Growth matters

By Ann McGauran | 06 March 2024

The Institute of Economic Development (IED) is hammering home its manifesto call for local authorities to be given statutory powers over economic development.

It is an auspicious time for the IED to gain traction with this key ask in its Grow Local, Grow National change agenda. With the Government set to transfer Local Enterprise Partnerships to local government next month and the General Election most likely to happen by the end of the year, national politicians are more likely to be in listening mode.

In reality, it is some years since the IED first launched a joint call with Solace for economic development to be formally recognised as a statutory function provided by local authorities. Why does IED chair Tom Stannard – who is also chief executive of Salford City Council – believe it is time to push harder on this point? He tells The MJ: ‘On the face of it there is a call for a statutory duty for economic development, but it is about form following function in local government.’

He said economic development represents ‘everything that matters most to voters’ and is the future of local, regional and national prosperity.

But he believes it is the area of councils’ business that is most neglected, and has suffered most over the years financially and through austerity. ‘And it is the area of the business on which we spend the least in terms of the proportion of our budget.’

He said: ‘Our form is guided very heavily by what we have to do in law, and the form of our budget is guided by what we have to do in law.’ As economic development is a non-statutory responsibility, ‘what you’ve ended up seeing is economic development and regeneration being much more of a Cinderella service in the eyes of government and in the way that elected members are effectively having their hands tied where they’ve got to prioritise resources in relation to statutory services.’

The timing is right to step up the campaign as this is the aspect of the IED’s work that resonates most with the general public, he believes. He added: ‘There is quite good cross-party interest in this whole area. There is absolutely a kind of parity of esteem argument.

‘It shouldn’t be the case this is recognised as a poor second cousin in law to the things for which local government currently has statutory responsibility.’

How can government accelerate levelling up and help local areas invest for the longer-term? A study from the Chartered Institute of Public Finance Accountancy – Investing in regional equality – lessons from four cities – says single pot funding would give councils better flexibility to respond to local priorities.

And the need to drive investment is being held back by ‘a significant lack of capacity within local government’ in recent years, says a new report from the Purposeful Finance Commission. Writing this week for The MJ, Tracy Blackwell highlights the report’s key recommendation that businesses contribute to an independently administered £22.5m ‘pipeline fund’ designed to address planning delays by increasing capacity and expertise in local planning teams.

Stannard emphasises boosting the economic development workforce in local government is crucial. He points to ‘a wider workforce crisis in the economic development professions’ that must be addressed. ‘Bringing new people into all of the different professions that sit under the economic development umbrella is, I think, a really important part of our mission’, he said.

Even if the statutory duty did not happen on day one of a new Parliament ‘we would still have a very important role to play in relation to the continuous professional development of our current membership and the next generation that comes behind it’, he added.

He is adamant further devolution and multi-year funding settlements will deliver greater levels of financial stability to local authorities. In turn, ‘the more stability a local public authority can give in its funding intentions to the market, the greater the conditions you develop for local economic growth’.

He said: ‘The greater the single settlement and medium-term funding stability, the greater the conditions for local economic growth – and the greater the probability of us having higher levels of revenue earning potential for a business rates income. It starts to become a more virtuous circle.’

It is all about gaining a prize around developing the conditions for stable sustainable investment in local economic growth which has big benefits for UK plc, he concluded.

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