Realising the potential of collaboration will require vision, leadership and courage – and lots of it.

Friday, December 19, 2008

Katy Morris, researcher at The Work Foundation, explains why it takes courage to ensure public sector collaboration benefits local economic development

Collaboration has become the new policy buzzword: procurement collaboration; public service user and provider collaboration; and collaboration across administrative and institutional boundaries to transform local economies. Whatever the circumstances of a local area, collaboration between different organisations or agencies within that local area have been suggested both as a solution to existing problems and a way of capitalising on new opportunities as they arise.

The focus initially lay on joint working between partners within local government boundaries, notably via Local Strategic Partnerships and Local Area Agreements. But as local economies have expanded and the UK's cities have been transformed, so the focus has increasingly turned to collaboration between local authorities, particularly for those within the city regions and urban areas that have driven the years of sustained economic growth that the UK has, until recently, enjoyed.

With all this buzz about collaboration, the important questions about what it means for two or more parties to work together and how it can help places to realise their economic development goals can be overlooked. Here, we take a look at these and other questions, presenting findings from our report published earlier this year.

Our analysis suggests that there is a strong economic rationale for collaboration across boundaries. Over the past 40 years, the UK economy has evolved from one dominated by basic manufacturing to what is often called a 'knowledge economy'. This structural shift in the economy, whereby the ability to produce, use, share and analyse knowledge has become increasingly important as a source of economic growth and wealth creation in all sectors, has not occurred evenly across the UK. Rather, the story of the knowledge economy is the story of the UK's cities. Cities provide knowledge intensive businesses with access to affluent consumers and to a pool of highly skilled workers that is both wide and deep; they offer strong transport links and vibrant cultural scene; and – perhaps most significantly in an economy in which firms rely on innovation and knowledge for comparative advantage – they offer individuals and businesses the chance to exchange ideas and information.

Not all cities have been able to capitalise on this development – contrast the ongoing success of London and the resurrection of Sheffield with slower progress in Stoke, Hull and Hastings – but growth in knowledge intensive industries and employment over the past 10 years has been concentrated in the UK's cities.

The expansion of the knowledge economy and its concentration in cities has some significant implications for local authorities. It has long been acknowledged that the areas in which people live, work and consume – also known as 'functional economies' – bear little relation to the administrative boundaries of local government. An individual may live in one local authority, work in another, shop in yet another and think nothing of – or indeed be unaware that they are – travelling across these boundaries on a regular basis.

This dissonance between functional and administrative boundaries has been accentuated in recent years, not only by the increasing ease and declining costs of transport, but also by the growth of the knowledge economy and employment in knowledge intensive occupations: research has consistently shown that more highly skilled workers travel greater distances to work than those with lower skill levels.

That local government boundaries have remained largely static even whilst economic structures have shifted is challenging because evidence suggests that economic growth is stronger when there is alignment between administrative and functional economic boundaries. In the absence of any desire for wholesale local government re-organisation, collaboration between local authorities within functional economic areas or city regions is now viewed as the most feasible way of overcoming the challenges posed by administrative boundaries that do not reflect economic reality.

By working together and with the private and third sectors, local authorities can co-ordinate on issues – transport, housing, skills, worklessness, inward investment and business support for instance – that cut across administrative boundaries and affect economic growth and wellbeing. For smaller and medium sized cities worried about evidence that suggests the knowledge economy has favoured larger European cities, collaboration also provides a means of acquiring the critical mass needed to remain competitive.

For the 10 local authorities within Greater Manchester, collaboration is nothing new. The long history of successful joint working between local authorities and the private sector has been a key driver of the physical and economic transformation of the city and its wider region.

More recently, former collaborations have also made significant progress on economic development issues. The Partnership for Urban South Hampshire's successful bid for New Growth Point status and £3.6m of funding for housing development; the joint work on low skills and worklessness between local authorities and key stakeholders in the Birmingham sub-region that will have helped 8,500 people into paid skilled work by 2009; and the Tees Valley Partnership's involvement in DigitalCity, Middlesbrough, the ambitious development designed to position Middlesbrough as a world class digital technology centre, are just some of many examples of this success.

Nonetheless collaboration is a complex art and there are some caveats for interested parties. For traditional rivals accustomed to constant competition for influence and resources, collaboration requires a fundamentally different mindset. It also requires patience and resources: developing trust and working relationships is costly, both financially and in the sense that it requires a great deal of time and effort from all parties, even whilst capacity varies significantly between authorities. Collaboration necessitates vision, strong leadership, the ability to navigate the complexities of central government and its sometimes contradictory impulses, and willingness amongst those involved to compromise and to take risks, to trade off immediate parochial benefits for their local area in favour of larger individual or collective benefits in the future, and to trust that this risk will pay off.

Given the accountability minefield that surrounds sub-regional collaborations (particularly those that involve the private sector) and lingering public unease about quango-like organisations, collaboration can be a tough sell to local populations.

It is also one that can provide fodder to local politicians in opposition. In Sheffield for instance, the leader of the city council's Liberal Democrat group queried the efficiency and cost of the Sheffield City Region collaboration prior to election and pledged a review of spending on partnership organisations as part of the party's election platform, with destabilising effects. And public trust, once gained, is easily lost, a problem experienced by The Mersey Partnership after reports of financial mismanagement emerged in the local press in 2007.

Above all, working together does not in itself guarantee any positive outcomes in economic development terms. Yes, collaboration might lead to greater understanding of the economic challenges and opportunities in an area, to the production of a co-ordinated transport, housing or skills policy for a city region, to greater trust and understanding between places or to joint bids to funding pots held by central government – all these are positive developments. But they do not inevitably help places adapt to wider economic change or lead to the concrete economic outcomes by which the success of collaboration is ultimately judged. That collaboration is such a complex and resource intensive activity means that it can feel like an outcome in itself, rather than the means of achieving an end that it really is.

Like other policy buzzwords before it, collaboration has yet to reach maturity as a potentially transformative approach to local economic development. For many places, joint working represents a fundamental shift in mentality. As such, it will take some time for concrete economic development outcomes to be realised.

Our research found that local authority collaborations must be explicit about what they want to achieve beyond the act of working together, and about how doing so will help achieve these objectives. In these times of economic change and uncertainty, and with tighter public spending, collaborations will be fragile as local authorities grapple with tougher challenges and smaller resources. Realising the potential of collaboration will require vision, leadership and courage – and lots of it.

'How can cities thrive in the changing economy?' and 'Can collaboration help places respond to the changing economy?' can be downloaded from our website.