Thierry Delange, Business Development Director at RTC North, reflects on the development of Local Growth Plans and the opportunity to establish a new approach to economic growth.

I’ve had numerous conversations recently with colleagues who are rapidly developing local growth plans. The urgency is partly due to the impending budget and the need to ensure that these plans are both influential and inclusive. It struck me that there is a broad consensus that trickle-down economics hasn’t worked and that a new approach is required. In defining this new approach, strategists are grappling with three economic priorities that could be seen as being at odds with one another: inclusive growth, regional specialisms, and the foundational economy.

The foundational economy includes everyday products and services such as food, housing, utilities, health services, and transport. Focusing on the foundational economy makes a great deal of sense as it directly impacts people’s daily lives and is under significant pressure due to austerity, the cost-of-living crisis, and social and environmental change.

The reality is that the three priorities are not mutually exclusive and should be combined to form a new, integrated, and contemporary approach to economic growth.

A strong foundational economy relies on private and public investment and people’s spending power. Public investment requires higher tax receipts, private sector investment depends on the ability to deliver higher profits, and residents’ spending power hinges on higher incomes—all of which are reliant on higher levels of productivity, where the benefits are more inclusively spread.

The challenges facing the foundational economy, such as dealing with the effects of an ageing society, climate change, and pressure on public services, demand new and innovative approaches. The innovations needed regionally are also required by regions across the globe, offering significant opportunities to those who can develop new solutions and approaches.

The relationship between productivity and the foundational economy places a firm focus on innovation. Innovation is not only critical to finding new ways to deliver foundational services but is also essential for increasing regional spending power by capturing a higher share of global value locally. This requires innovations to be developed regionally and exported to attract value back into the region. All too often, however, we make and build in the North of England but use technology, products, and services created elsewhere to do so. This has the opposite effect to that intended, as value is captured elsewhere.

To date, innovation policy has tended to focus on academia and large businesses, with little evidence that this approach translates to more inclusive growth (DBEIS 2021). A focus on innovation at a foundational level and through SMEs and social enterprises, which are better connected with local people, could present a significant opportunity to spread the benefits of innovation more inclusively.

The foundational economy, the development of regional specialisms, and ensuring that the benefits are spread inclusively should, therefore, be viewed as a connected economic system that is coherently presented in Local Growth Plans.

Our team of 100+ innovation, supply chain, and scale-up practitioners are on hand to support the development of Local Growth Plans and to design and deliver the programmes required to embed a new approach that spreads the benefits of economic growth more inclusively. To find out more about RTC, please visit Our Services