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Centre for Local Economic Strategies The role of creativity and innovation in an economic downturn Neil McInroy, Chief Executive Natalie Qureshi, Consultant Kreative Byer & British Council March 20th 2009
About CLES: Our Mission • “The Centre for Local Economic Strategies is a registered charity which is committed to places and communities experiencing social and economic inequality and lack of opportunity. We want to improve the effectiveness of local groups, agencies and government in addressing these problems, by informing policy and developing practice.”
About CLES: Services • Around 50 Members (Local Authorities, regeneration partnerships, third sector organisations, public bodies, economic partnerships) • Events and Training • Policy Bulletins and briefings • Policy Research • CLES European Research Network (CLES Consulting) – Our trading arm
Today's presentation • How we got to where we are and how we need creativity, innovation and risk • The concept of resilience and why it is important • New approaches to create resilient places
Challenging times! • Climate change, peak oil, energy insecurity • Economic Downturn • Unemployment, stalled property market, lack of capital for investment, lack of diversity • Regeneration incomplete – Even the boom times were not that good! Still work to do…. • Inequality • Governance and powers- Rigidity of Local policy instruments
What has come before in terms of Local economic activity in the UK • WAVE 1. 1960s 1970s: Inward Investment • WAVE 2. 1980s 1990s: Grow the sectors. Local business growth as well as investment • WAVE 3. 1990s to....Networks and clusters • Property and land appreciation. A city renaissance…? • Productivity and competitive advantage
What have we created? ‘We are capable of shutting off the sun and the stars because they do not pay a dividend’ John Maynard Keynes 1933
The next wave: Local Economies in the future... • New paradigm?... • Increasing recognition that the local matters • Too focused on economic growth (eg GVA, GDP) as a means to local economic success • Economics is not the end in itself….merely a means • We need to get economics to work for us more • Work for environmental and social priorities • Networks are important • Economic recession partly due to the financial network • New networks of public and private sector, social innovators and universities needed
Scaring traditional Local Economic development professionals!
The need for creativity, innovation and risk “Creativity is a mental and social process involving the generation of new ideas of concepts, or new associations of the creative mind between existing ideas or concepts, creativity is fuelled by the process of conscious or unconscious insight.” “creativity as an assumptions breaking process” “Innovation is the process of both generating and applying creative ideas in some specific context”
Toward ‘New’ Economic Strategies and what interests CLES 3 thoughts for the future
The economic resilience model The economic resilience model What do we mean by resilient? • Functional economy • Delivers positive and equitable outcomes • Withstand economic shocks
The economic resilience model Public economy • Public expenditure on goods and services • Footprint of procurement activity on local supply chains • Public employment
The economic resilience model Public economy • Public expenditure on goods and services • Footprint of procurement activity on local supply chains • Public employment Social economy • Contribution of community activities to the local economy • E.g. social enterprises, voluntary organisations, community groups, community assets such as community centres, youth clubs, halls, etc.
The economic resilience model Public economy • Public expenditure on goods and services • Footprint of procurement activity on local supply chains • Public employment Social economy • Contribution of community activities and networks to the local economy • E.g. social enterprises, voluntary organisations, community groups, community assets such as community centres, youth clubs, halls, etc. Commercial economy • Private businesses • Investment into development and new enterprise • Provides the bulk of employment
The economic resilience model The three spheres of a resilient economy work within a wider context • Government policy framework • Broader economy • Need to work within environmental limits • Importance of “place”. Link economy to the history and identity of the place
What are the weaknesses which make our Localities less resilient? Low enterprise Disempowerment Scared of risk Inequality Worklessness No innovation Poverty Poor health Lack of opportunity
Strengths which increase the resilience of our localities Volunteering Quality environment Effective community infrastructure Fairness Empowered citizens who innovate Education & skills Creative spirit Employment opportunities Local businesses
What can be done to strengthen the economic resilience of localities? • Four ideas: • Innovation - Creating the conditions to encourage innovation • Valuing “place” and “locality” - Developing and strengthening networks, social enterprises, understanding how money flows in your economy • Health and wealth -Look to create an economy which focuses on wealth and health • Green new deal -A range of mechanisms to stimulate a green economy
Innovation • Historic track record • Unique opportunity • Thriving not surviving • Creativity fundamental
Creative Futures: Innovate • Social Innovation. Comes from two sources • The Bees • Community groups/social enterprises • Driven by anger, loss or wanting to make things better • 2. The Trees • Big public agencies, companies with roots, power and money • Success needs both!
