Momentum is gathering behind the foundational economy and with backing from Welsh Government. Debbie Green sets the scene.
As a small country with a commitment to implementing the ground-breaking Wellbeing and Future Generations legislation, Wales is already well placed to think about doing things differently. And at a time when it is clear that there is public discontent with our democratic institutions, concerns about ‘left behind places’ and growing inequality, Wales is seizing the opportunity to think differently about economic policy.
Questions are being asked about what does a good economy really look and feel like for citizens in Wales, and how do we create meaningful measures for economic activity, over and above Gross Domestic Product (GDP) and Gross Value Added (GVA), that properly recognise the connection between economy, meaningful activity, creation of social capital and wellbeing.
In 2017 Welsh Government’s new Economic Action Plan was published. This document explicitly stated that its purpose was to ‘support delivery of Prosperity for All’ In its vision for inclusive growth the plan articulates twin goals of growing the economy, and reducing inequality. The document seeks to ‘drive public investment with a social purpose’ and contains specific ‘asks’ of business, such as agreeing to a fair work agenda, promotion of health, wellbeing and learning in work, and a commitment to de-carbonisation.
Significantly, for the first time in a mainstream government economic policy document, the foundational economy was also included. This was a specific recognition that there is an (often over-looked or neglected) ‘part of the economy that provides essential goods and services and plays an important role in the lives of people and communities’. The document went on to talk about a ‘limited number of foundation sectors, tourism, food, retail and care’. This sector-led approach, whilst being a traditional government response to economic intervention, nevertheless caused some confusion with foundational economists, who saw the agenda as one that needed innovative and interconnected thinking and action across the whole of foundational activity.
It was recognised that moving from academic theory, to policy, to practice was likely to be a challenge when delivering on and agenda which differed from existing paradigms. So in 2018, as well as establishing a Ministerial Advisory Board to take forwards the Economic Action Plan, Welsh Government set up a Ministerial Advisory Board Task and Finish Group on the Foundational Economy. This gained additional momentum when Lee Waters, the deputy minister for the economy, joined the group in late 2018 and widened the group’s membership.
Members are now drawn widely from across the private, social enterprise and third sectors and across industry specialists, as well as drawing on academics, Wales TUC, and other intermediary bodies. The scope of the work was also widened to look at the foundational economy as a whole, rather than being constrained by the four sectors mentioned above. The group has been brought together to offer perspectives based upon individual knowledge and expertise, to complement and to add value to existing sources of advice provided by the civil service and others. The group is also working with Welsh Government to help promote strategic join-up across government departments and beyond.
One of the early actions of the task and finish group was to work with Welsh Government to hold a well-attendended foundational economy event in early 2019, aimed at both civil servants and relevant stakeholders. Amongst other things the attendees heard from practitioners working to foundational economy principles in Barcelona, Preston, the care sector, and in the field of procurement, as well as from a range of entities including foundational micro firms and SMEs, in both the profit and not for profit sectors.
Following on from this, to help turn policy into practice, in May 2019 the £3 million Foundational Economy Challenge Fund was launched. The fund was aimed at those engaged in foundational business activities, for example care and health services, food, housing, energy, construction, tourism and high street retailers. This offered funding of up to £100,000 to support organisations to innovate within the foundational economy and to help with learning about ‘what works’, and it attracted well over 200 applications. It is hoped that those organisations and projects which are awarded funding will provide valuable learning about what is already working that can be replicated, and what government can either continue doing, start to do, or stop doing, to help the foundational economy in Wales grow stronger.
It is still early days in terms of Welsh Government applying the foundational economy in Wales but there is much good will and agreement on the importance of this agenda. We are still working through what this means in practice, and in relation to joining up agendas across government, but we have made a promising start.
Debbie Green is chief executive of Coastal Housing Group and chair of the Ministerial Advisory Board Task and Finish Group on the Foundational Economy