Devolve Industrial Strategy powers and funding or risk leaving areas to fail, say councils

Moves to rebalance the economy through the Government’s Industrial Strategy risk failing without an urgent and radical move to devolve funding and responsibility to local areas to enable councils and business to work together to boost housebuilding, create jobs, close the growing skills gap, and improve transport and broadband.


Thumbnail

Ahead of the Autumn Budget, the Local Government Association said the Government needs to recognise that councils are crucial to delivering inclusive economic growth to benefit all communities but this is being hindered by centralisation and scores of different nationally controlled funding pots.

The LGA, which represents more than 370 councils in England and Wales, is highlighting that more than £23 billion spent on growth, regeneration and skills is spread across 70 different national funding streams and managed by 22 government departments and agencies.

This creates a really confusing picture, wastes public money and creates unnecessary delays in getting projects off the ground. Perversely, this holds back the local and national economy, and more importantly, impacts on people’s opportunities for prosperity.

The LGA says the Autumn Budget is an ideal opportunity to devolve powers to councils who are best placed to understand the needs of their local economies and create the conditions for jobs and future growth.

It is also urging government to reform the current inefficient maze of separate funding pots for local growth and instead devolve money to local areas through a single, streamlined investment fund.  

The LGA says devolution of growth funding must be used to deliver the Government’s Industrial Strategy as it will benefit local economies and improve the wellbeing of communities in several key areas:

  • A devolved and funded skills and employment system would be quicker at addressing the skills and jobs challenges unique to every area than government-run initiatives. By 2024, analysis for the LGA reveals there will be four million too few high skilled people and eight million too many intermediate and low skilled people than there are jobs. Failure to address this by 2024 puts at risk up to 4 per cent of future economic growth – or a loss of £90 billion in economic output – and leaving the average worker £1,000 a year worse off. LGA proposals to devolve and integrate careers advice, apprenticeships, employment support and skills funding would each year result in 8,500 people off out of work benefits and 6,000 people attaining better skills.
  • A simplified, ambitious and longer term approach to funding for local transport – including fixing potholes and tackling congestion - as enjoyed by Highways England and Network Rail, would create greater scope for efficiencies, innovation and business investment, instead of councils being forced to spend scarce resources bidding for siloed national funding pots, with no guarantee of results
  • Fast and reliable digital connectivity is increasingly critical to a productive economy and engaged society. Councils are best placed to understand the digital needs of their local areas – including the projected 60,000 premises which will remain unaddressed by the Universal Service Obligation - and pilot new ways of working with mobile network operators and communities to help deploy the infrastructure needed to facilitate excellent mobile coverage across the country.

Cllr Mark Hawthorne, Chairman of the LGA’s People and Places Board, said:

“The UK is one of the most centralised economies in the western world, and as a result, has poor levels of productivity.

“Councils are best placed to understand the needs of local economies, but are currently having to spend too much time trying to access growth funding for essential projects to improve their local areas. This is frustrating the efforts of councils to build homes, create jobs and invest in infrastructure, such as transport, to boost our economy.

“Despite improvements, the current system for growth and regeneration funding is still unnecessarily bureaucratic and hindering progress in our towns and cities, as well as creating uncertainty for businesses and investors. Simpler, fewer funding streams would help kick-start more projects more quickly.

“It is clear top down approaches don’t work. Giving local government more freedoms would improve productivity and also help to boost place-based inclusive growth. We need to upskill young people and adults now to make them relevant for the jobs of today and tomorrow. We have a plan in place and are ready and willing to help the Government deliver a skills system that makes sense for local people and places.

“The Autumn Budget provides an ideal opportunity for the Government to formalise the role of local government in delivering the Industrial Strategy. By placing local leadership at the heart of investment decisions to bolster inclusive economic growth, councils can help create sustainable, cohesive and successful communities in all parts of the country.

“The Industrial Strategy should use this place-based approach to drive up skills levels and productivity across the country to ensure that all parts of the country are able to create the conditions for inclusive growth.”

NOTES TO EDITOR

  • Work Local is the LGA’s practical model to help tailor DfE skills policy locally. Coordinated by combined authorities and groups of councils, partnerships can plan, commission and have oversight of careers advice, employment, skills, apprenticeship provision in places, providing a coherent offer for the unemployed and low skilled, and forging links between training employers and providers. This could each year result in 8,500 people off out of work benefits, 6,000 people attaining better skills, additional fiscal benefits of £280 million and a benefit to the economy of £420 million. 

Our submission to the 2017 Autumn Budget sets out how, with the right funding and powers, councils can continue to lead their local areas.

Budget 3

Read the full submission