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…But, there is another big measure due to be announced on that day that could change the way we invest in the roads, skills, schools, and public spaces that support the economy to grow. Lord Heseltine’s ‘Single Local Growth Fund’ is that measure, and it has the potential to offer a new and better way of investing in UK cities.
The Single Local Growth Fund will offer a pot of money for places to spend on growth-enhancing projects and programmes. The Fund will create the platform for cities to align finance and projects with the geography at which people live, work, go to school and spend their free time – the city-region.
The Centre for Cities has been an advocate of a city-region approach to economic development investment since 2006. Our original research on this issue, City Leadership, tackles the issues of governance, finance, and investing in growth at the city-region level. It serves as a foundation for more recent research on how cities invest (Banking on Growth) and how a more joined-up approach to budgeting could have major impacts on services (Ways and Means).
Now, more than ever, the value of adopting a more coordinated approach to investing in our cities is gaining recognition, and the announcement next Wednesday on Heseltine’s Single Local Growth Fund will show how far this Government is willing to go.
City Leadership sets out some important lessons on how the Fund could be best designed to support growth.
First, we need to formalise the structure of city-regions as the scale at which economic development investments are made. City-regions are the heart of the national and regional economies, serving as the hub of jobs, business and innovation. Defining city-regions as the institution for investment gives certainty, clarity and confidence for local government and private partners who want to invest in the area. In the current political context, this may be LEPs rather than city-regions, which are a less-perfect approximation of the economic geography of places and may require additional thinking.
Second, Whitehall needs to give city-regions the powers they need to succeed.This means giving greater flexibilities to all cities, including greater power over regeneration and infrastructure spending. The National Infrastructure Plan emphasises the new role of government as a co-investor and guarantor rather than a grant administrator. In turn, Whitehall should give local government more powers and freedoms to act in the same way. This includes providing local funding streams which local authorities can leverage for investment; council tax and a portion of business rates (as the system stands) simply are not enough.
Lastly, we need more coordination between local government and Whitehall to make investment sustainable. This should be embedded in a system that enables funding streams from central local government bodies to be pooled. Often, the economic benefits of capital investments are spread across localities and the national economy while their financial benefits accrue to Whitehall. For investment in growth to be sustainable, the returns to growth should be shared accordingly.
When it comes to implementing the Single Local Growth Fund, taking these lessons on board will help make the best impact possible. Next week, we will likely only get the headlines—how much money is in the Fund and some things it can and cannot do. Importantly, if cities are to have new powers at new scales of planning and coordination, they will also need to develop more capacity and new skills. In the context of austerity and a shrinking public sector, cities need to work with the private and third sectors to identify and plug skills shortages that slow down or stop local regeneration priorities.
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