Three Ways to Promote Inclusive Growth

Any answer to the question ‘how do we promote inclusive growth?’ must start with those sectors already responsible for economic growth across the UK. What levers can policymakers pull to make sure this growth benefits everyone? One of the most important is public sector commissioning.

The business services industry – encompassing ICT, business process outsourcing, facilities management, construction and infrastructure services, and managed public services – accounts for 8 percent of the economy and three million jobs.

This is not an industry which needs to be enticed away from London.  It is already responsible for at least one in ten jobs across the North East, North West and South West.  It therefore has a crucial role to play as an engine of inclusive growth and prosperity.   

Here are three ways in which government at all levels can work with the industry to help make the growth it generates as inclusive as possible.

1. Recognise that the barriers between sectors are breaking down

The Government’s industrial strategy is at the heart of attempts to foster growth which benefits everyone.  The place-based emphasis is welcome.  And just as important as recognising the particular strengths of each town and city is recognising interdependence between towns, cities and sectors, and the role that industries such as business services can play in generating inclusive growth across the whole of the UK.

The old barriers between the sectors are breaking down - with market, digital and technological change leading to servitization in manufacturing and increasingly an ‘internet of things’. 

In today’s world a thriving service sector helps other sectors thrive as well.  That’s a constant theme across industries and across the UK.  It needs to remain a constant theme in the Industrial Strategy. 

2. Recognise that barriers between economic and social infrastructure also need breaking down

May’s metro mayoral elections – possibly the first set of many - can be a game-changer.  They will give political leaders in some of the UK’s most powerful city regions some of the biggest direct electoral mandates around.  This provides an opportunity to hardwire inclusive growth into the new strategies of each area from the start. 

The focus in devolution deals, initially at least, has been on stimulating economic development, especially through transport and infrastructure.

This is understandable.  Commissioned wisely such projects are vital for inclusive growth.  But wider service integration and improvement should not be seen as an alternative to economic growth but as complementary to it. 

Devolution deals can be used to help break down the barriers which have existed between economic and social infrastructure.  When decisions about economic and social policy and across service streams are taken at the same strategic level, this should enable the needs of ‘place’ to be considered as a whole and allow all interconnected policies to be considered together to help meet those needs. 

Services such as employment support, skills provision, and health and social care provision not only improve people’s quality of life but help provide a healthier, more skilled and more productive workforce.  The aim should be to produce a virtuous circle of local service delivery which will help generate inclusive growth - which, in turn, generates the income for services to be provided.

 3. Put Place leadership and commissioning at the centre

Achieving such a goal involves the public, private and VCSE sectors working together, with each playing to its strengths. 

In such an environment, businesses - including larger businesses with substantial resource and national and international experience - have a vital contribution to make.

The public sector meanwhile needs to use all the levers at its disposal.  Especially when budgets are tight, these include, in particular, the lever of public procurement. 

The process by which public services are commissioned should be the foundation for partnership working for inclusive growth.  Commissioning decisions need to be taken at a high enough level in the council for them to be based on a view of the needs of the community as a whole – with a broad picture of the needs of a ‘place’ and how these can best be met - not just on the basis of a need for a specific pre-determined project, with the contract then decided solely on lowest cost.

Use of private sector skills in analytics and customer engagement can help ensure commissioning is resident-led.  Focusing commissioning on outcomes means partners can help scale and replicate innovation and change in service delivery.  And, depending on the particular needs of the community, commissioning can also promote:

• employment of local workers.  Business services are ‘people businesses’.  So the industry has a particular responsibility to develop links with schools and with training and employment support providers.  It also has a responsibility to promote training and career development amongst its staff.  BSA members alone employ 17,000 apprentices.  Larger companies can also offer career development opportunities across the business which might not otherwise be available; and
• scaling up local SME capacity - making full use of the external expertise and supply chain management which larger companies can bring to the table. BSA members have supply chains which include over a quarter of a million SMEs.

All sectors need to work in partnership to generate the virtuous cycle between inclusive growth and service development which will enable communities to prosper.  

The Business Services Association – the BSA - is a policy and research organisation. It brings together all those who are interested in delivering efficient, flexible and cost-effective service and infrastructure projects across the private and public sectors.  A list of members is here.  The full BSA submission to the Inclusive Growth Commission is here.

Read the final recomendations of the RSA Inclusive Growth Commission