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Local authorities report damaging economic development funding cuts amid fears that Industrial Strategy aspirations could become “impossible”


More than a third of UK local authorities have had their funding for economic development cut by more than 25% in the past five years, according to new research published today by the Institute of Economic Development (IED).

When asked what had happened to their economic development funding since 2012-13, 38% of local authorities revealed that their budget had declined by over a quarter and a further 32% said that it had fallen by less than 25%.

Around 37% of economic development professionals believe that no new funding will be made available, despite the potential ability for local authorities to retain business rates increasing the profile of economic development, and a further 30% said that more cuts are still likely. Only 10% of those surveyed are expecting an increase in economic development funding as a direct result of retaining business rates.

Some respondents reported that the impact of economic development is not well understood by elected members in their local authority, and many initiatives fail because of this, and 35% admitted the function could be better understood. However, whilst 48% said they had been able to show very clear and quantified benefits of their work, another 40% claimed there was a sense that projects have delivered value but evidence for these had not been gathered, suggesting an opportunity for stronger evaluation.

Despite these issues and challenges, 37.5% of respondents believe economic development will be central to their local authority meeting its economic and financial aims over the next five years. A further 28% said that economic development would increasingly help their authority meet its economic and financial aims. Only 5% thought that economic development would no longer exist as a function, but 20% felt it would be increasingly marginalised as other pressures consume their local authority.

IED Executive Director Nigel Wilcock said that the research, which collated 60 responses, raised serious questions about investment in economic development at a time when the profession was required to deliver the broad goals set out in the UK’s Industrial Strategy:

“Members of the profession have seen dramatic cuts to resources, and despite generally believing the importance of economic development has increased, many remain incredibly anxious about their ability to deliver in the future.

“What is clear is that, in England in particular, structures for delivering economic development are being eroded – ironically at the very time when central government has signalled its greatest intent to deliver. The Industrial Strategy represents a watershed moment for economic development and delivering the strategy and associated policies is a vitally important activity within the UK. Yet any amount of wishful economic development thinking from government will be undeliverable if the resources of local delivery agencies are being cut to the point where they will be unable to turn the broad-brush strategy into tangible outputs.

“The IED recognises that resources are scarce, and also that the UK has a number of structures for delivering economic development functions, but the profession is in place to bring rigour and a structured approach to achieving the goals set out in the Industrial Strategy. The Industrial Strategy has been set out at a national level with an objective for the themes to be cascaded locally. This research shows, however, that the profession in place to deliver the plan has been denuded of resource and without action there is a risk that local delivery of national aspirations will become impossible.”


For further information please contact Phil Smith, Institute of Economic Development PR consultant, on 01778 218180 / 07866 436159 / phil@philsmithcommunications.co.uk.

Notes to editors:

The Institute of Economic Development (IED) is the UK’s leading independent professional body representing economic development and regeneration practitioners. Established over 30 years ago, the IED's key objective is to represent the interests of economic development practitioners and ensure their views are widely expressed and noted. The IED is committed to demonstrating the value of economic development work for local and regional communities; the pursuit of best practice in economic development and the attainment of the highest standards of professional conduct and competence.

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