Of a new regional policy
The Green Paper signals a new chapter in Conservative thinking in two respects. It accepts the state has a larger and more positive role to play in fostering development, and also acknowledges that place-based institutions are critical to the success of “local innovation ecosystems” in the knowledge economy.
The knowledge economy model of development – predicated on science, technology and innovation in the narrow technical sense – dominates the policy worlds in Brussels, London and Cardiff, and regional policy has become a major conduit for this model.
The main problem is not that this model wrong, but that it’s partial. It only truly resonates with certain hitech sectors, yet implies its benefits trickle down to other sectors and places, when they manifestly do not.
A regional policy totally in thrall to the knowledge economy model cannot claim to be smart, sustainable and inclusive – the key tests of a policy that gives parity of esteem to efficiency and equity. Breaking with the past – nurturing the foundational economy To compensate for the partiality of the knowledge economy model, a post-Brexit regional policy will need to do much more to promote inclusive growth, as the Bevan Foundation argued in response to the public consultation on economic priorities in Wales.
A new regional policy will therefore need to embrace and nurture the foundational economy, which involves the mundane production of everyday necessities.
Conceived by researchers at Manchester University, the foundational economy model refers to that part of the economy that creates and distributes goods and services consumed by us all because they support everyday life.
It includes the networks and branches of private companies or state agencies that distribute health services, education, utilities, food and so on. In contrast to hi-tech industry, the foundational economy is employment-intensive – it employs up to 40% of the workforce throughout the country. The challenge is to enhance the terms and conditions of these jobs, particularly in social care and food provisioning, where human need looms large and where wages are low.
Conventional regional policy is unaccustomed to dealing with the mundane sectors of the foundational economy because it has been exclusively focused on the high-visibility sectors of the knowledge economy. But a future regional policy will need to embrace both models if it wants to be smart, sustainable and inclusive.
Beyond conventional regional policy – sharing the burden of development
Expecting a single regional policy to shoulder the burden of regional development has been the biggest failing of spatial policy since the 1930s. To remedy the problem, it should be incumbent on all public, private or third sector institutions to demonstrate what contribution they are making to social and economic wellbeing in its locality. Take two examples: The Welsh Government will need to get more public value from the public purse and the wider public sector. One of the biggest challenges here is to hold public bodies and local authorities to account for unacceptable variations in performance.
This is long overdue in the case of public procurement, where purchasing power could be deployed more effectively to promote upskilling and local supply chains.
Universities in Wales are among the most important anchor institutions in their localities and they could and should do more to demonstrate their contributions to economy and society.
For example, all Welsh universities ought to be fully accredited Living Wage employers to demonstrate their commitment to inclusive development, yet only one university – Cardiff University – is currently accredited.
Fashioning a new development model requires finance, ideas and leadership. On the financial front, the ESI funds currently flowing from Brussels should be transferred into the Welsh block grant.
As regards ideas, the university sector could be utilised to a much greater extent to furnish evidence as to what works where and why in and beyond the UK.
And on the leadership front, the Welsh Government will need to demonstrate more commitment to a development model that gives parity of esteem to the knowledge and foundational economies if it wants to generate more inclusive forms of development.
Kevin Morgan is Professor of Governance and Development in the School of Geography and Planning at Cardiff University, where he is also the Dean of Engagement. He is currently a member of the European Commission’s Mirror Group of special advisors on Smart Specialisation. This article first appeared on Cardiff University’s Welsh Brexit Blog.