What does place-based growth actually mean for the businesses, entrepreneurs and organisations trying to create jobs and opportunities outside London?
As Prime Minister Andy Burnham takes the approach he championed in Greater Manchester onto the national stage, Matt Smith CBE, CEO of social investor Key Fund, argues that local growth cannot be driven by major employers and infrastructure projects alone, and that social enterprises could have a much bigger role to play.
With Andy Burnham now in Number 10, much of the political conversation has centred around whether his place-based politics – coined ‘Manchesterism’ – can succeed on a national scale. It’s an approach rooted in the model he championed as Mayor of Greater Manchester. An approach that emphasises devolved power, local decision-making and what he called “good growth in every postcode”.
The ambition is welcome and, in many ways, music to my ears. But ambition alone won’t deliver change. If government is serious about creating growth that reaches beyond major city centres and into every corner of the UK, it shouldn’t look to build an entirely new delivery system. Many important parts of the infrastructure needed already exists in the form of community and social enterprises, who are doing amazing things in communities across the country.
I grew up in South Yorkshire, a place that knows all too well what happens when economic change arrives without a plan for the communities left in its wake. Over the past two decades, Key Fund has provided investment to thousands of social enterprises across the North and Midlands, enabling them to tackle challenges that traditional funding mechanisms and public services alone have struggled to solve.
What I’ve learned is simple. Communities often already hold the solutions to their own challenges. The real question is: how do we back them to do this?
For too long, economic policy has been driven by the assumption that growth in one place will eventually trickle down to benefit everyone else. The evidence suggests otherwise. While some areas have prospered – in parts of the South East for example – many communities have experienced decades of underinvestment and declining opportunity.
Burnham’s approach reflects a growing recognition that this model has run its course.
Places need the power to shape their own destinies. Investment needs to respond to local strengths and local challenges. And, most importantly, people need to feel ownership of the opportunities being created around them.
That is where we believe social enterprise can help.
Social enterprises have an incredible ability to operate where conventional business models often struggle. They create jobs, generate income and deliver services truly focussed on the needs of local people, while reinvesting their profits back into the communities they serve.
We see this every day across our portfolio at Key Fund. In Doncaster, Higher Rhythm has created education and employment pathways in the creative industries for young people. In Sheffield, Food Works is tackling food insecurity and environmental waste by redistributing food that would otherwise end up in landfill. In Trafford, Collaborative Women provides safe housing and support for women escaping violence and abuse.
These financially-robust organisations are not side projects. They are economic infrastructure. They create jobs, build skills, strengthen communities and reduce pressure on public services.
Yet, historically, they haven’t always been seen as part of mainstream economic development. Growth policy has often gravitated towards large-scale interventions, major employers, built environment and infrastructure projects, while social investment has been treated as a niche tool rather than a strategic partner.
If government is serious about a place-based growth agenda, social enterprise cannot be treated as a nice-to-have. It must be recognised as a core part of the delivery mechanism.
This matters because combined authorities are facing a significant ‘capacity’ challenge.
Whether in Greater Manchester, South Yorkshire or West Yorkshire, mayors have ambitious plans to tackle inequality and drive sustainable growth. But delivering those ambitions at neighbourhood level is complex. Building trusted local relationships, understanding community needs, carrying out due diligence and supporting organisations to become investment-ready all require a lot of time, expertise and local knowledge. And that’s before we figure out where the money comes from.
The good news is that many of these challenges have already been addressed by social investors, such as ourselves and many others across the sector. We have spent decades building relationships with community organisations, understanding local economies and helping enterprises develop sustainable business models. It reflects years of working in places where mainstream capital rarely flows.
Last year, almost 40% of Key Fund’s investment went into the 10% most deprived communities in England, while almost 70% went into the most disadvantaged 30%.
Rather than creating entirely new delivery structures, combined authorities have an opportunity to partner with organisations that are already embedded in local communities. Social investors can act as capacity extenders, helping public bodies deploy funding more effectively and with greater confidence.
There is also a compelling financial argument here, and as we know, public finances are stretched right now. Grants will always have an important role to play, particularly for early-stage or higher-risk activity. But where organisations can generate income and develop sustainable trading models, repayable finance can help public money go further.
Every pound repaid can be recycled into future enterprises and future communities. Just as importantly, organisations supported through repayable finance are often encouraged to build stronger, more resilient business models that are less dependent on short-term funding cycles.
If there is one thing I could ask the government to improve in terms of economic growth, it would be creating more opportunities for social enterprises to trade.
Public bodies can buy more from social enterprises. Large businesses can bring them into their supply chains. More support can help social enterprises scale and compete for contracts. If we can create the opportunity, the investment will follow.
For myself, and organisations like Key Fund, this conversation feels very familiar. We were established more than 25 years ago to support communities affected by the decline of coal and steel industries. Our founding belief was that the people best placed to solve a community’s challenges are the people who live there.
That belief feels just as relevant today as it did then. And, hopefully, we now have a PM who truly understands that lasting national renewal needs to start locally.
