Jessica Craig from Power to Change writes about how government and combined authorities can foster inclusive growth through the social economy.
The Labour Government took power with a central mission of accelerating growth and tackling declining living standards. A little over a year on from the election, there’s now a more established roadmap to attaining this growth – including in the form of the Industrial Strategy. But, if the government is to convince voters that its economic plans are working by the time they next go to the ballot, it will need to produce growth that manifests in people’s daily lives, and which can be seen and felt in our communities.
Harnessing the social economy
Organisations in the social economy – like community businesses, co-operatives, and social enterprises – can help achieve this vision of inclusive growth. By focusing on purpose over profit, they create growth that can be tangibly felt in their communities. They do this by keeping profits circulating in the local economy, preventing wealth extraction by distant shareholders: 51% of community businesses’ suppliers are local, and a quarter are other community businesses. They create jobs and training opportunities for local people – including those furthest from the job market. And they offer affordable, high quality services tailored to the needs of their communities, often working alongside public services or filling gaps in local provision. Individually these businesses are often small, rooted in a particular community and with intentionally low turnover, but collectively, they are creating more vibrant high streets, more connected neighbourhoods and stronger communities that are better for us all to live and work in.
Government at all levels should be harnessing the potential of these organisations to make the benefits of growth more apparent in our lives. But traditionally, they have not enjoyed the same support as mainstream businesses. Too often, they’re viewed as a ‘nice to have’ and not a necessity for creating a more equitable economy.
While the Industrial Strategy focuses primarily on boosting the few (often high-tech, high skilled) sectors of the economy which government perceives as having the highest growth potential, it does include some positive signs of recognition of the important contribution of social economy businesses. In the Industrial Strategy, government commits to working with civil society to ‘bring meaningful change to workers and communities’ by ‘align[ing] economic value with social outcomes’. This includes plans to introduce three-year targets for procurement spend with social enterprises, and to put ‘mission-driven capital’ behind these businesses.
This alignment between growth and social outcomes is positive, and there are clear opportunities to put it into practice. For example, the government’s manifesto commitment to double the size of the co-operative sector could harness policy levers to promote the start-up, growth and scaling of co-operatives, community businesses and social enterprises, enhancing the economic contribution and social benefits of these businesses. Given the cross-cutting nature of these organisations – active in sectors like health and social care, housing, education, and food systems to name a few – the social economy can also be part of delivering across other mission areas, providing a local connection to government’s national agenda.
Growing local
The local dimension of the social economy also makes these businesses important to growing regional economies. The Westminster government has made combined authority mayors part of its growth strategy, with Keir Starmer instructing them to produce Local Growth Plans to create regional economic growth and attract inward investment in the next decade. It’s vital that these Local Growth Plans also connect economic growth and social impact to ensure all of their communities see the benefits of growth.
Power to Change’s recent report Lessons in local growth outlines a range of strategies and approaches that mayors and combined authorities can pursue to support and partner with their regional social economies to attain inclusive growth. It’s based on our strategic partnerships with three combined authorities and new conversations with officers drafting Local Growth Plans across eight English combined authorities.
In these conversations officers told us they struggle to position the social economy in these Local Growth Plans, because the Plans are intended to align with the ‘high growth’ sectors which are the focus of the Industrial Strategy. But to address the wider intentions of the growth mission, particularly around improving living standards – which, in the year to the election, had dipped to their lowest point since the 1950s – combined authorities will need to address the economic challenges holding back their communities as much as grasping opportunity areas. Often operating in areas of high disadvantage that may have been left behind by economic change, social economy businesses can support people who are furthest from the opportunity of those ‘high growth’ sectors and prevent the entrenchment of intra-regional inequalities.
Creating a clear and central role for the social economy in plans for local growth necessitates bold leadership and vision; a commitment to achieving a version of growth that is ‘for everyone’, in the language of the West Midlands Mayor, Richard Parker. I recently joined the Mayor to visit a community-owned fish and chip shop in Solihull. The shop started from a simple premise – someone is going to profit here, so why not our community? Now the shop puts its profits into local community projects and employs local people, having given some of its staff their first ever paid role.
What’s to come
While we’re still a number of years from a general election, the signs of a growing economy – if growth can be achieved – will take time to manifest in changes to our daily lives. But the changes that social businesses achieve, like fewer empty shops on the high street and more services that local people want and need, can make growth feel real to more people, more quickly.
As the devolution agenda continues at pace – there’s an English Devolution and Community Empowerment Bill in train and a raft of new combined authorities holding their first mayoral elections in 2026 – combined authorities are likely to remain part of the delivery of government’s growth goals. As new combined authorities take in increasingly more rural areas, they’ll face new challenges for stimulating growth relative to their city-region predecessors. If the fragmentation of British politics persists, it’s likely that the new mayoralties will be more politically pluralistic. Across these different regions, a desire for inclusive growth that creates more prosperous, resilient and connected communities can help unite combined authorities with each other, and with the government’s national mission. By working with and nurturing the social economy in their regions, combined authorities can make growth feel real in the lives of their communities.
This blog was written by Jessica Craig from Power to Change. Power to Change are Board Members of Local Policy Innovation Partnership Hub.
Disclaimer:
The views expressed in this post are those of the author and not necessarily those of City-REDI or the University of Birmingham.