Brexit, inclusive growth and Theresa May

If ever we doubted that inclusive growth was relevant to Brexit – or we wondered whether the thrust towards the devolution of power would be blunted by recent political events – the opening statement of Theresa May’s premiership would have dispelled the doubts.

Just as Andrea Leadsom was preparing her surprise exit from the Conservative leadership campaign, Theresa May put her finger on the main issue for devolution, Brexit and inclusive growth, because of what she called “a gaping chasm between wealthy London and the rest of the country”.

If the Inclusive Growth Commission has begun to talk about the problem of economic connectability between inner urban and outer urban, between cities and satellite towns, those gaps are dwarfed by the real connectability gap – between London, with all its notional property wealth and its financial services, and the rest, the fundamental reason why we need economic initiative devolved as well as administrative power.

She also underlined the urgency of the task by setting out the other side of the fundamental issue. “We don’t just believe in markets but in communities,” she said. “We don’t just believe in individualism but in society.”

By a coincidence in timing, the Inclusive Growth Commission finds itself at the heart of national debate. We are wrestling with the very problem that Theresa May implies: to go beyond just setting out these juxtapositions, to answer more precisely what holds markets and communities together. Inclusive growth means going beyond the economy versus society contradiction. We know both are important: what we don’t know yet is how the two interact to create something useful and sustainable. We don’t know, in practical terms, how to bring the two together without just cancelling each other out.

It is true that the Brexit agenda is unstable enough to pose a threat to some of the achievements of devolution so far. It may unnerve central government so much that it clamps down on some of the small gains created by the City Deals and the Devo Deals. It could go the other way, and lead to a breakdown of the links between London and the rest or, more fundamentally, between Scotland and the rest.

At its heart, the devolution agenda means tolerating differences between the administrative arrangements between places. Without that, devolution is meaningless and pretty pointless too. And it may be that the new How-To-Do-Brexit debate will imply much more fundamental differences between the ways places are run.

Is it possible, for example, that we could introduce some kind of affiliated membership of the European Union to devolved nations or regions or cities, along the lines of enterprise zones or small business zones, so that Scotland could continue as an EU affiliate? Could the same thing apply to London or other cities?  Could Europe build up a federation of Euro-linked trading cities around the world, like a great global Hanseatic League?

It is hard to see how this would be compatible with the free movement of people, though some elements of that might be possible. Because Brexit involves a whole range of opportunities for new thinking and new arrangements, not just here, but also in the European Union.

It is what happens when you finally start thinking, as medieval economists did before us, of cities as the fundamental building blocks of economies.

And there is the fundamental paradox of inclusive growth. It is at the same time about holding together in one administrative whole a range of different arrangements and objectives. It allows differences. But on the other hand it is about holding together and integrating the traditional opposites – inner and outer, economic and social, individual and community.

David Boyle is a Research Associate for the Inclusive Growth Commission. You can find him on Twitter @DavidBoyle1958.

Find out more about the RSA's work on inclusive growth.