No one in local government was expecting the Chancellor's statement on the Spending Review to contain much in the way of good news for our sector, but the government's unwillingness to trust local communities has led it to pass up an enormous opportunity for economic growth to the detriment of the whole country.
Local authorities have – as was highlighted in a recent Public Accounts Committee report – been pushed to the brink of financial collapse by government cuts, with 1 in 8 now at risk of being unable to balance their budgets. The cost of the further 10% reduction to local government funding will be great. Nevertheless, councils have demonstrated remarkable resilience in implementing the 33% real-term cuts to their budgets announcement by the government prior to this week – earning the high level of public trust invested in them through maximising efficiency and innovation in public service delivery.
Local government's mettle in the face of austerity neither excuses nor justifies the government's decision to inflict more cuts on vital locally-delivered services. It does, however, render all the more frustrating the revelation that it will not – despite its seemingly positive initial response to Lord Heseltine's No Stone Unturned report –
be utilising the ambition and capacity of our communities and cities to kickstart the ailing economy.
The government's announcement that it will distribute £2 billion amongst Local Enterprise Partnerships (LEPs) across the UK should not be completely discounted.
The business leaders, further and higher education representatives, politicians and council officers who are the driving forces behind these bodies will certainly spend this money more wisely than could be achieved by mandarins calling shots remotely from their desks in Whitehall. Spending decisions generate more growth where they are made by local people who know how their area's economy works, have a stake in its success and understand residents' priorities.
Lord Heseltine himself, however, commented in the run-up to the Review that to apportion funding for LEPs in the low billions would be to squander the chance for substantial economic growth offered by localised partnership working as well as the enthusiasm built up for those organisations at the local level.
In his report, the former Deputy Prime Minister proposed that funding streams for skills, employment, infrastructure, housing regeneration and business support should be devolved to LEPs through an amalgamated single funding pot totalling £70 billion.
The government has allocated LEPs a mere fraction of this sum, and what is being offered is in large part a reheated version of the Regional Growth Fund- money already set aside for local enterprise. It follows that an almost negligible proportion of economic development spending will be tailored to the specific challenges and opportunities of distinct communities or invested with the efficiency which characterises localised decision-making.
A further result of the government's choice to maintain centralised control over these funds is that LEPs and local authorities will not – as Lord Heseltine envisioned – be able to assume leadership roles at the centre of whole functional economic areas. Instead of shaping all economic development policies to work in conjunction with one another, local leaders will be restricted to making siloed commitments, often concerning solitary large projects, which may or may not harmonise with central government spending decisions. Indeed, the system risks mimicking the splintered approach that so cripples Whitehall.
This incapacity will, moreover, be exacerbated by ministerial choices to include very little in the way funding for apprenticeship and skills schemes as part of the single pot package, and to commit even this minimal level of funding for a single year only.
To build for the future we must plan for the long term, and many potential private sector partners will be unwilling to invest when shifting political winds may result in funding taps running dry.
The business community has repeatedly made it clear that in order for LEPs to function, central government must enable them to make joined-up decisions and guarantee a basic level of stability. Council leaders, chief executives and economic development officers – as well as residents concerned about record levels of youth unemployment – will rightly worry that business may conclude the government isn't serious about trusting local communities after all and walk away. I firmly hope that LEPs will become a successful and permanent fixture on the economic development landscape, and local government certainly won't be taking its ball and going home.
Nonetheless, it's up to the government to prove to the private and public sector professionals who have freely given their time to help establish LEPs in their areas that their efforts haven't been in vain.
Joanna Killian is chair of SOLACE
Content on this page is provided by SOLACE, partner on the local leadership hub
