In this episode, David and Mike chat with Professor Henry Overman OBE, about spatial rebalancing in the UK. They explore how economics, particularly through the What Works Centre for Local Economic Growth (WWCLEG) and the Centre for Economic Performance, can aid local and sub-national policymakers. Henry, a leading economic geographer, advocates for orthodox economic thinking and ‘radical incrementalism’ over grand visions. This discussion offers practical examples of how his approach can address today’s place-based challenges with evidence-informed policy and evaluation.
What does ‘Economics 101’ offer to local economic development and placemaking?
LED and placemaking thrive on their multidisciplinary nature, involving geographers, planners, sociologists, and other social scientists, as well as STEM and humanities professionals. Standard economics, or ‘Economics 101’ as Henry puts it, plays a key role in place-based policymaking.
Henry uses the example of the large gaps in average employee productivity between London and cities like Manchester and Birmingham, which is largely due to the higher graduate share in London. Policy recommendations include developing city centres for graduate employment, improving transport infrastructure to connect people to those jobs, improving the housing offer to attract and retain graduates, boosting local skills for higher-value jobs, and conducting distributional impact analysis to understand and mitigate increasing inequality.
Traditional economic perspectives can add significant value to these analyses and policies, shifting focus from broad goals like net zero to local priorities such as reducing air pollution by decarbonising local buses.
The case for ‘radical incrementalism’
We explore major challenges like sustainability, demographic transition, post-Brexit global trade, AI, and technology. Henry argues that economic tools are suitable for analysing employment, productivity, and the income and distributional impacts arising from these changes.
He notes how the employment impacts of places that suffered the biggest impacts from deindustrialisation in the 1970s and 1980s are today much less visible – at least in headline terms. However, LEDC regulars will know that we explore the broader - and longer lasting – set of impacts on communities of economic shocks from this era in other episodes. Our episode with Professor Danny Dorling is a great entry point for this topic.
Henry is less optimistic about addressing inequality and productivity, partly based on Britain’s patchy record of decisive action. Solutions include reducing inequality through benefits changes, boosting productivity via upskilling, managing demographic transition with social care reforms, and enhancing sustainability through infrastructure investment and permissive planning. These radical policies can be implemented incrementally.
Lessons from international comparators
Henry’s involvement in the Economy2030 Inquiry has identified European comparators that achieve both higher prosperity and higher inequality than the UK. It is not about simplistic mimicry of, say, Germany’s apprenticeship system, but more thematic issues familiar to UK audiences. Greater capacity sub-nationally to use evidence in a more nuanced way to address local issues, and a decisive move away from endemic competitive bidding for short term funding pots. We discussed whether large single pot funding might reduce experimentation and innovation in the LED system. And this led to the final major area of debate…
The critical roles of evaluation and the What Works Centres
Henry uses his economics lens to make the case for national evaluation at scale as a free ‘public good’. The economics of local evaluation can get sandwiched between the downside risks of leaving yourself open to criticism locally when you surface mistakes and failures and the ‘free public good’ upside of sharing success with other areas with whom you might be competing.
This is not an uncontested position but argues for something akin to the national WWCLEG that can summarise the evidence on a topic or issue, address gaps where evidence is lacking, and support local role players to use it more effectively (including encouraging and supporting local experimentation). These latter two areas will be the focus of the WWCLEG going forward.
Concluding remarks
To use Henry’s terminology, we really should consider ‘Economics 101’ thinking, ‘radical incremental’ theories of change, and the lessons of independent evidence reviews and evaluation in our policy development and practice. These are not the only considerations, but one suspects our outcomes and impacts will be that much less positive if they have been absent all together…
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