Driving local growth: challenges and opportunities for councils

1. Driving local growth: challenges and opportunities for councils Unlocking Economic Growth conference East Midlands Councils Piali Das Gupta Senior Adviser 13 March 2013 www.local.gov.uk

2. Councils’ role in driving growth Local government actively promotes growth by • Creating an environment for enterprise to flourish • Brokering partnerships between businesses and other partners such as skills providers • Investing directly in infrastructure and leveraging other sources of investment • Providing services such as housing, planning, transport, and education www.local.gov.uk

3. Key barriers to local growth • Transport: Decisions often not consistent with the investment priorities of localities and funding is insufficient. • Skills: Funding and policy for skills provision is fragmented across all age groups. • Financial return: Apart from business rates, little direct financial return from the proceeds of investment in growth. • “Initiative-itis”: Too much time and resources are being tied up in competitive processes and pilots. • Geography: Geography of devolution is not always consistent with functional economic areas. • Governance: Plans for growth can have a direct impact on local residents and businesses so they need a say.

4. Positive step: City Deals • The Government has signed deals with 8 cities offering them each a bespoke package of powers and levers to drive local economic growth. • 20 more localities were invited to bid for a second wave of Deals and have been given the green light to negotiate. • Estimates from first 8 Deals are that 175,000 jobs and 37,000 new apprenticeships will be created over the next 20 years. • LGA pushing for local growth deals to be made available to all areas to unlock potential for growth all over the country.

5. Positive step: Heseltine Review • Review called for Government to pool and localise £50 billion of growth-related funding streams through a single pot. • Autumn Statement committed to devolving a greater proportion of growth-related spending to Local Enterprise Partnerships (LEPs) through a single pot • likely to include funding for local transport, housing, schemes to get people back into work, skills • LEPs to have new strategic role in skills and use of EU funds such as the European Social Fund

6. LGA’s call for ambitious devolution National roll-out of Local Growth Deals, comprising: • A menu of economic powers, including devolution of skills policy and levers for localities to support local businesses to access finance. • A single pot of growth-related funding comprising all of the funding streams from the Heseltine report. • Capacity to reinvest the proceeds of growth in a local area through an “Earnback” principle, including but not limited to business rates. • Access on a non-competitive basis

7. What could devolution deliver? The case of youth unemployment can illustrate the potential. Under the current highly centralised system: • Almost 1 million 16 to 24 year olds not engaged in work or learning • Fragmented system with 33 different funding streams • Mismatch between work readiness and skills of young people and needs of local employers. • In 2011/12, for instance, 94,000 people trained in hair and beauty but just 18,000 new jobs in the sector • only 123,000 trained in trades although 275,000 jobs advertised in the construction sector

8. What could devolution deliver? LGA report, Hidden Talents: re-engaging young people, the local offer, proposes an alternative offer: • Councils and businesses take the lead in setting priorities for and commissioning skills provision for young people in an area across the 16 to 24 age spectrum • Programmes would be designed to match with employer demand in local labour markets so that young people could go from training into real jobs • We calculate that this could cut the number of young people out of work by 20 per cent in three years and save £1.25 billion a year to the taxpayer

9. Next steps for the LGA • Pressing Government to follow through on Autumn Statement commitments • Pushing for Local Growth Deals to be made available to all • Supporting councils to join up with each other, businesses and other partners in the ways that are right for them, including but not limited to Local Enterprise Partnerships • Helping councils to make the most of their current powers and learn from each other • Making the case that councils have taken a disproportionate share of cuts and any further cuts will hurt growth potential • Stressing the importance of local democratic accountability and oversight on decisions that impact local areas

10. Discussion questions • Where do you think the opportunities for growth in your area lie? • What does your area need in order to meet its economic potential? • What are the ways in which your council is joining up with neighbouring authorities, businesses and other partners to support growth? • What lessons would you want to share with central government about engaging local residents in planning for growth?