Investing in regional equality

The cost of living crisis has deepened the inequalities that exist within and between different parts of the country. At the same time, the financial challenges facing many local authorities – partly a cause and partly an effect of deepening inequalities – are headline news, and we are yet to feel the full effects.

At Social Finance our work most often focuses on people experiencing the sharpest edge of social injustice and disadvantage, and local government is a key partner. We therefore welcome the new report from the Chartered Institute of Public Finance and Accountability (CIPFA), Investing in regional equality: lessons from four case studies in England, which explores how different parts of England are trying to overcome significant social and economic inequalities against a tough financial backdrop. CIPFA applies a series of nine key success factors developed during previous research with international city-regions to four mostly urban areas: Dudley, Enfield, South Yorkshire, and Tees Valley.

We were struck by both the examples of innovation and pioneering practice identified in these places, as well as the usefulness of the framework for understanding and appraising the health of a place’s approach. The report is essential reading for anyone interested in the role and effectiveness of local and regional authorities in tackling inequalities.

Short-termism and bureaucracy

One aspect of the report we found interesting was CIPFA’s analysis of areas where England has struggled compared to its international counterparts. The authors concluded that ​“local areas have struggled to invest for the long term”, picking out specific challenges such as short-term central government funding pots, complex and bureaucratic funding processes, and real capacity constraints at a local level to administer and monitor new funding programmes.

How can local government break out of these cycles of short-termism and bureaucracy?

In our work we see several ways in which places can, when appropriate, achieve greater independence from the currents of central government funding and policy, and find the strategic focus needed to make a dent in long-standing inequalities. These include establishing arms-length institutions that can have a tight and consistent purpose outside of government policy and funding cycles, and partnering with philanthropy and social / private sector partners with shared long-term goals who can both support local government and hold it to account.

Community wealth

The growing ​‘community wealth’ movement is one such example. This encompasses a family of different models and approaches that look to develop local social infrastructure (physical places and spaces, civil society institutions, social capital/​fabric) as the foundation stone for long-term economic development. 

The big development in this world is the Community Wealth Fund (CWF): building in part on the learning from the Big Local programme, this will provide significant investment to some of the most deprived communities in England. Funding will be long-term and local people will decide how to use it.

A small but growing number of local and regional authorities are also taking a leading role and establishing their own local community wealth funds: at a local level there is Bristol City Funds, Camden’s Community Wealth Fund, and the Greater Cambridge Social Impact Fund; and at a regional level Kindred in Liverpool and the Social Finance Fund in the North of Tyne. There is a lot of variety amongst these models, but they share some common characteristics:

• A desire to use local government’s resources (e.g. traditional grant-making) differently to create more sustainable, lasting change within communities.
• Strong partnerships with non-governmental partners including pooling resources (e.g. foundations, social investors).
• A balance of social investment directed towards social businesses and ventures alongside grants, peer support, and other mechanisms to make system change.
• A high degree of community ownership over fund design and decision-making.
• Designed at heart to enable the long-term development of local social infrastructure and social economies.
  

Many of these initiatives are at an early stage and there is a lot to still figure out. Learning and evaluation, for example, is a challenge: local authorities are often aiming to improve more visible economic outcomes (e.g. employment), but are doing so in part by working in systemic ways, reflecting the scale of their resources relative to inequalities and the need to use them as effectively as possible by working closely alongside other local partners. 

How can they find out whether what they are doing is working and why is an area of growing interest at Social Finance as we explore evaluating change in complex systems, and we see the emerging Community Wealth Fund model as an exciting possible testing ground.

Transferable learning and knowledge exchange

CIPFA’s research into investing in regional equity also identified a tenth factor specific to England: transferable learning and knowledge exchange, which is of vital importance but not prioritised enough.

This is perhaps unsurprising. As always in local government, there is great energy and willingness for learning and collaboration. And we know first-hand, for instance from acting as a learning partner to DLUHC’s Changing Futures programme, how beneficial it can be when local authorities who are trying to tackle complex problems in new ways work together. But there are also real constraints on time and capacity for really engaging in joint learning and collaboration.

So in that spirit, if you’re looking to develop community wealth and tackle inequalities, or if you want to grow your knowledge sharing network, get in touch. Let’s not let the latest trend get in the way of our long-term ambitions!