Creative Futures: Innovate • Innovation – helps us to get to grips with recession • Allows us to adapt and manage change in order to achieve positive outcomes • Product and process innovation • Networked approaches to innovation • Examples: • Life cycle analysis in low carbon technology, waste from one company becomes raw materials for another • Wool industry, where wool for textiles becomes wool for insulation
Creative Futures: Innovate • Yokkaichi – Japan • 1998 – petro-chemical industry in decline • 20,000 jobs lost –A loss • Environmental pollution problems • Shift to high value added production • Companies sharing expertise and knowledge • Mix of sectors • One stop service introduced • Advanced Materials Innovation Centre • Raw materials (Chemists), Ideas, Production all together
Creative Futures: Innovate • Portland – USA • Traditional industry in decline • Built on strong business networks connected insiders and outsiders • An outward looking network • New regional coalitions • It got the quality of place/life offer right • Sophisticated networks and satellite networks
Creative Futures: Innovate • Coimbatore – India • Traditional textile industry • New technological industries • Fuelled by high levels of individual entreprenerialism • Social consciousness high and high levels of family and community networks • Knowledge demanded by population • Drives demand
Creative futures: Go Local • Localism • Supporting local suppliers, businesses, social enterprise • Procurement matters - using the public spend wisely to support the local economy
Creative futures: Progressive procurement • “The process whereby public sector organisations acquire goods, services and works from third parties” • Making money “sweat” • £160 (1300dkk) billion per year on goods/services by public sector • Not simply a bureaucratic process to be adhered to but… • Significant lever to influence local economies and achieve other policy objectives – (social and environmental) • CLES work inSwindon
Creative futures: Progressive procurement • Understanding how Swindon Local Government will spend money? • Use of Local Multiplier tool (LM3 tool) • Public spend as a promoter of ‘local’ supply chains • Explored one service area within the Council services “Street scene”: • Mapped spend through analysis of invoices • 51% of spend with suppliers £1 (8dkk) Million was spent upon organisations based in Swindon • Re-spend of suppliers in local economy - £250,000 (2,000,000 dkk) through own suppliers and employees • Summary: For every £1 spent by the council, a further 64p re-spent into the local economy
Creative futures: Progressive procurement • Consider how procurement strategy enables business to tender for public services and goods. • Widening access to tender information • Terms and conditions • Scale and size of contracts • Community benefit clauses to support local community outcomes, eg local labour clauses • Explore the opportunities for both revenue projects but also larger capital projects (e.g. building schools for the future)
Creative futures: Health and wealth • Source: European social survey
Creative futures: health and wealth • Economics is not the end in itself….merely a means • We need to get economics to work for us more • Is economic downturn an opportunity or a return to crude economic growth priorities • A wealth and health producing society • Focus on material and psychological needs and support
Creative futures: Health and wealth • An emphasis on the core economy • Economy of the home, family, neighbourhood and community • UK 40% of all economic activity takes place in the core economy - not currently reflected in GDP • If the core economy fails, burden on public and private sector grows
Creative futures: Health and wealth • Invisible economy that we take part in every day • The economy of the home, family, neighbourhood and community • It is an economic system as it involves the goods and services produced, exchanged and distributed • Like a computer • Operating system: The core economy • Specialised programs: Hospitals, schools, civil society • The programs may be ok, but the operating system is struggling!
Creative futures: A green new deal • Getting to grips with climate change “A green new deal” • Development of a low carbon economy through building efficiency • Development of a “carbon army” – new skills and knowledge • Setting clear targets for carbon reduction at both a local and national basis • Local energy production • Heightened Global environmental and economic awareness
Creativity as an assumptions breaking process • New economic model is sought • Current economic situation requires change • Paradigm shift • This is the time to take risks • Emphasis on people, place and balance • Not just growth, but resilience Final thoughts