A Good Economy is ‘an economy that works for everyone’. We presented our 4-pillar model of a Good Economy in a position paper published in early June 2016. It draws on the ideas of Edmund Phelps about a “high dynamism, wide inclusion” economy – in other words, the Good Economy is synonymous with “inclusive growth”.

Good Economy Index

Over the past year, a portentous time in British economic history, we have developed tools and data for tracking progress towards the Good Economy, which we brought together to create “The Good Economy Index”. In time, we will evolve the Index to measure progress across all four pillars of the Good Economy from countries to communities.

We have initially focused on two pillars of the Good Economy – Good Jobs and Business Dynamism – simply because these are fundamental to inclusive growth but rarely cited as key indicators. In the words of J.K. Galbraith, ‘There is no serious doubt as to the economic basis of the good society. There must be employment opportunity for all willing members’.

The Good Economy Index has a dual and specific focus on businesses as market and place-based actors. It can be used as a new tool for inclusive growth reporting and benchmarking across business and finance, public policy and the social sectors. The Good Economy (TGE) will launch the Index by the end of June 2017.

For now, as we consider the implications of the General Election, we wanted to publish a geographical picture of inclusive growth in Britain, as measured by the Index.

Good Jobs

Inclusive growth is a global agenda championed by the OECD, the UNDP (Sustainable Development Goals, SDGs), the World Economic Forum and other international organisations. Decent work or good jobs for all are seen as central to inclusive growth – this comes under SDG 8, although several other SDGs are linked to good jobs and inclusive economic growth, such as tackling inequality and poverty, or the prospects of young people. All countries, ‘developed and developing’, are implementing the SDGs, including the UK.

In the UK, there is political consensus around inclusive growth – “a country that works for everyone/a country for the many, not the few” – but also fundamental disagreement on how it is to be achieved. The stakes for getting a sensible policy mix right in theory and practice couldn’t be much higher. Britain’s future after Brexit depends on how well its businesses and policy makers perform, in every place and in every sector.

The triptych of inclusive growth below – by local authority, Local Enterprise Partnership and government regional office areas – shows the current state of inclusive growth across Britain, the ‘starting grid’ for Britain’s transition out of the EU. Our focus is on the private sector contribution to inclusive growth.

TGE combines these metrics to generate an inclusive growth landscape:

• Growth here is measured by private sector job growth, GVA growth, SME dynamism and working age population growth
• Inclusion is measured by earnings quality, job security and young people’s labour market prospects

These maps form part of TGE’s Inclusive Growth Framework for measuring the contribution of businesses to inclusive growth, focusing on their job growth performance in the UK, weighted by sector and place. We analyse the performance of listed companies and private companies on behalf of global asset managers and private equity houses.

We recognise that place-based stakeholders in job growth and economic development will also find some value in these maps as assessment and policy guidance tools. For this audience, as it mobilises around the new place-based Industrial Strategy, we offer some interpretation of what the maps appear to show:

• As whole nations, Wales performs badly on both growth and inclusion, and Scotland performs badly on growth, but well on inclusion;
• England has a mixed bag of regions: London, the South West and the East of England perform well on growth and inclusion; the North West and West Midlands under-perform on both growth and inclusion; encouragingly, given their familiar ‘lagging region’ status, the North East and Yorkshire and the Humber do well on growth, if not inclusion; the South East’s weaker growth performance is worth exploring further;
• Every region is marked by local divides, the fault lines in our inclusive growth landscape being clearly visible in every region including London; there is a strong southern bias in this geography of inclusive growth; the case for a “Midlands Engine and a “Northern Powerhouse” – with other ‘engines and powerhouses’ in Scotland and Wales – is irrefutable and long-overdue.

Business Dynamism

The big policy challenges, as we see it, are to create urban-regional planning and development frameworks that bring about inclusive growth. Cities must drive growth across their regions whilst making their own ‘backyards’ more inclusive. London has failed in this regard. Employment and income deprivation – and labour market polarisation – is highest in those very cities which generate most of the nation’s jobs and growth.

Conclusion

The Good Economy has a Good Geography to it. We must, therefore, tackle “The Growth-Inclusion Paradox”. We must realise that Brexit Britain simply can’t afford the efficiency and equity costs of its hyper-centralised economy. We surmise that the disruptive nature of Brexit could lead to new and unexpected policy solutions.

If you are interested in discussing the application of our inclusive growth model and the Good Economy Index to your work please contact Mark Hepworth at mark@thegoodeconomy.co.uk.