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Local chiefs call on Government to “release the handbrake” on economic growth

16 May 2023

Councils should be given statutory powers over economic development so they can more effectively help create high-quality jobs, attract investment into local areas, and turbocharge the UK plc.

The joint call by Solace and the Institute for Economic Development (IED) comes as the UK's Real Estate Investment & Infrastructure Forum (UKREiiF) gets underway in Leeds today.

Giving councils statutory powers over economic development will deliver a range of benefits including:

Clearer accountability for economic development in local areas, making it simpler and more attractive to UK and international firms and financial institutions to invest in places;
Local strategic economic development plans that respond to the views of local businesses, as well as the wider community;
Enhanced local focus on tackling stagnant growth and inequalities, in particular through resources invested in regeneration and boosting residents’ skills;
Upskilled council staff with the tools and knowledge to help drive growth.

Robin Tuddenham, Solace Policy Spokesperson for Economic Prosperity, and Chief Executive at Calderdale Council, said: “The UK is set to be one of the worst performing major economies in the world this year, while inflation is at its highest for nearly 40 years.

“The current, nationally-led approach to economic growth has underperformed for years. It’s time the Government released the handbrake on local places and give them the tools and resources to turbocharge economic growth across the country, and address social, regional and financial inequalities within and between places.

“Thriving economies are built on robust physical and social infrastructure and councils are ideally placed to deliver on both these fronts. This includes tackling the growing number of people suffering from persistent ill health that prevents them from working, undermining their quality of life and shrinking the national workforce. It also includes helping to catalyse the creation of new high-quality jobs and ensuring that local residents of all ages are equipped with the skills and knowledge to make a success of those jobs, whether that be banking or biotech, engineering or environmental, or construction or social care.

“Because councils, with their local knowledge and ability to bring different organisations together, have always played an important role in economic development and planning the best for their places. However, if given a legal duty over economic development, councils could do so much more to create thriving economic conditions and the quality jobs that local businesses and people want and need.”

Solace President Matt Prosser, who is also Chief Executive at Dorset Council, said: “With the 2023 Spring Budget confirming the Government’s intention to transfer the functions of Local Enterprise Partnerships to local government from April 2024, a strengthened local government role is essential to realising the country’s growth aspirations.

“Councils are more familiar with their local economies than any other level of government; they are in close contact with local, regional, national, and global stakeholders, and they can ensure growth policies and strategies are adapted to local conditions, capture specific local circumstances and advantages, and tackle key bottlenecks.

“But without a statutory footing, economic development will always be in danger of falling down the pecking order and be more liable to experience budgetary constraints compared to other service areas such as social care.

“The Institute of Economic Development has previously highlighted the challenges facing the profession and warned that, without statutory powers, the effectiveness and success of economic development interventions will continue to be constrained due to a lack of knowledge and skills in the sector. So we are jointly calling for enhanced economic development functionality for local government which, twinned with the clarity of accountability that this will create, will undoubtedly strengthen councils’ ability to catalyse the better jobs, economic development, and growth that we all want to see.”

“The role of economic development in understanding the drivers of growth and the needs of communities is clear and the detailed work required requires local understanding,” said Tom Stannard, Chair of the IED. “Without recognition as a statutory service, the importance of economic development can be under-prioritised as difficult funding decisions are made, although in the medium term a strong economic development strategy can create the foundations on which local areas can improve financial performance. In our 40^th anniversary year we are keen to convert the work we have carried out to date into this solid policy outcome, and are delighted to be working with Solace on this.”

Judith Blake, the Baroness Blake of Leeds CBE, Patron of the IED, said: “As increasing local devolution moves up the political agenda, it will be essential for local areas to have in place the models to ensure local evidence can be gained, effective policies developed and implementation delivered. This is the core role of any economic development function and it seems unthinkable that despite moves towards devolution, economic development is not yet one of those areas deemed as a statutory responsibility of each local authority.”