Mark Bandalli and Andrew Laird argue that for a successful economy we need to value social capital and invest in people and communities.
If we are to support businesses and the economy then we have to support people and communities first. That was the central message in a “Social Capitalism” thought piece by backbench MPs this week.
But how would you go about implementing this?
In this article, we argue that councils are uniquely well placed to both support people, communities and their local economy by ensuring spending on “people” and “place” have common goals.
The challenge
For years it has felt like every time we have written about councils, the situation has “never been worse” or that councils are “facing the perfect storm”. With each article it just keeps getting more challenging. Funding situations which were once unimaginable have regularly become accepted as business-as-usual.
There are forces outside of the control of councils which are directly impacting their communities and businesses - such as the cost-of-living crisis and the enduring impacts of Covid and Brexit. For families and communities who were experiencing acute deprivation prior to the pandemic, inequalities are becoming more pronounced. Community buildings and facilities have also suffered as priorities have understandably been elsewhere.
The Johnson Government was not entirely blind to this. Programmes such as the Towns Fund, Levelling Up Fund and Shared Prosperity Fund are designed to promote economic growth and drive productivity. These aim to address market failures and systemic challenges that mean many places across the UK have been unattractive for investors, employers and potential employees. Tackling inequality through inclusive growth has been a central aim of these funds.
However, taking the Levelling Up Fund as an example, whilst the timescales for completing transport infrastructure, town centre regeneration and cultural projects is March 2025, the impacts of these investments are unlikely to be felt by those who need them most until well after this. So, notwithstanding the immediate economic boost of the building work itself, there is not likely to be immediate relief for communities from these traditional capital “place” investments.
What about revenue budgets and “people” services? Given that most easily achievable efficiencies have already been driven out of the system, the unavoidable response to such challenges is to increase thresholds for receiving a service, reduce investment in prevention and early help services and instead direct these funds to those who require immediate support. This stores up challenges for the future, as the essential preventative work that manages low level need is no longer there.
So we have the “perfect storm” (there’s no other term to use!) of a long lead time for traditional capital “place” investments and reducing “people” service budgets and services in the short term…
Its time for new thinking
Councils should think more creatively about how they use their capital budgets to achieve better outcomes for both “place” and “people”, whether that’s funding through one of the central government funds or a council’s own investment pot.
Traditionally, the economy/regeneration bit of a council did their thing quite separately to the teams that looked after people services like public health, employment support, and social care.
It’s time to bring it all together and ensure that every penny a council spends, whether capital or revenue, supports both the local economy but also the local communities who hope to participate in it. Capital spending should aim to support wider council wellbeing ambitions through investment in community assets and infrastructure that supports people services whether delivered by the council, the local NHS or by independent partners.
There should be an appetite for this new thinking within economic and regeneration teams. Given the challenges faced by retail and commercial property sectors, investing in shopping centres and office space are no longer the attractive investments they once were.
The public sector cannot and should not do everything, so a lot of this is about empowering communities. But without investment in the infrastructure that supports communities to find and deliver their own solutions, they won’t have the ability to effectively respond. Facilities and services based within communities, run by communities, offer local, accessible and inclusive support that many find invaluable. Critically, these investments can bear fruit relatively quickly when compared to a more strategic infrastructure/transport project whilst arguably delivering better outcomes to those who need it most.
Given the strong connections local authorities have with their communities, the opportunity exists to consult with residents, third sector organisations and community groups and agree on small but meaningful capital investment projects. Community responses to the pandemic demonstrated the immense impact that can be achieved in the face of a crisis.
Of course, large strategic capital programmes have an important role - but investing in smaller community assets presents a significant opportunity at a time of great challenge.
To hear more about our work supporting councils with regeneration, contact Andrew Laird andrew@mutualventures.co.uk.
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