5th March 2009 By Neil McInroy
It’s maybe not popular to be now talking about risk.
It’s now clear that part of the problems we are facing as regards the broad economy is about a system which did not foresee the risk in the financial markets and that the mechanisms and institutions such as credit rating agencies were incapable of properly assessing risk.
However, whilst this casino capitalism was going on, it could be argued that conversely, within the public sector and local authorities, that we were not bold enough and were risk averse, as we were glued to traditional economic development models, high levels of scrutiny, managerialism and centralism.
Immediate action and long term recovery will require greater levels of risk taking and innovation. Let’s not let the risky casino capitalism of the financial sector dampen local public sector risk taking.
For us at CLES, risk goes hand in hand with a resilient and robust economy of place.
Innovation cannot occur without risk – by definition it is going to take new approaches that have not been tried before.
A strong economic place needs to have an ability to withstand stresses and strains. Local economic governance structures and processes, such as Local Strategic Partnerships (LSP’s), public service boards and governance structures around Multi Area Agreements and related new Economic Prosperity Boards, need to be capable and ready to take calculated risks, so that a location is flexible and ready to grasp opportunities.
This is the basis to a future in which places are more resilient.
I think local government is willing to take risks, but is fettered by existing red tape and by a sense that councils do not know what is around the corner in terms of how bad it is going to be, and what the future of public resources are.
It is very important though, that local government and LSPs do not just ‘batten down the hatches’, sit in silos and wait for the storm to blow.
Central government must give them the opportunities to think about the upturn, make calculated risk and innovate. The biggest risk in these challenging times would be to take no risks at all.
LSPs now face the acid test, arguably more arduous than any inspection process. Some critical commentators have seen LSPs as mere talking shops.
It is now time for these mechanisms to stand up and be counted. The LSPs have been around for over eight years or more. Created in the good times, they now need to show their worth in the bad times.
It is in these forums where the collective wisdom of the public, private, community and voluntary sectors needs to start working to think about the problem facing localities now, predicting the upturn and taking risks with projects, devising and trying out new activity and being allowed to do things differently.
For example the filling of the gaps in our high streets is about risky innovation and imaginative re-use of space, via ideas such as slack space.
This cannot be driven by targets for footfall and service efficiencies, but by stakeholders taking and being allowed to take risks.
There has been a lot of talk about good principles in good times being even more important in bad times. Let’s see this good principle of LSPs, being allowed to prove its worth by taking risks and forging an upturn.