New productivity deals must inspire local growth and community prosperity

New productivity deals must inspire local growth and community prosperity

  • A renewed relationship is needed between local economic anchors (an area’s major wealth creators) and ‘place’ to deliver local economic success;
  • These new productivity deals represent forming a new social contract with business to balance increased productivity with benefits to local communities – which in turn support the growth of local employers;
  • At the heart of this should be a longer-term dialogue between place and its largest employers about growth guided by a shared ambition for community wellbeing;
  • West Sussex County Council should explore developing an exemplary productivity deal around Gatwick Airport’s expansion and put into practice a new way of working for common aims.

Our biggest employers should act as responsible businesses by helping boost local standards of living – including wages and housing supply – to prevent residents being priced out of their own areas in ‘doughnut economies’, a report issued today by the think-tank Localis has recommended.

In a report ‘Prosperous Communities, Productive Places’ Localis warns without a new deal some places risk becoming trapped as ‘doughnut economies’ where the wages of residents remain far lower than those of the commuters who journey into their areas to work with major local firms.

Localis’s report recommends major local authorities should strike productivity deals with private sector local economic anchors to galvanize economic growth, improve community prosperity and improve people’s lives.

The study argues because the relationship between businesses and the places they are based in is a symbiotic one, recent dramatic changes to the economic landscape call for their renewal in the form of a new kind of social contract.  These productivity deals could be as simple as a commitment between local economic anchors and leaders of place to hold regular high-level conversations, or be as extensive as signing up to a detailed set of local agreements for economic growth and community renewal.

Such strategic relationships between places and big local employers should deliver higher standards for residents in the shape of “good jobs”, higher wages, stronger local skills supply chains and support for developing local housing and infrastructure for communities.

The report indicates new productivity deals would offer a new way of working for local prosperity through a fresh approach to Corporate Social Responsibility (CSR), one that is directly linked to an area’s Local Industrial Strategy (LIS) for promoting economic growth.

For the biggest local firms, these new deals would support the five foundations of the Government’s national Industrial Strategy: ideas, people, infrastructure, business environment and place.

To support these business productivity aims, the local state should in turn co-ordinate for firms a local public sector innovation offer providing greater access to data, markets and finance, skills supply chain development and spatial planning.

The report further recommends that West Sussex County Council – which commissioned the research – should use the negotiations over the expansion of Gatwick Airport to establish a new way of working that would increase the economic productivity of the airport and the prosperity of the wide area it serves.

Localis chief executive, Jonathan Werran, said: “Our productivity crisis has been allowed to slip below the surface of national attention owing to Westminster’s Brexit theatrics. But worrying official statistics suggest this problem of weak growth hasn’t gone away and must be faced down at local level throughout the country.

“History teaches us that when communities prosper, businesses prosper.  In the straitened economic and troubled political waters we find ourselves in, local industrial strategies provide a sturdy life-raft in which to navigate these rough seas.

“By realising the positive effect of successful local economic anchors in building prosperous places, local areas will attract and grow productive businesses: this in turn will further strengthen the communities in which businesses are based in a positive cycle of mutually-reinforcing prosperity.”

West Sussex County Council leader, Cllr Louise Goldsmith, said: “We welcome this report and are keen to explore with Gatwick and all partners the possibility of a ground breaking productivity agreements which both builds prosperous communities and supports the airport.

“Maximising opportunities from Gatwick is a priority theme in the West Sussex Economic Growth Plan, and we look forward to working with the airport to explore the ideas and potential opportunities identified in the report.”

Stewart Wingate, Gatwick Airport’s chief executive officer, said: “We welcome this report’s recognition that Gatwick is an important driver of the region’s economy in terms of jobs, international connections and wealth creation and that the future success of West Sussex and the airport are intrinsically linked.

“Gatwick is committed to sharing the benefits of our growth and we look forward to building on our already strong relationship with West Sussex County Council to explore how a productivity deal might boost local prosperity even further for all our neighbours.”

Report author, Localis visiting fellow, David Godfrey, said: “We want to support a new way of working between major businesses and the communities where they are based – but this must be for mutual benefit.

“Combining productive businesses and prosperous places makes a compelling formula for local economic success.”