Interviews

Changing the conversation

The Centre for Local Economic Strategies is a think tank that says it not just thinks, but does. PSE went to meet its chief executive of 12 years, Neil McInroy.

The Centre for Local Economic Strategies (CLES) is based in Manchester, but its perspective and influence is national. Being based outside of London does give it a different vantage point. 

As its chief executive Neil McInroy tells us: “We’re not looking at things from the corridors of Westminster and Whitehall, we’re looking at it from here in Ancoats in Manchester. It’s a different view of the UK. 

“Whilst we do the national think tank ‘stuff’, we only talk and speak to that on the basis of experience of local citizens, places and public services. Our experiences are rooted in those localities. Others start nationally, and then search for a local example. We are local first, and evidence-based.” 

CLES recently launched a ‘manifesto for local economies’, which arose from the work it’s been doing on the ground. 

Devolution 

The first recommendation is more local control, and less from London – but the devolution of the last few years has been haphazard and lopsided, it argues, with a “growing asymmetry” in the power being handed to some cities in England.

McInroy said: “Devolution does two things: it gets away from the oppressive, centralised nature of England and the UK, and also would serve to reform the nation-state, and the practices and processes of Westminster.” 

Areas with more devolved powers and resources inevitably tend to make decisions that are “more in tune with what local people, public services and businesses require”, he said, with “better-quality, more bespoke decision making”. 

“Linked to that, devolution lends itself to more adroit economic decision-making, which can accrue an economic growth dividend but also ensure the dividend is reaped by local individuals and businesses.” 

While CLES is pleased that devolution in England is on the agenda, especially since the Scottish independence vote, it says the current process is opaque, based on backroom deals and driven by the perceptions of the Treasury. 

“That is not a good way of going about devolution: it will create an asymmetry, and winners and losers. That’s not how a democracy should be run,” McInroy said. 

He acknowledged that different areas and councils have different capabilities, which is why Greater Manchester and a few other areas have won significant influence and power while others have none. But there should be clear and public thresholds of capabilities, he said, which areas can work towards and know they will then be granted the next stage of devolutionary powers. “Areas should all know what game they’re playing, know what level of abilities and capabilities they need to get to, and know they’re on a particular devolution pathway.” 

This stops a “largely unreconstructed Westminster” having complete control of the process, making the rules as it goes along. 

“This shouldn’t be a question for Westminster: it should be a question for the whole nation. There needs to be a wide conversation, which involves civil society, the public sector, local government, businesses, and citizens, about what kind of country we want, and what levels of powers should be given to different parts of the country.” 

Cuts 

CLES believes in thriving local economies that do social good, and so is unsurprisingly against the scale of cuts seen to public services during this Parliament. McInroy said: “We believe that public services, and investment in them, are an input to economic success. 

“Under the debate at present, austerity is a given: irrefutable and unchangeable.”

It is often said that austerity has provided a ‘burning platform’, forcing many local authorities and other public bodies to innovate and find new ways of delivering services, often for the better. McInroy said: “These are good things in terms of changing the way we devise services – co-production, co-operatives, mutuals, different mechanisms for delivering public services that are more in tune with the users. 

“Yes, that’s partly been inspired by the austerity narrative. However, innovation and creativity is actually stymied by austerity – which is not often talked about. There’s less room for innovation and creativity and risk-taking and experimentation, because there’s less money to do that.” 

Part of the conversation will have to be the balance between cuts and taxation in dealing with the deficit, McInroy said. 

CLES’s manifesto says core funding for England will fall by £3.3bn from £24.1bn in 2014-15 to £20.8bn in 2015-16 (-13.9%). Instead, it wants 2014-15 levels of funding for each year of the next Parliament, with an additional 0.5% real terms growth, costing £1.45bn extra to 2019-20. 

Getting out of ‘crisis mode’ 

This is important to give councils some “breathing room” and allow them to come out of “crisis mode”, he insisted. “If we continue on the current pathway, some local [councils] will go to the wall. Some services will have to be done nationally – adult social services, perhaps.” 

He noted warnings from local government leaders that growing demand and shrinking resources mean there will soon be statutory services they cannot deliver – non-statutory services have already been slashed in most areas. 

