We don’t need a Lyons’ 2.0

By Ben Franklin and Annabel Smith | 06 March 2024

Another week, another authoritative report exploring how we can spur economic growth across all regions and places by Ed Balls and co.

While there are points of difference with other recent major reports including Centre for Cities, Resolution Foundation and Centre for Progressive Policy, there are common threads running through them all. These include the emphasis on long-term financial settlements for local government, stronger institutions for subnational governance and a focus on growth and investment spending outside London and the South East. But in many ways, we’ve been here before – 17 years ago in fact.

The seminal Lyons Review in 2007 coined a new phrase to describe the multifaceted role local governments can play in ‘place-shaping’. Crucially Lyons described three roles for local government: ‘as service provider; as a vehicle for investment in public infrastructure; and as an institution of government – a place for debate, discussion and collective decision-making’. His review called for a revitalisation of local government enabled by local flexibility and to inspire a sense of ‘powerfulness in local government’. Sustainable financial reform was part of this – Lyons recommended revaluation of council tax, partial business rate retention and more radical reforms to ensure local areas were incentivised to go for growth – but money was just one aspect of an extensive package.

Fast forward to today, and there are clear signs of progress. Despite continued and excessive centralisation, place-shaping has captured the zeitgeist and become the approach to local government practice among the most forward-thinking local areas. The Combined Authority trailblazers of Greater Manchester and the West Midlands have demonstrated this, encapsulated by their drive to deliver a different type of regional growth which seeks to benefit all people and places. But so too have many local authorities, who are playing key roles as enablers and convenors to innovate and make positive change happen in a context of a decade and a half of national disinvestment.

The Centre for Progressive Policy’s own Inclusive Growth Network – the first of its kind of network of places dedicated to delivering inclusive growth in practice – represents the very best of this creative place-shaping agenda. Whether it’s supporting people furthest from the labour market to get into good work in Barking and Dagenham, making city regeneration more inclusive in Cardiff, or measuring the success of the local economy by how well it’s contributing to people’s wellbeing in the North of Tyne, places have been flexing their considerable ‘soft’ convening powers and rather more limited ‘hard’ powers to foster inclusive growth in their areas.

But, while there has been innovation across some of the UK and the profile of some regional leaders has risen, this has been in spite, not because of, the conditions created by central government, with austerity putting a heavy price on places’ ability to deliver Lyons’ vision. As last week’s exclusive data release in The MJ revealed, across England there has been a 18% cut to councils’ core spending power since 2010 rising to 27% across the country’s most deprived areas. If, as Lyons argued, local government is a vehicle for public investment and service delivery, then its capacity to play this role has been fundamentally eroded – particularly in the very places that need it the most. It has created devastating false economies with places forced to cut back preventative services like children’s health and youth services to ‘reduce costs’.

It is a reductive and short-sighted approach to local government – the very antithesis of the approach Lyons set out more than a decade and a half ago. And it has served to both reduce our potential economic growth as well as increase regional and local inequalities.

The good news is there is consensus on next steps which require reform and investment. Local areas need more financial resource, allocated according to need. Consolidating existing funding pots and tied to long term funding settlements – ideally five years, this would provide the certainty areas need to plan their economic and other activities. Delivered as single pots, places could prioritise the sorts of investments that meet their locally determined needs including restarting preventative and early intervention programmes.

The UK is among the most centralised and regionally unequal of advanced economies. Local and regional government given greater freedom to plan and innovate can help drag the UK out of its current malaise. We don’t need a Lyons’ 2.0 to tell us that – it’s time to get on and do it.

Ben Franklin is interim chief executive and Annabel Smith is director of place and practice at the Centre for Progressive Policy

X – @CentreProPolicy

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Finance Infrastructure Economic growth Combined Authority Inclusive Growth Investment inequality