Mark Bandalli and Sally Dickens consider some of the levers available to the new government to ensure economic growth in inclusive and prosperity is shared within local communities.
With the Budget two days away, we will soon know how the new government intends to deliver its manifesto promise to ‘kickstart economic growth’. To do this means addressing weak productivity, economic inactivity, and low levels of local and regional investment. All these challenges will require long-term policy and financial commitment from central government, alongside strong leadership and disciplined delivery at a local level.
Our immediate thoughts following the Chancellor’s speech are likely to focus on how much she intends to spend on catalysing growth (and how she intends to pay for it!). But there are also changes the government could make which wouldn’t require headline-worthy sums. Instead, there are ways that the government could help shift mindsets, provide incentives for change and, ultimately, begin to address some of the most difficult place-based economic challenges.
Here are three such changes:
1. Giving certainty where possible
Many of the systemic issues facing places require long-term thinking, collaborative working across public services and attracting external investment - all of which benefit from confidence through certainty.
A Budget that provides some indication regarding the level of investment places might receive over the next four and a half years would be a very helpful starting point. A clear indication of investment from the outset would give confidence to local areas to develop a realistic vision, and plan it short and medium-term priorities. It would also provide partners and investors with clarity and confidence.
The previous government’s Long-Term Plan for Towns, involving selected towns being allocated £20m over 10 years, provides an interesting vehicle for investment that could potentially be rolled out at scale across towns and cities. The involvement of communities and businesses in setting the priorities for each town’s Long-Term Plan also ensures that local voices inform the investment priorities, rather than these being set at a national level.
2. A focus on prevention
A change in how investments are appraised should be considered. Recent changes to HM Treasury’s Green Book increased emphasis on the geographic and social distribution of benefits. However, the way business cases are appraised in practice still means the focus remains on financial returns/savings and economic benefits that residents, communities and small businesses often don’t benefit from in a meaningful way.
For example, using an increase in land value as a metric currently skews decision-making – the high value of land in the south-east of England compared to most other areas of the country mitigates against like-for-like comparisons.
Instead, we could shift towards a model that appraises investments based on their ability to positively contribute towards one or more of the wider determinants of health. Placing greater emphasis on an intervention’s demonstrable ability to contribute towards improved education outcomes, improvements in the supply and quality of housing, improved skills and employment opportunities, or improved health and wellbeing would shift the dial. Prevention would immediately become a focus for capital and revenue investment decisions, requiring places to align their growth plans with the needs of their communities and businesses.
3. Ensuring places have the capacity to deliver growth
The ‘hollowing-out’ of Council corporate centres over the past decade is well documented. While local authorities will undoubtedly share the government’s ambitions for growth, their ability to consult, collaborate, plan and deliver at pace is restricted by their limited capacity. This situation is particularly acute at many borough and district councils who are best-placed to support inclusive growth, given their in-depth knowledge of the local opportunities, challenges and stakeholders.
Central government policy that depends heavily on local authorities to drive economic growth needs to recognise the need to invest in local authorities themselves. Pots of capacity funding, such as those that accompanied the Levelling Up Fund, to support councils to develop bids aren’t what is required. Rather, long term commitments to increase local authority capacity should be seen by the government as an essential enabler.
As the lessons from towns and cities across the UK have shown over the last few decades, to be sustainable, growth must be inclusive. The government has put both these things at the centre of its agenda – and now must deliver.
Read more about MV's place-based support to local areas here.
To hear more or discuss how MV might be able to support your local authority with its plans for economic growth contact mark@mutualventures.co.uk.
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