June 14 2016

Can the Northern Powerhouse address social inequality?

Dr David Etherington, Principal Researcher in the Centre for Enterprise and Economic Development Research (CEEDR), is near to completing a research project in collaboration with Professor Martin Jones in the Department of Geography at the University of Sheffield.

The project, entitled ‘Economic and Social Disadvantage in Sheffield City Region: Devolution, Employment, Skills and Welfare Policies’, critically examines how devolution and the city region growth strategies tackle long-standing economic and social disadvantage and inequalities in the city region.

In late 2014 in a wave of razzmatazz Chancellor George Osborne announced the ‘Northern Powerhouse‘ initiative whereby city regions were to be given more ‘powers’ to develop initiatives in their local areas in order to regenerate city economies which for many years lagged behind the rest of the UK in terms of growth and prosperity.

This follows a series of initiatives to promote the localism agenda including the Local Enterprise Partnerships (LEPs) charged with managing the Regional Growth Fund aimed at improving infrastructure and business support and then, in 2011, ‘City Deals’ with more of a focus on employment and skills.

The Northern Powerhouse in effect expands and consolidates on this and allows the LEPs and local authority leaders within a number of city regions (Manchester, Leeds, Liverpool, Newcastle and Sheffield) to combine strategically on a number of issues including transport and economic planning, electing their own mayors, and also powers to manage health (in Greater Manchester) and employment and skills via apprenticeships and, in 2017, co-commissioning welfare-to-work policies.

The research on devolution and economic and social disadvantage

Much of the devolution debate has been focused on ‘growth’, but for whom? A question that underpins our study, which is funded by Sheffield University via an Economic and Social Research Council (ESRC) Knowledge Exchange and Innovation Initiative that commenced in October 2015. Professor Martin Jones and I have been collaborating for 20 years, and a number of things came together nicely in terms of developing our research and focusing on Sheffield City Region (SCR) as a case study.

The first reason for choosing Sheffield is my long-standing links with the region as a former employee of Sheffield City Council working on economic and social regeneration in the city, and subsequently having undertaken research (with Martin) which has focused on the Sheffield economy. Martin, as Principle Investigator leading on an ESRC project ‘Spaces of New Localism: Stakeholder Engagement and Economic Development in Wales and England’, involves Sheffield City Region (SCR) as a case study area.

Second, work undertaken by myself and my Middlesex colleague Anne Daguerre on welfare reform and benefit conditionality, which we completed in 2015, raised a number of issues about the local implementation of welfare policies which I was interested in pursuing in this study.

Finally Sheffield City Region – once the centre of the coal and steel industry; a tradition of trade unions and labour movement organisation, and a centre for the 1984-85 Miners Strike – is now bearing the scars of many years of de-industrialisation and economic and social exclusion. This presented a relevant lens through which to analyse how devolution is going to work out in a severely de-industrialised area.

The research involved addressing three questions:

• What is the nature of economic and social disadvantage?
• What policies are being implemented to address this?
• What are the barriers to accessing welfare, employment and skills?

Thirty policy stakeholders (including Central Government, City Region, local authorities, colleges, the voluntary sector and trade unions) were interviewed, many documents were analysed and we held a Policy Forum to discuss the findings and our recommendations. In addition we submitted evidence drawing from our research to the Department of Business Innovation Skills Select Committee Enquiry into the Northern Powerhouse.

Devolution is reinforcing economic and social disadvantage

Our main findings are perhaps unsurprising. First, the extent of economic and social disadvantage is extensive – more than 100,000 people are claiming some form of sickness and disability benefit; many people can be classified as working poor as many of the jobs are low paid and often insecure.

Second, by privileging business interests, there is a danger that city region governance arrangements do not involve civil society groups and decision-making processes accordingly lack local legitimacy in terms of transparency and scrutiny.

“We are concerned that growth will not be inclusive, and that we may see growing inequalities and the risks that emanate from this despite overall better economic performance” (Voluntary sector)

Third, we found that the employment and skills system is extremely complex and poorly coordinated.
Fourth, breaking the vicious low pay, low skills cycle is extremely difficult under current policies because meeting targets for ‘upskilling’ people is a tall order given current levels of funding.

There are significant numbers of people with low-level qualifications in the SCR – the number of people of working age who hold no qualifications is nearly 127,000 within SCR with and a further 150,000 with qualifications below Level 2. There are also a significant proportion of residents (a higher proportion than in other northern LEP areas) who have poor or low-level literacy, numeracy and ICT skills.

A key element of devolution is apprenticeships, which are being vigorously promoted by the government with the introduction of the employer levy but we found that there a number of other specific barriers identified to the potential routes to apprenticeships for disadvantaged groups. An example is cuts to funding of FE link and foundation courses which act as stepping stones for those with just basic skills: Information Advice and Guidance Policy changes in terms of the National Careers Service may have reduced its quality of provision according to a number of stakeholders. As the Local Enterprise Partnership has commented, “there are real challenges in improving the IAG delivered within the City Region, given the devolution of funding and responsibility for IAG to individual schools and the reduction in support available for work experience and education business link activity.”

The impact of austerity

Areas like Sheffield City Region are disproportionately impacted by austerity, budget cuts and welfare reforms. We manage to obtain up-to-date data from various sources including Professors Christina Beatty and Steve Fothergill from Sheffield Hallam University on how the welfare changes have impacted on places and people. Two of the local authorities in the City Region, Bolsover and Barnsley are in the top 50 which have been most adversely affected by the welfare changes. But the welfare reforms and changes to benefits, including increasing sanctions (70,000 between 2012-2015), are a major cause of impoverishment in the area.

As one Advice Worker commented, “the circumstances of people coming through our doors are far worse than those of the 1980’s. Reliance on foodbanks; benefit sanctions on a massive scale; sick or disabled workers, without a hope of being employed, found ‘fit for work’ are some of the issues that our team of advisers have dealt with this year.

“Policies which are supposed to be about helping people to move closer to the labour market are in many cases damaging to health, self-defeating and at their very worst, causing deaths and contributing to suicides.”

Recommendations

A number of recommendations were discussed at our Policy Forum held on 11 May 2016. Devolution needs to take account of the way welfare reforms combined with austerity cuts are disproportionately impacting on disadvantaged groups and areas. There is a cost-benefit case for an enhanced role for public services in supporting growth.

We consider that there also needs to be a focus on demand-side approaches, such as guaranteed work placements combined with training which can be targeted at disadvantaged groups and an overall greater integration of the employment and skills system. There needs to be a focus on critical issues of sustaining and managing growth (and dealing with possible issues of labour market overheating and residential congestion) and also dealing with absolute decline elsewhere.

Unless these geographical tensions are managed, the likes of Devo-Sheffield and the Northern Powerhouse will be undermined.

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Tags: austerity, city, Conservative Party, Conservatives, David Cameron, devolution, economy, George Osborne, government, Northern Powerhouse, Sheffield, Tories, UK