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Is economic growth an imperative for councils?

Written by Gareth Young on . Posted in Our blog

After having spent a day (at the Local Government Strategic Leaders Forum) listening to council Chief Executives tell us how they were planning to stimulate the local economy as a means of growing their way out of austerity I was intrigued by a post from Hannah Fearn of the Guardian entitled:

Have councils abandoned the poor searching for economic growth?

It turns out that the headline was far more provocative than the article which was, as always, a thoughtful look at the issue; examining tensions in housing policy and the struggles that local authorities and social landlords are having in balancing the social role of housing and the need to build and regenerate.

However, towards the end of the piece Hannah raises a provocative point:

'But many questionable choices are councils' own, from Hackney's decision to cosy up to the international digital elites while poverty spreads on its own doorstep to the effective displacement of social tenants in the regeneration of Southwark's Elephant and Castle area.

Just like housing, has local government started to lose its soul in the relentless chase of local economic growth above all else? The government is paying them a bung to do so, after all. If local government forgets that it, too, is part of the safety net – even as it calls for a safety net of its own – where does that leave us?'

Having spent a day listening to council Chief Executives looking to grow their local economies I am sure their answer to this question would be a firm ‘no’. For a council like Liverpool or Derby economic growth is essential to enable them to increase their tax base (both council tax and business rates), provide work for their local population and to protect local services.

If we assume that the local politicians and officers have read their local situation correctly then the question becomes about the balance between the priorities. Are we, as local authorities, making sure that we are focusing as much on the services we pay for from this growth as we are in generating the growth in the first place? I can’t speak for them but at least on the surface in Liverpool it seemed like they were adept at making this balance.

The growth, and the council's role in more 'creative' growth was being driven by a small group of managers. The vast majority of staff were, as far as I could tell, still working on delivering the services they always had (although obviously this number was falling with the cuts). If you can get this balance right then you don’t need to abandon the poor to pursue economic growth. Indeed, if you are brining jobs to the area and then helping people get back into work then this is arguably a pro-poor position even without the service imperative.

Hannah’s suggestion was that Hackney spent too much time on the economic stuff and was losing focus on the services (the Southwark example is more complex and probably deserves its own article). This may be the case although my counter argument would be that a council who is ignoring the development of their local economy is surely just as bad as one neglecting the services they provide.

Councils are about far more than localised service provision and the danger of the argument against these strategies is that it becomes a minimalist interpretation of local government; one which eventually will fail the population who elected it.

A council like Hackney might get away with it because they are in London (although I doubt freeloading would last for ever) but if I learnt anything this week it is that councils have a duty to be more than just service providers.

What is more, for many councils this duty is now a pressing necessity. When the Government grant is cut as much as it has been and when there are precious few other options for local councils to raise revenue many have an obligation, if they are to protect local services and sustain their communities, to take economic development seriously.

Have councils abandoned the poor in search of economic growth? In some cases this is probably the case but in my reading this is nowhere near a universal thing. Should councils abandon economic growth because it feels uncomfortable next to their other social aims? No, that would be as big an abrogation of their responsibilities and just as difficult to defend, especially when so many councils are showing how it can be done right.

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