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Getting money to the right places

18 Oct 2024

As we marked Labour’s first 100 days in government at an Institute of Economic Development (IED) event last week, a straw poll of delegates found that 67% felt “quite optimistic” about the prospects for economic development in this parliament.

From my perspective, I would point to the many promising steps we have seen in terms of refreshing the policy framework which is supportive of local government, and the economic development profession in its broadest sense. The momentum has shifted, and things have moved up a number of gears since July, including the appetite from Ministers and civil servants to engage with the sector in supporting mission growth.

The King’s Speech set out a raft of bills to kickstart economic growth, and the emphasis on “kickstart” is very powerful and telling language, particularly for economic development professionals who are supporting delivery across the UK.

With the English Devolution Bill we have seen a new government minded to do more business with Mayors, and enable further devolutions. Strength in numbers is clearly the order of the day, but without being uber prescriptive on the Mayoral structure. Through wider devolution, there is an opportunity for economic development professionals to play a seminal role in driving forward progressive place-based innovation.

Through the Planning and Infrastructure Bill, we have a renewed emphasis on housebuilding and affordable housing delivery, and an overhaul of the planning system. There remains a need to fix the impetus for supply, but we are encouraged by the possibility of freeing up greater capital investment in essential projects. Housing and transport are essential for achieving local growth plans, especially outside of London, and they are needed as well as social and economic development infrastructure.

The Skills England Bill, meanwhile, has already led to a new arms-length body of the same name to boost and regionalise training, bringing together businesses, unions and mayoral combined authorities. This will help to equip regions with the skills they need. The government’s Curriculum and Assessment Review is another key moment for this administration, and it can also support the workforce development needs of the broadchurch of professionals serving economic development.

Importantly, there is a consistency in message. At the recent Labour party conference, both the PM and Deputy PM restated pledges to national renewal, sustained economic growth, devolution, investment zones, rebuilding public services, and modern industrial strategy. And, of course, we now have Invest 2035, and a consultation on the subsectors within these which the Industrial Strategy should prioritise. A final strategy as well as sector plans for each will be published alongside the spring 2025 spending review.

Local government, and economic development, professionals have a critical role to play in supporting the acceleration of growth in city regions and clusters of growth sectors across the UK. The IED, in representing over 1,500 practitioners who will be at the coalface of supporting the execution of the Industrial Strategy, is seeking representation on the Industrial Strategy Council or be consulted as part of a taskforce reporting to the Council on national strategy, local growth plans and other policy mechanisms.

However, with the 30^th October budget on the horizon, first a stronger financial footing is needed for local authorities, in the short and long-term. There is an urgent need for a financial settlement to bridge the gap ahead of the Levelling Up Fund and UK Shared Prosperity Fund ending in March 2025. Beyond that, a promise of long-term multi-year settlements to secure the sustainability of local services and functions from next year, as the vehicle for funding competitions to end, is the best we can ask for at this stage.

Sector sustainability is key for Industrial Strategy, and my message is that delivery problems are not going away without solving council finance. The jury on this government’s commitment to local government is out until that comes through, and so the devil is now in the detail.

Given the direction of travel on Industrial Strategy, the case for economic development to be formally recognised as a statutory function provided by local authorities intensifies. It is a more compelling argument for deprived areas, especially places where the geography of economic growth and historical interventions have been so much harder. If economic development remains non-statutory in local government, then there will also likely be an inconsistency in approaches on statutory local growth plans.

Parity is still not there for the economic development function, and we still want to have a debate on that, as first outlined in our Grow Local, Grow National manifesto 12 months ago, in which we have made some good progress. Councils alongside specialists in the private sector could deliver so much more if they were given statutory powers, with their unique understanding of local economies, to better ensure policies are adapted to local conditions and make the most of the strengths of local places.

Tom Stannard is Chair of the Institute of Economic Development. The IED Annual Conference 2024, 'Economic Transition – How do we deliver long-lasting change in our towns, cities and regions?' , is on 6^th November.