The role of creativity and innovation in an economic downturn Neil McInroy, Chief Executive Natalie Qureshi, Consultant Kreative Byer & British Council March 20 th 2009 Centre for Local Economic Strategies

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Today's presentation 1.How we got to where we are and how we need creativity, innovation and risk 2.The concept of resilience and why it is important 3.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 s 1970s: Inward Investment WAVE s 1990s: Grow the sectors. Local business growth as well as investment WAVE s to....Networks and clusters Property and land appreciation. A city renaissance…? Productivity and competitive advantage

We are capable of shutting off the sun and the stars because they do not pay a dividend John Maynard Keynes 1933 What have we created?

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 The next wave: Local Economies in the future...

Scaring traditional Local Economic development professionals !

Policy assumptions underlining current economic policy

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 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 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 The economic resilience model

Worklessness What are the weaknesses which make our Localities less resilient? Scared of risk Inequality Poverty No innovation Poor health Lack of opportunity DisempowermentLow enterprise

Strengths which increase the resilience of our localities Effective community infrastructure Empowered citizens who innovate Creative spirit Employment opportunities Volunteering Local businesses Quality environment Education & skills Fairness

A creative and resilient place Creative and resilient PlacePlace which lacks resilience Balance between Localised and globalised economy Fully globalised and local is weak Networked businessIndividualised and poor supply chain Innovative businessBusiness as usual Progressive public spendingSpending based on efficiency and the cheapest Health and wealth generatingGenerates wealth Cross sectoral connectionsSectoral Bottom upHierarchical Flexible governanceRigid

What can be done to strengthen the economic resilience of localities? Four ideas: 1.Innovation - Creating the conditions to encourage innovation 2.Valuing place and locality - Developing and strengthening networks, social enterprises, understanding how money flows in your economy 3.Health and wealth - Look to create an economy which focuses on wealth and health 4.Green new deal - A range of mechanisms to stimulate a green economy

Innovation Historic track record Unique opportunity Thriving not surviving Creativity fundamental

Social Innovation. Comes from two sources 1. 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: Innovate

Localism Supporting local suppliers, businesses, social enterprise Procurement matters - using the public spend wisely to support the local economy Creative futures: Go Local

Even your breakfast egg

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 in Swindon 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: Progressive procurement

= Creative futures: Health and wealth

Source: European social survey

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

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!

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 Creative futures: A green new deal

Final thoughts 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