Crossrail project, there was a need to increase the amount of training which could be given to workers. In 2011, Crossrail built the Tunnelling and Underground Construction Agency (TUCA) in Ilford, where it estimates that 20,000 people have received training. This has a lasting legacy benefit to East London, bringing skilled individuals to the area and increasing employment opportunities for many years to come. It has now been passed on to Transport for London, but will doubtless be used extensively for Crossrail 2, and other underground rail projects. (Similarly, for the construction of HS2, two campuses for the new National College of High Speed Rail have been established in the cities of Birmingham and Doncaster).
- Joseph Rowntree Foundation’s briefing on how Local Industrial Strategies can deliver inclusive growth outlines how a LIS can help to deliver growing economies that allow people in, or at risk of, poverty to benefit from and contribute to a more prosperous economy.
- The Centre for Progressive Policy’s step-by-step guide on supporting more Inclusive Growth outlines the six step programme places need to make their own in order to embed inclusive growth.
- JRF and Metro Dynamics’ open-source Inclusive Growth decision-making framework is a tool for public sector practitioners to assess whether interventions and investments will support inclusive growth.
- The North of Tyne Combined Authority Devolution Deal is an example of how inclusive growth can be incorporated within a deal with Government.
- DCMS Connected Growth Manual is a manual for places working to boost their digital, cultural and social connectivity. It includes segments on digital, cultural and creative sectors, and the visitor economy.
- The final report of the RSA Inclusive Growth Commission sets out the Commission's framework and recommendations for achieving inclusive growth.
- Presentations from the inclusive growth masterclass on 3 April 2019.