To boost lagging productivity, cities will need to invest to reduce the barriers that hinder the attraction and growth of more productive businesses. Given the lack of fiscal freedom that would allow cities to raise this money themselves, they have had to look to central government to provide the money for such investment.
The Local Growth Fund (LGF) is the most recent in a number of policies to boost economic performance across the country, following on from the Urban Regeneration Grant in the 1980s to Regional Development Agencies in the 1990s. The current round of funding is due to expire in 2021. This briefing sets out how the LGF could be improved for any future rounds to allow it to play a more effective role (alongside other policy interventions that will be required) in improving the UK’s poor productivity performance.
The following five changes to the LGF could give places greater certainty and autonomy to make policy and investments: