Focusing on GDP and physical infrastructure is futile without real-life benefits for people living in left-behind towns, says Professor Henrietta Moore (UCL Institute for Global Prosperity).
The UK government’s as yet formless promise to "build back better" and "level up" the country faces the inconvenient truth that everything that was difficult pre-Covid - raising productivity, turning economic growth into wellbeing, protecting the planet’s resources, transitioning to renewables - has not suddenly become easier.
The question for purveyors of "build back better" is whether they can define it with more than targets for transport infrastructure, house building and job creation. The road to prosperity has too often been paved with targets whose success is measured in gross domestic product growth, but which have had limited real-life affects on improving living standards for individuals, households and communities.
For decades, economic orthodoxy has held that large spending programmes improve GDP and eventually trickle down to boost individual prosperity. But what if this is insufficient for truly levelling up? What if the US president’s $3.5tn infrastructure bill and Boris Johnson’s $6.6bn "levelling up" fund successfully boost GDP, but the residents of the Pennsylvanian rustbelt and the Durham coalfields feel their prosperity is unmoved? What if building more houses in Carlisle doesn’t reduce unemployment levels on the city’s housing estates because parents living there can’t access affordable childcare? What if building back better in 2021 requires us to reimagine what prosperity actually looks like?
A four-year research programme in east London offers a new approach. Focused in neighbourhoods predicted to benefit from the Olympic legacy regeneration strategy, teams of citizen social scientists and community organisations created a local prosperity index based on what local residents said prosperity meant to them, what factors supported their ability to prosper and live good lives, and what factors hindered them.
Instead of measures of growth, productivity and income, the index identified 15 headline indicators that reflected the lived experience of prosperity for people in these places. It established that "human infrastructure" - public transport, affordable or free childcare, social care and low or no-cost digital services - was what made lives liveable and laid the foundations for a prosperous life. Prosperity was also affected by good quality and genuinely affordable homes, a sense of inclusion in the economic and social life of the city, rewarding work, life-long learning, good health, a healthy environment to live in and having hope for the future.
Some, but not all, of these can be delivered from the centre. A significant number depend on residents feeling engaged in the policies to improve their prosperity. At the core is an emphasis on people and social, not physical, infrastructure.
Interestingly, it is the US, leader of the free market, that comes closest to recognising this. It’s why Joe Biden plans to invest more than $1tn in "human infrastructure" in the shape of the American Families Plan. By contrast, based on the evidence of schemes he has so far rolled out to so-called left behind towns, Johnson’s levelling-up programme focuses almost entirely on physical infrastructure. If Biden and Johnson are to create shared prosperity, they must start by reimagining what the economy does for society. They must rebuild the connection between macroeconomic policy and the daily struggles of people in Pennsylvania and Durham, realities that are not homogenous even within communities.
To heal their divided nations, both men need to replace their economies of inequality with one of belonging. They must stop believing that prosperity is something that can be built with bricks and mortar and instead facilitate people-led responses that foster long-term prosperity.
This article first appeared in the Financial Times on 6th September 2021.