McInroy acknowledged: “What we are saying may seem a bit wacky and mad and against the narrative. But I think it will be almost inevitable that, in some way, we need to get more money to local government.” 

There has been no appetite for that centrally so far, with ministers usually insisting that councils can cope with reduced grant funding by further cutting ill-defined ‘waste’ and bureaucracy, and eating into their reserves. Local government minister Kris Hopkins MP recently accused the Local Government Association (LGA) of putting out “continued warnings and false claims” over the scale of the cuts (more on page 9). 

McInroy said: “It seems to me that DCLG [the Department for Communities & Local Government] has been particularly keen to instil cuts upon local government, and been very successful in implementing those cuts. They’ve got the support grant, which they can easily cut, and local government’s just got to accept it. 

“But one only has to visit any local authority, particularly one with high levels of deprivation or disadvantage or need, to see the problems that are being created in those individual services. I’m not sure that DCLG is very attuned to those live, qualitative experience of cuts in particular localities.” 

Public perceptions 

Ministers also point to opinion polls that show that, in general, the public has not noticed the cuts to council spending – except for potholes and the state of the roads. 

McInroy said there will be a lag between cuts and perceptions, with things getting worse, but also that most people have relatively little knowledge of or engagement with council services beyond their bins getting emptied. But there are a minority who depend heavily on councils, especially those in need of care or housing, where perceptions clearly are changing. 

Polls also show, however, that most people have more trust in local than central government. Some of that is because people realise that councils are not usually to blame for the cuts, McInroy said – though that might change in a devolved world. 

“This is one of the double-edged swords of devolution: an area taking on more powers and responsibilities, such as Greater Manchester with the health budgets, can deflect the blame for cuts away from national government.” 

Local spending, local taxes 

He added: “The reason DCLG and central government can treat local authorities as children is that there’s no true constitutional protection of local government in the constitution. They should be seen as co-directors of the nation: central and local.” 

Constitutional reform seemed like it might be on the agenda in 2010, looking at the Coalition’s ‘Programme for Government’ document and the presence of the Liberal Democrats in government, who have traditionally had more of an interest in these issues. But in fact little has happened. 

Without such change, the only way that local government will get more control over its future is by having more control over its own money, McInroy said. About 70% of spending currently comes from central sources, and 30% from council tax and charges and other local sources. In Germany, those percentages are reversed. 

“Where the money is, is where the decisions lie,” McInroy said. “We need to have some form of local tax-raising powers, be it land value tax, local income tax, local sales tax, etc.” 

People rarely support higher taxes for any layer of government, but more local taxes could mean a reduction in central taxes. Nevertheless, the central state would have to retain a role to ensure redistribution and overall fairness, McInroy said, to account for the vast differences in wealth, deprivation and economic success across different areas, and to stop rural areas or post-industrial towns with struggling economies being left behind. 

Overall, he said, these decisions have got to be made by looking at the social consequences of decisions on tax and spending and devolution – not just the economic consequences. Some cuts increase demand, making the deficit worse, not better. 

Alternative economy 

McInroy called CLES “truly unique research and member organisation”. As well as the main ‘think-do tank’, it has a magazine, New Start, focused on community economic development, plus a consultancy trading arm. 

It has won attention for its work on the ‘local double dividend’ – an approach in which both economic and social success are seen as intrinsic to local prosperity, with more stress on how social investment complements and actively supports economic growth. 

It recently won funding for work looking at alternative economic activity in 10 cities, and has also been working on an impressive project in Preston, focusing on community wealth building through so-called ‘anchor institutions’. These are those biggest and best-established organisations, businesses and employers – public and private – that are not going anywhere. Building on work out in the USA, including the ‘Cleveland model’, it ensures that more of the spending power of these major anchor institutions is used locally, including with grassroots social enterprises and co-operatives.

McInroy said: “We’re looking to repatriate the economy to local businesses and organisations in the belief that will have a bigger jobs dividend for an area like Preston. This is a growing movement of organisations, individuals and thinkers who believe that the way to have a great society and great places is to make sure that those organisations that are not going anywhere ‘look after the local’ as much as they possibly can. 

“As the ebbs and flows of globalisation become speedier, this local ‘ballast’ is so important. People have a natural hankering for the local and intimate. It’s not hippy-dippy: the trend is there, and it’s serious.”

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