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Funding and finance: the big ‘stability’ question facing economic development

19 Jun 2024

In our Grow Local, Grow National manifesto we are clear that underpinning all economic development and associated projects is a requirement for a more stable and long-term funding landscape.

We ask for an end to the micro competition for capital funding as part of the single settlement funding pot approach, with any funding settlement with government and wider government programmes, such as the Shared Prosperity Fund (SPF), operating over a longer timeframe and coinciding with a five-year economic strategy horizon. We also call for multi-year funding streams for business support programmes.

Our member survey, which ran in April and May prior to the General Election announcement, also identified a groundswell of opinion with funding stability being a major ask of the incoming government to support economic development going forward. Expanding on this, we asked members to respond to the question: What lessons can be learned from SPF implementation, and what should come next?

“Funding needs to be long term,” one respondent told us. “Link it to the economic strategies rather than Local Skills Improvement Plans (LSIPs). Skills elements should not be through SPF but through LSIPs. Less restrictive on in-year application of the funding and no threat of removing underspends before the end of the full programme.” Less rigidity with funding criteria and longer term funding settlements was a common theme.

“Places benefit from the autonomy to choose their own priorities, but the timeframes need to be over at least five years, especially if you are going to connect the disparate aims (community/business/skills etc) that SPF is trying to address,” another IED member wrote. “Micro grants have a place, but there should be more consistency across places so that the different sectors can engage with the process easily.

“The amounts allocated need to have more certainty over longer term. We haven’t yet had time to assess the value of the relatively limited investments we have made; however, having a more defined set of objectives than the impossibly amorphous ‘improving pride in place’ would help focus investment in a more strategic way.

“Finally, for now, authorities should have an identified list of ambitious investments across sectors and scales i.e. ‘shovel-ready’ projects so in the instance that a pot of money becomes available, be it from central government or private investment, then there are identified investment opportunities that are linked to locally established priorities. Local authorities need support to build capacity to do this in a collaborative and joined-up way that reduces the scramble for funds (as seen most recently with rounds 1 and 2 of the Levelling Up Fund).”

As well as longer-term funding settlements, IED members also reported the need for “less salami-sliced funding, better strategic priorities”, “the need for planning at a larger scale to have impact”, and “even less red tape.”

Members were also asked: How can greater devolution be achieved whilst maintaining good governance over local finances? Giving local areas more freedom over finance so they can be more flexible with their policy areas, empowering town and parish councils to create greater professionalism and control at a lower level, and establishing a system for coordination with national bodies and strategies were all highlighted as opportunities. Primarily responding economic development professionals were keen to stress the importance of good leadership, effective structures and systems, and maximising transparency and efficiency.

It was also thought that ‘reinvented’ places that have found their identity and strengths, and are in turn using that to secure investment and grow communities, could be particularly successful going forward.

Nigel Wilcock is Executive Director of the IED.