Local places risk becoming ‘doughnut economies’

A new report has suggested that major local authorities should strike productivity deals with private sector local economic anchors to galvanise economic growth and improve community prosperity.

Prosperous Communities, Productive Places, published by Localis, warns that without change some places risk becoming trapped as ‘doughnut economies’ where the wages of residents remain far lower than those of the commuters who journey into their areas to work with major local firms.

Therefore, large employers should act as responsible businesses by helping boost local standards of living to prevent residents being priced out of their own areas. The report recommends that major local authorities should strike productivity deals with private sector local economic anchors to bring about such change.

These productivity deals could be as simple as a commitment between local economic anchors and leaders of place to hold regular high-level conversations, or be as extensive as signing up to a detailed set of local agreements for economic growth and community renewal.

The report further recommends that West Sussex County Council – which commissioned the research – should use the negotiations over the expansion of Gatwick Airport to establish a new way of working that would increase the economic productivity of the airport and the prosperity of the wide area it serves.

Jonathan Werran, Localis chief executive, said: “Our productivity crisis has been allowed to slip below the surface of national attention owing to Westminster’s Brexit theatrics. But worrying official statistics suggest this problem of weak growth hasn’t gone away and must be faced down at local level throughout the country.

“History teaches us that when communities prosper, businesses prosper. In the straitened economic and troubled political waters we find ourselves in, local industrial strategies provide a sturdy life-raft in which to navigate these rough seas. By realising the positive effect of successful local economic anchors in building prosperous places, local areas will attract and grow productive businesses: this in turn will further strengthen the communities in which businesses are based in a positive cycle of mutually-reinforcing prosperity.”