Fixing the foundations: renewing our economy and society together

This essay was first published in Ordinary Hope: A Mission to Rebuild (Download PDF)

The debate around ‘fiscal black holes’ is acerbic. Such debate has been a feature of British politics since this year’s general election. “The public finances are worse than we thought,” is the refrain we hear from the new government’s ministers, as they try to pin responsibility for this on the previous government. Amongst policymakers, debate rages about what to do. Cut public spending to shrink the hole? Raise taxes? Borrow to invest and hope this leads to growth and increased tax take?

Less widely noted than this fiscal debate, is another debate. The argument about a ‘societal black hole’ that Sir Keir Starmer spoke of in his Rose Garden speech in Downing Street in late August.

“Because imagine the pride we will feel as a nation. When, after the hard work of clearing up the mess is done. We have a country that we have built together. Built to last.”

He was speaking about how it was incumbent on all of us to help close this black hole too. This concept of common endeavour has roots in the Labour tradition and is one of the most prominent features of the political story that Starmer is trying to tell, alongside the need to rebuild trust between citizens and state. Government intervention should pass this twin test. Do policies engage people meaningfully in shared endeavour? Do they build and maintain trust through accountability, reliability and responsiveness?

And it might just transpire that the task to fix the societal black hole is just as important in righting the British economy as the fiscal one.

Restoring trust

The factors which have led to a decline in trust in politics are complex and overlapping. The past couple of decades certainly have not been short of political and institutional scandal. Everything from MP’s expenses and the Post Office Horizon saga to Liz Truss’ ‘mini-budget’ and ‘partygate’ have played their part. But it is much more than that. We are faced by a growing sense that politics is unable to respond to fundamental issues like the lack of real-terms wage growth over the past decade and a half. A recognition that in a globalised economy, many of the levers the government used to pull no longer have anything attached to the other end. An understanding that we, as a nation, are subject to huge external shocks beyond our control. Fundamentally, a sense that people’s votes have less impact than they once might have.

Across the globe, countries are grappling with declining trust in politics in different ways. There is a job to be done to ensure our 20th century democratic norms and institutions are brought into the 21st century. Technology will play a role, as it has done so spectacularly well in Taiwan. But there is also a need to bring power closer to people, to ensure that democracy can engage with the messy reality of ordinary life and not just be limited to a trip to the ballot box every few years. So devolution must be part of this picture, but what else needs to be done to make progress?

Fixing the social and economic foundations

Closing this ‘societal black hole’ will require action on economic and social fronts. Support for the relationships and connections that sustain communities and the rebuilding of economic security. Boosting economic growth is part of this puzzle. However all too often, there is a disconnect between how politicians and economists see growth and how people live it.

With trust in politics flagging and the electorate more volatile than ever, delivering growth that has a real impact on people’s everyday lives should be a central concern for our politics. But how do we do that?

At present, our political economy is disconnected from the lives of ordinary people and their aspirations for where they live. Large multinationals might be able to identify countrywide consumer trends, but they’re unlikely to know what the needs of a community might be, let alone what people want the place they live to be like. For many, ‘the economy’ and the state it is in is experienced in their communities and neighbourhoods as much as in their pockets. Does the high street feel vibrant or run-down? Do they have the services and amenities they expect – pub, post office, park – on their doorstep? To build an economy on these ordinary hopes means building a political economy that is closer to people.

This isn’t about rejecting large-scale investment or the modern economy but about recognising, as the UCL economist Wendy Carlin has, that in a mature economy, sustaining local communities is good for growth and good for ordinary people.

Shared endeavour

So, how do we get there through shared endeavour? Too often, when we talk about partnership between state and business we think only of the national state and big business. If we want to build an economy based on Ordinary Hope, we also need to think about partnership at the neighbourhood level. Community business is often the way this hope manifests itself in places. These are locally rooted and locally accountable businesses that trade for community benefit.

In places like Plymouth and Sunderland, organisations like Nudge Community Builders and Back on the Map are working alongside communities to turn around the fortunes of their local high street. It is a similar tale in Hastings and the Knowle West neighbourhood in Bristol. Hastings Commons is developing affordable workspace and residential property in the heart of their town centre. WeCanMake is innovating to tackle the housing crisis in Knowle West and they have developed a playbook for how this could be replicated across the country.

The common thread that links all of these examples? Economic change which people can touch, see, and feel. Economic change which is built from the frustrations and aspirations of the communities in which they operate. Here, they understand that the GDP of the nation going in the right direction doesn’t necessarily mean positive change for the people of Plymouth, Sunderland, Hastings or Knowle West. It will only mean that if they make it so together.

An emerging policy platform which passes this twin test

There is an emerging platform agenda across government which, if done right, would pass this twin test. The government made its English Devolution Bill a centrepiece of its first King’s Speech. Through this it can legislate for an expansive Community Right to Buy. This new power would give communities first refusal when assets – with existing or potential community use – come up for sale. It could help revitalise our struggling high streets, and do so alongside communities with skin in the game. This should be accompanied by a supportive policy framework. An extended, expanded, and improved Community Ownership Fund, accompanied by targeted capacity-building support, is a vital part of the picture.

There is also more work to be done to close the loop between this and the financial difficulties local authorities find themselves in. In places like Birmingham, where hundreds of vital public assets are due to be sold, how might a revitalised community ownership agenda help get these assets into community hands rather than seeing them sold to the highest bidder and lost forever?

GB Energy has garnered lots of political and public attention. Indeed it is one of the most popular policies in the Labour manifesto. Underneath the neat branding, there is something which again has the potential to pass the twin test. The Local Power Plan is set to support community-led energy projects through grants and loans up to a value of £1bn to councils and community groups directly. This has the potential to give communities a stake in our transition to net zero and unblock opposition to this vital national infrastructure, but there is lots that needs to be done to get this right. Money cannot just get stuck with local authorities.

Communities need to see tangible ownership and financial benefit as a result.

As well as specific interventions coming out of relevant departments, the government should help build the foundations of growth from the bottomup. Building a new wave of community-level institutions like community businesses that are controlled by local people, would grant them a stake in the economy, help improve lives locally, and sustain themselves once Labour leaves office. The formation of these businesses could be supported by a national institution – say a Community Growth Network – that provides support for people and communities who want to set up these institutions and can help develop capacity where it does not exist already.

The job of closing our societal black hole won’t be quick or easy. It also shouldn’t mean reinventing the wheel. So much of this is happening in pockets across the country. The job of government should be to support, get alongside and nurture our communities to do more of this vital work.

Nick Plumb is Associate Director for Policy and Insight at Power to Change.