Published: 2nd Jul 2016

small millenniumWith a City Deal proposal in the pipeline, can south Wales forge a vision of a community-centric local economy?

‘This is our chance to do something different and we may not get it again.’

Those were the words of a delegate at the New Start, CLES and New Economics Foundation’s ‘Activating Local Alternative Economies’ event held in Cardiff in mid-September.

This view was echoed by others at the event, hosted by the Wales Co-operative Centre, as they discussed how the area’s emerging City Deal could be used to build a ‘good’ local economy in the Cardiff region.

Delegates – drawn from councils, community organisations, universities, and social businesses across the Cardiff region – spoke of an urgent need for a different approach to the local economy.

South Wales was designated an assisted area in 1934,

and is the only place in the UK to retain that status today

Decades of pursuing economic growth and millions of pounds being poured into the area’s marginalised communities – some of the poorest in the UK – have made little impact on the region’s social outcomes.

South Wales was designated an assisted area in 1934, and is the only place in the UK to retain that status today. Youth unemployment in Blaenau Gwent in the south Wales Valleys stands at 26% and the gap between Wales and other regions in the UK is widening.

Off-the-shelf approaches

The City Deal and the creation of the Cardiff Capital Region are badged as opportunities to turn south Wales into a globally competitive region which will drive economic growth through sectors such as advanced manufacturing and life sciences, and the creation of a new Metro network.

An initial submission for a City Deal for the region has been put forward to the Treasury, with plans for an infrastructure fund for transport, and support for the business and social economies in the area.

The Cardiff Capital Region brings together 10 local authority areas, extending to Blaenau Gwent and Merthyr Tydfil in the valleys, Monmouthshire to the east and the coastal regions of Bridgend and the Vale of Glamorgan.

This is the first time a city region approach has been taken in Wales, and it is hoped it will forge a new economic identity for south Wales and close some of its significant disparities compared to other UK regions.

A PWC report setting out the new region’s vision claims that ‘the changing global environment places an onus upon us to become ever more strategic in harnessing the forces of agglomeration to build critical mass, economies of scale and attract further investment’.  But to many delegates this vision – another off-the-shelf proposal for global competitiveness – would, on its own, fail to change the socioeconomic picture in the region.

A broader, bolder vision of a local economy

Delegates at the Activating Local Alternatives Economies event called instead for a broader and bolder vision of a local economy. Their vision of a local economy was one that may still seek economic growth but which does so by building on the region’s strong community heritage and assets and capturing a ‘double dividend’ from economic policies.

They criticised some past and current economic policies, which they said have spent public money luring in big business, attempting to build new sectors unsuccessfully, and pushing through policies that have revolved around vested interests.

Dr Mark Lang, honorary associate at the Sustainable Places Research Institute at Cardiff University, said that the city region model fits into the narrative of city competitiveness and agglomeration economics and which has thus far failed to provide a significant proportion of the population with a good standard of living or to tackle inequalities or poverty.

Those working at ground level in the poorer regions of south Wales bore witness to the growing poverty and inequality and called for the region to take its economic destiny into its own hands.

‘Why is it that despite all the money that has come in nothing has changed?’, one said. ‘We’ve become reliant on others rather than self-determined.’

Could south Wales instead become a leader in a ‘sustainable community-centric’ economy? An economy that ensures the wealth that is created is distributed evenly and fairly and which works with and builds on what it has?

What follows are a number of proposals presented during the event to feed into the City Deal process and work towards the creation of a ‘good’ local economy for south Wales, with quotes from delegates taking part in the event:

1. Building a vision of a sustainable community-centric economy

What would a City Deal look like that aimed to bring about such a local economy?

The vision suggested by delegates included building the ‘foundational’ economy of the region, ensuring business is ‘good’, and focusing on the assets and values of south Wales.

In practice this could mean building on south Wales’ heritage as the place where the NHS was born, with a community level health system and high quality care services providing good employment opportunities; developing a Ken Robinson-style education system to enable the region’s children to become creative thinkers; and placing community and values at the centre of their local economic vision.

‘We should stop trying to be the best or be

like Manchester or London and focus instead on what we have’

It could build on some of the policies set out in the Smith Institute’s Double Dividend report, which seek to capture both social and economic outcomes. They include a focus on developing social outcomes as an intrinsic and fundamental part of achieving local prosperity, rather than the downstream recipients of economic success; boosting social capital and networks; building a business community that contributes to the creation of an effective workforce; maximising the power of procurement so that every penny spent in the locality worked towards building local prosperity; and locking in local economic wealth and ensuring any economic growth stayed in and worked for the local community.

Delegates talked of a mix and match approach, with some policies that generate GVA in one area mixed with policies that focus on social outcomes in another area.

Above all, the vision eschews the one-size-fits-all approach in favour of a diversity of flexible policy mechanisms and strategies that spring from a collective vision of a good local economy.

2. Broader representation into economic policies

Many of the problems cited by delegates spring from the fact that economic policies in the south Wales region have not been made democratically. Delegates criticised the lack of representation into the economic policies by the people affected by them. The process for the City Deal and the thinking behind the Cardiff Capital Region have yet to include citizens, communities or the social or small business sectors and there is a strong sense of communities not feeling in control of their own destiny.

‘In economic policy there is a stranglehold by a

small elite with decisions being made undemocratically’

Delegates called for the development of a partnership of organisations engaged in and connected to the process of developing a roadmap for the collective future of the region. The social sector in Wales is worth £1.7bn and many of its organisations are working on the ground in some of the area’s most marginalised communities. The City Deal needs to support fuller engagement and participation of communities and for the voluntary, community, social and small business sectors to play a much greater role in overall economic strategy.

In an interview with New Start, Phil Bale, leader of Cardiff Council, said that he has asked the Wales Cooperative Centre for inputs and ideas to feed into the City Deal process to ensure it delivers social outcomes.

3. Measuring what matters

The vision of a ‘good’ local economy put forward during the discussion is one that measures what matters, and values what makes the region distinct, rather than trying to compete with other areas, or to be another Manchester or London.

The City Deal is focused on projects that boost economic growth and job creation, seen as blunt measurements of the social and economic health of the region.

‘There is no point in GVA growth that benefits 50% of the population.

We have an economy set up to function so that masses of people don’t contribute’.

A broader set of measurements of social and economic progress was proposed, including health and wellbeing, inequality and standards of living. Delegates suggested that a suite of measures be introduced to monitor the health of local economies in the region. This would include GVA growth but also the diversity of businesses in the area and their assets, and would track how much of the economic growth generated stays within the region.

The event has kickstarted a conversation about what a good local economy for south Wales could look like if it drew on a broader range of participants, looked inwards rather than outwards and valued what it has as well as building the new.

Wales is a nation whose natural resources once powered the world but which – many years after the demise of its mineral industries – is still struggling to find an economic destiny; a nation heavily dependent on the state for grants and solutions; a nation with devolved powers and a desire to build on its rich heritage. It is a country that needs to begin to tell itself a new economic story.