The UK economy is still on the road to recovery from recession. Although the recent figures suggest this recovery is beginning to strengthen, important questions remain as to how future growth will be secured, what this growth will look like and who it will benefit.
While the recovery is often discussed in national terms, it is at a local level that people engage with the economy, via the jobs they do, the goods and services they use and the communities they play a role in. Local economies are the foundation of the national economy, and local councils have always played a central role in their development. But with many local economies still scarred by the effects of the recession on jobs, wages and business, and with councils facing substantial cuts to their budgets, the task of securing local economic development faces new and pressing challenges.
From tackling empty high streets and improving youth training, to meeting local housing need and accessing finance to fund capital projects, the latest review in the "need to know" series explores how research-based knowledge and evidence can help councils respond to the urgent challenges of local economic development in a climate of austerity.
The review identifies a wide range of ways in which councils can support local economic development, from supporting small businesses to funding culture and the arts; from investing in housing stock to capitalising on the research outputs of local universities. Councils are already finding innovative levers for local economic development. Ashfield council is using special leases to encourage community groups and charities to use empty high street retail units. In Oldham, the council is working with the NHS and a local social housing partnership to make homes more energy efficient and lift 1000 people out of fuel poverty. Manchester city council has employed over 200 unemployed local residents as apprentices since 2012, while in Portsmouth the council is providing small business loans to local companies struggling to access bank finance.
Skills policy is a key area of action emerging from the review. Local councils are in a unique position to act as a broker between employers, education providers and learners, ensuring that skills provision is tailored to local needs and that local firms play an active role in developing local skills. Nonetheless, the evidence in this area suggests the scope for action here is currently limited by an overly centralised approach to policymaking.
Procurement is another key lever identified in the review. Despite significant reductions to their budgets councils are responsible for procuring £58bn of goods and services every year. By taking steps to encourage local suppliers to bid for contracts, local government can channel its sizeable spending power into supporting local jobs and living wages, as well as upholding training agreements and environmental standards.
Behind its analysis of the evidence for specific levers, the review identifies two consistent themes in the literature. Firstly, some of the most effective levers for local economic development are those that make up the core business of local government: ensuring people are healthy, skilled, employed, safe, mobile and engaged with their communities. Secondly, local councils have an in-depth knowledge of their local areas that central government lacks, and this insight – whether in relation to the housing needs of local residents, gaps in transport infrastructure or supply chain problems facing small businesses – places local councils in an unrivalled position when it comes to producing tailor-made responses to the challenge of local economic development.
Sam Baars is a research associate at LKMco
The local government knowledge navigator is a two-year initiative funded by the Economic and Social Research Council, and steered with the Local Government Association and Society of Local Authority Chief Executives.
Copy on this page is provided by Solace, supporter of our Local leadership hub
