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Greater devolution could reduce poverty and inequality

More devolution of powers and budgets from Whitehall offers councils the chance to tackle poverty and inequality by ‘doing things differently’. 

A new report – The Local Double Dividend – published by the Centre for Local Economic Strategies (CLES), argues that if councils are to deliver change for the better then a local economic policy that has social investment and a focus on addressing inequalities at its heart is needed. 

The report, backed by the Smith Institute and Carnegie Trust UK, adds that a ‘Double Dividend’ approach is required in which both economic and social success are seen as intrinsic to local prosperity, rather than Treasury-backed proposals that do not pay attention to poverty and inequality between areas. 

Neil McInroy, chief executive of CLES, said: “Local government is battered by austerity and clearly needs to free itself from a failing economic and social model. It must take any devolution which comes its way and demand more. 

“It’s time for an enabled and empowered local state working with social and business partners to forge a new local social contract.” 

CLES has recommended a fresh focus on building social capital in areas with weak local economies; and developing a new role for local government in promoting business citizenship so that the private sector helps to create an effective workforce. 

The report highlights several examples of the ‘Double Dividend’ in practice. These include the London Borough of Camden’s innovative use of commissioning to take account of social, environmental and economic impacts. And in Northamptonshire, Corby Employment Agencies Forum is helping to tackle the exploitation of workers by setting common standards for the town’s employers. 

On top of this, CLES noted that the public sector spends around £240bn a year buying goods and services, with local government procurement in England alone totalling some £45bn. 

It has been suggested that, if carried out effectively, procurement can be used as the means through which public authorities indirectly influence the behaviour of suppliers, particularly in terms of their practices around recruitment and their own procurement policies. CLES added that councils can also influence the behaviour of suppliers by making them aware of the challenges facing their locality, such as worklessness and skills shortages. 

Paul Hackett, director of the Smith Institute, added that local growth in all places won’t be achieved by “letting the market rip and focusing just on areas of business opportunity”. 

“As the report shows, our future success will depend on making more of the social value that local people can offer,” he said. 

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