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The Foundational Economy: Influencing Economic Policy and Practice in Wales

Research led by Professor Julie Froud and Professor Karel Williams set out to re-focus Welsh Government policy and practice onto the provision of essential services and nurture foundational sectors of the Welsh economy.

“Through collaborative interaction between the Manchester team and key Welsh policy-makers, Wales is now the first country in the world to adopt the foundational economy approach at national level.”

(Deputy Minister for Economy and Transport, Wales)

Building the Foundational Economy (FE) approach

The concept of the ‘Foundational Economy’ (FE) was initiated by Professors Froud and Williams, along with Professor Michael Moran, at the Centre for Research on Socio Cultural Change (CRESC). They defined FE as the ‘taken for granted’ parts of the economy that meet basic needs by providing services and goods that are essential to everyday life.

They argued that successive UK governments were overly preoccupied with tradeable and competitive activities, including advanced manufacturing, automotive, aerospace, and pharmaceuticals, which together accounted for a smaller part of the British economy than FE sectors. By contrast, their research recognised that foundational sectors had considerable capacity to lever better economic and social futures, particularly in UK regions outside the southeast of England.

Getting the Foundational Economy onto Welsh government agendas

Froud and Williams developed their pathway to impact through the creation of the Foundational Economy Network Wales. The network’s bi-monthly meetings brought organisations across sectors to facilitate the implementation of the FE approach, including third sector organisations such as housing associations, Welsh think tanks, the Welsh Local Government Association, the Wales Co-operative Centre and the Future Generations Commission.

Froud and Williams also built cross-party political support for the FE approach, via a series of presentations to the Labour and Plaid Cymru party conferences and to the Welsh Assembly Economy, Skills and Infrastructure Committee. In 2017, Welsh Assembly members initiated a plenary debate which, citing research by Froud and Williams, secured cross-party support for a motion which ‘calls on the Welsh Government to develop a strategy to maximise the impact of the ‘Foundational Economy’ across Wales as part of its work on developing a new economic strategy’.

Informing Welsh Government economic planning and policies

The above activities informed a foundational turn in Welsh economic strategy. The 2017 Welsh Government Economic Action Plan identifies four foundation sectors ‘for development in the Welsh economy – tourism, food, retail and care’. The Economic Action Plan also explicitly calls for FE ideas to be integrated into wider cross-governmental policy reforms.

Furthermore, in 2018 Williams joined a new Ministerial Advisory Board on the Foundational Economy which aims to bring together Welsh Government officers, third sector, NGOs and researchers. The Board Chair, the CEO of Coastal Housing, recognised the importance of this group and attests how the board has “put forward a package of post Covid foundational recovery policies […] and is now focusing on delivering this package of recovery policies as a key pillar of Welsh Government’s economic reconstruction plans”.

Bringing together policymakers to deliver and implement the Foundational Economy approach

Froud’s and Williams’s work bought together networks of policymakers to implement policies with explicit focus on ‘three pillars’ of FE namely: funding local foundational projects; reforming public procurement; and developing new kinds of small business policy.

As Wales’s Deputy Minister for Economy and Transport explains, “through collaborative interaction between the Manchester team and key Welsh policy-makers, Wales is now the first country in the world to adopt the foundational economy approach at national level”.

Additionally, the Welsh government established its Foundational Economy Challenge Fund based directly on Froud’s and Williams’s arguments. Consequently, a series of small-scale, foundational projects have begun to demonstrate scalable impacts. These include a new model for organising Welsh GP practice services using triage and on-site mental health and community service teams so GPs can concentrate on physical health problems.

Regional and Community Impact in Wales

As well as national impact through the Welsh government, FE is continuing to have an impact at the community and regional level. The Chief Executive of the Cardiff Capital City Region states that the newly approved £10m Local Wealth Building Fund has borrowed heavily from the principles of Williams’ work on foundational renewal. Overall, Froud and Williams have contributed to a systematic shift in economic thinking and policy in Wales, with the foundational economy figuring as one of the pillars of economic recovery in Wales.

In summary, their research has informed the Welsh Government’s Economic Action Plan and its strategy for four key sectors: tourism, food, retail, and care. They have also built cross-party political support for the ‘Foundational Economy’ approach within Wales. And their research has underpinned a systematic shift in economic policy in Wales, consolidated by the 2021 Welsh Economic Recovery Plan.

Further reading:

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