The perspective we refer to here as 'local economy' is relatively recent in origin. The emphasis is upon the consideration of the micro-economic system of a local area, primarily in respect of inflows, circulation and outflows of money. The level of industrial and commercial activity in an area affects the numbers of jobs and wage levels, and thereby, the flows of money circulating in that area. Thus, where a major employer or industry in an area declines or ceases trading, the effects are felt not only by employees directly affected by job loss, but also other organisations servicing those employers, the retail stores used by employees, the providers of leisure services, and other organisations dependent upon the disposable income of local employees. A cycle of decline may thus arise; or, conversely, the multiplier effect of rising levels of economic activity may result in a virtuous cycle of growth and prosperity.
In the post-war period, when Keynesian economic theory was part of the political consensus, national government had attempted to address problems of economic decline in localities by various policies. One major policy, particularly in the 1960s and 1970s, was the transfer of government departments out of London to regions deemed in need of job creation, particularly those where traditional heavy manufacturing industry and coalmining had previously dominated. Labour Governments tended also to provide subsidies to industries under threat, a policy also followed to a less extent by Conservative Governments. Major public sector investment, eg in construction programmes, and in the defence and aerospace industries (eg Concorde) were also used, to improve the economy of particular areas selected for such investment whilst providing for the production of the politically desired objects. Inward investment by major corporations, usually overseas-based multi-nationals, was also encouraged through subsidies.
The Keynesian consensus was formally broken with the change to the monetarist economic policy adopted by the Conservative Government elected in 1979 (although some would argue that the Callaghan Labour Government had also abandoned Keynesian policies with the public expenditure cuts following the economic crisis of 1976 and the intervention of the IMF). Control of money supply was deemed to be the major requirement of economic policy, and attempts to counter the workings of the market were deemed to be fruitless. The private sector, rather than the public sector, was seen as the motor for economic development. The massive rise in unemployment resulting from the change of national economic policy was deemed to be an inevitable prerequisite for sustainable economic growth, as 'phoney' jobs based on public sector subsidy were to be replaced by 'real' jobs arising within a market freed from government intervention. To promote such free-market approach, the Government established Enterprise Zones and Urban Development Corporations freed from the planning restrictions of local councils and from local taxation (rates). This approach was adopted for the redevelopment of the London docklands, through the London Dockland Development Corporation and the Isle of Dogs Enterprise Zone. The aim was to attract inward investment by the private sector, and so revive these areas of economic and social decline. The anticipated success was intended to then demonstrate the validity of the free-market approach.
Local government played a limited role in such interventions, primarily in terms of lobbying national government. In general, local councils efforts to promote job growth were restricted to their role as direct employers and to their expenditure programmes, particularly on major capital programmes of house-building and other construction. This limitation was mainly the result of legislative restrictions. Local government expenditure powers and duties in the UK are prescribed by national legislation, within a constitutional framework in which (the Westminster) Parliament had virtually sovereign power in the absence of a largely unwritten constitution. (NB This is, of course, changing under the treaty provisions of the European Union and current constitutional changes taking place, particularly with regard to Scotland and, to a less extent, Wales). A very limited degree of discretionary powers existed for local councils to spend monies on activities not prescribed by statute.
However, in the early 1980s, a number of Labour-controlled local councils began to develop 'new' economic strategies. These were counterposed to the free-market policies of the Conservative Government, seeing the public sector as the main agent for promoting economic growth and development. However, rather than a return to previous 'top down' interventionism of the past, the approach adopted by these local councils emphasised the involvement of employees and users of services in the planning and implementation of strategies. Key influences on this were the worker, consumer and tenant co-operative movements that had developed during the 1970s, and the 'socially-useful production' movement illustrated by the 'worker's plans' developed in the defence-related companies Lucas Aerospace and Vickers. Issues of equal opportunities had a central place in strategy development, and the impact of economic change on jobs for women and for ethnic minority workers were key considerations. Trade unions were involved in strategies to preserve existing jobs, particularly in undertaking social audits of the impact of job loss on a local area and in developing rescue packages. Planning for the future was undertaken, identifying areas for key job growth especially in new and expanding industries, such as leisure and tourism, electronics and the media industries, and also identifying the applications of new technologies for production.
Such pioneering developments involved the creation of new posts in such local councils, particularly the Greater London and the Metropolitan County Councils. In addition, existing staff eg those in planning departments began to engage in work related to local economic interventions. A number of supporting agencies such as locally based co-operative development agencies and trade-union sponsored resource centres were established and/or expanded. Academic institutions also established research and support centres, notably the Local Economy Policy Unit (LEPU) at the Polytechnic (now University) of the South Bank under the directorship of the late Sam Aaronovitch. LEPU established a programme of seminars and workshops for staff engaged in local economic development work, then began to publish the journal 'Local Economy'. Existing centres for local government studies, such as the Institute of Local Government Studies at Birmingham University also became involved in such developments.
Much of the momentum in this new 'local economy' approach was lost with the abolition of the Greater London Council and the Metropolitan County Councils in 1986, and with the restrictions on local government financing. However, the example provided during the early 1980s by these and other councils controlled by mainly 'new left' Labour Party groups was taken up by other local councils, especially as those previously controlled by the Conservative Party became Labour or Liberal Democratic Party controlled in local elections during the 1990s. Many councils remaining under Conservative control have also began to develop local economic policies, albeit that these tend to be less interventionist. Even without the ability to engage in direct investment for economic development purposes, local authorities' economic leverage is seen to be significant and capable of being directed towards key goals, particularly to address employment issues.
The sustained growth of the local economy perspective has thus led to a somewhat professionalisation of the work undertaken by those employed in this area, although it tends to be more disparate than the other approaches. No specific entry qualifications exist, although degrees in town/urban planning, economics and business studies appear to be relevant. There are, however, a number of universities providing postgraduate courses in local economic development (see Appendix 1). The Institution of Economic Development was established in the mid-1980s, but membership is still relatively low in numbers.
We show, in figure 7, example advertisements for jobs in local economic development work which appear to be based mainly in this perspective.