00Introduction
In last year’s Levelling Up White Paper the Government made a welcome commitment to streamline the local government grants system.1 As local government in the UK has few other sources of revenue, it relies on central grants to deliver local economic policy.2 The design and operation of this complex grants system has large effects on local economic policy, and is part of the reason local government struggles to respond effectively to economic change.3
The Government has made attempts to streamline grants in the past. Notably, Michael Heseltine’s 2012 report, No Stone Unturned, advocated for the creation of a single pot of economic funding to address the problems that fragmented grants had created.4 And yet over a decade later these problems are arguably worse, leading to the latest commitment in the White Paper.
A year on from the commitment in the Levelling Up White Paper there have not yet been any concrete proposals to make it a reality.5
The purpose of this briefing is to propose a way forward. It sets out a number of persistent issues with the system of grants, pulls out lessons from past efforts to streamline the system, and sets out how a streamlined grants system should be designed. It then uses these findings to set out how a simplified ‘single pot’ of funding for local economic policies should be allocated by central government based on Centre for Cities research which finds the greatest benefits for national growth and ‘levelling up’ can be made by concentrating on the big cities with the greatest potential for growth.