How experiments can be visionary

1. How experiments can be visionary Karel Williams Centre for Research in Socio-Cultural Change (CRESC)University of Manchester

2. Small experiments... big vision • So what? about small econ. experiments which can’t change the world (local procurement, housing retrofit, food and fuel) • Answer: vionarey local experiments can change the way we think about the economy • define the problem: distribution not growth • focus on what’s left: the foundational economy • add new policy principles:using the social franchise • Warm up for Alan S where Enfield is doing this

3. (1) Problem of distribution (not growth) regions, localities + groups falling behind

4. Trickle down isn’t working:inequalities increase • Regions + localities + groups falling behind: • 30 years of relative decline ( eg Welsh/London GVA 1989-2009 = 54 – 43%) dependence on publicly funded jobs + SS for 20% of wing age • “ Recovery” is more of the same: • nearly 50% of GVA growth 2007-11 went to (parts of) London and the South East take; • nearly 40% of income growth goes to top 20% of households take; • Its getting worse with SS cuts taking £700 per wing age person out of N and W

7. (2) Focusing on what’sleft the foundational economy

8. Can’t get over : lost manufacturing What’s lost = manufacturing: employment 1970-2010 7mill-2.25 mill by 2010 , no real output increase; so manufing now is 11% of GDP with disemployed male, working class, broken supply chains, failed manufacturing PLCs Dreams of come back: BIS industrial policy offavoured sectors ie high value manufacturing, life sciences etc; regional policy of competing for inward investment (via better training + infrastructure . No leverage: sector sizewhen motor vehicles employ 125k, pharma. manufing. <50k; favoured sectors regionally concentrated in the M11 corridor and the Thames Valley

9. Needs to focus on the foundational economy • What ‘s left = the foundational economy of mundane activities: everyday goods and services, sheltered + distributed according to population. • Employs 8 million in privatized utilities and transport infrastructure+ branch private activities like supermarket and retail banking+ state funded health and education (largest group = state funded) • Messed up by point value: public and private business models for least cost/ most profit at one node in a chain; egs’markets capture margins of food processors and producers; utilities pass investment cost and risk to the state, local authorities spread low wages and dependence thro lower price for adult care.

10. Private sector and state and state supported employment in foundational economy

11. (3) Add new principles against fragmentation and value extraction using the social franchise

12. What we want (1) less fragmentation Build coordinated provision: point value produce a fragmented economy of profit centres with underinvestment in network ( eg TOCs in trains, BT in telecomms) . • Think regional as space of coordinationwhenprivate sector utility brings in the product and take out the money: What has British Gas done for you lately • Think chain and pressure retailer or final assemblers with long supply chains e.g. regionalise in food processing and distribution, i • Think non-profit for eg retail banking/supermarkets/trains deliver shareholder value but not social good; state contracting out which creates vested interests and transaction costs (PFI) • Think pro-state revenue sources; need new sources of tax on land and property ; and why can’t state run revenue earning enterprises on the model of Jo Chamberlain’s gas and water socialism

13. Experiment(2) less value extraction Build regional financial circuits; point value creates local toll booths from PFI schools to train line train tickets; financialized capitalism routes e.g. L.A. pension funds via London Giant sucking sound ex utilities, supermarkets taking nearly £100 per week per household, pension funds, insurance contributions; Social investment as useful things for low and steady returns • Back regional infrastructure: as inEnfield the best initial projects would probably be social housing (preferably council run); but not other kinds of property development (capturing planning gains) • Mobilise pension funds: don’tsend your pension fund to London managers but retain in the region and local community for a social purpose • Think 5% return maximum: your pension fund isn’t currently getting any moreand infrastructure is inherently low return, high investment secure return;

14. Our social franchise + local actors • Social franchise justification: the state franchises foundational activities + our household spend and tax revenue sustains foundational activities. • Central state in Westminster and Whitehall can’t and won’t challenge business models because it has bought into privatisation/outsourcing + public sector economy = • City regions + LEPs a poor substitute for English regional government; cities caught up in property development, ¾ of local revenue will still comes from the centre • Guerrilla economic regeneration at local level... What Enfield has started