LGA - Ambitious nationwide devolution to boost economy by £80bn and raise productivity

22 Sep 2015 11:10 AM

At least £80 billion in economic growth could be unlocked if the Government shifts widespread powers and funding to local areas to free them to remove barriers holding back businesses, council leaders pledged yesterday.

The Local Government Association (LGA) said London and the South East accounted for more of the UK's economic output than the North East, North West, Yorkshire and Humber, South West and East of England combined in 2013.

A total of 34 devolution proposals – from cities, towns and counties in England – were submitted to the Government this month ahead of the Spending Review. Bids, from areas such as Liverpool, the North East, Gloucestershire and the West Midlands, include calls for infrastructure and economic development powers to close widening economic gaps across the country.

The LGA said productivity would be lifted if the Government matches the ambitions of communities by devolving, or handing greater local control over, at least £60 billion of central government spending to local areas in the Spending Review.

This would allow local leaders to improve transport links and business support and close skills gaps – all barriers currently holding local businesses, local growth and productivity back. It would also meet the Government's aim for the Spending Review to prioritise "promoting growth and productivity through the radical devolution of powers to local areas in England".

Examples include:

• Digital connectivity
  One in seven small businesses say the lack of reliable, fast broadband is their main barrier to growth – councils could achieve 100 per cent broadband coverage with full control over future public funding of superfast and mobile broadband rollout.
   
• Transport
  32 seconds per mile will be lost to congestion by 2035 – councils should be given full control over bus and road maintenance funding and any new funding to promote cycling and walking to provide an integrated transport system and reduce congestion.
   
• Skills
  In 2022, between 16 per cent and 25 per cent of growth could be lost as employers struggle to recruit to the estimated 14.8 million high-skilled jobs with only 11.9 million high-skilled workers – localising all back-to-work and skills schemes would ensure a better supply to meet employers' specific local skills needs.
   
• Business support
  Small and medium enterprises (SMEs) which export are 34 per cent more productive in their first year yet only one in five SME's export their products – simplifying, localising and improving access to business advice, would help SMEs grow and benefit from expanding overseas economies.

Cllr Gary Porter, LGA Chairman, said:

"Decades of centralised control over funding for local growth have failed to produce a more balanced economy. It is time to spend smarter on infrastructure to get maximum value from every public pound. This starts with a much more effective and efficient approach to investing in local growth.

"The ability to improve transport links and digital connectivity would allow councils to boost our visitor economy which is worth £60 billion to the UK each year and supports one in 10 jobs. An integrated transport system would also lead to less congestion, giving more choice to commuters and consumers and making a huge difference to helping businesses succeed and grow.

"Devolving education and skills funding would allow them to ensure businesses can access a skilled workforce and avoid growing skills gaps costing almost £500 billion in lost growth and lost tax by 2022.

"Local leaders know their local economies best and hold the key to removing the obstacles limiting the productivity of businesses and holding back local growth. We need the Spending Review to hand us the fairer funding and powers to unleash the full potential of local businesses and economies."

Notes

1. ‘Spending Smarter: A Shared Commitment', the LGA's 2015 Spending Review submission, focuses on proposals to help councils drive efficiencies and prioritise the radical devolution of power within England.
2. In 2013/14, councils and Local Enterprise Partnerships only had influence over how 25 per cent of the Government's total £17 billion funding for local growth was spent. There were also more than 100 local growth and regeneration funding pots worth more than £22 billion managed across more than 20 central government departments and agencies.
3. The LGA's full white paper, ‘English Devolution: local solutions for a successful nation', is available to download.
4. Compared to the average of the UK's 10 largest cities, productivity per person is 88 per cent higher in Munich, 42 per cent higher in Rotterdam and 26 per cent higher in Barcelona, according to the Core Cities group.
5. The LGA is providing the secretariat to the All-Party Parliamentary Group (APPG) on Reform, Decentralisation and Devolution in the UK, which is seeking evidence on devolved nations, local government, central powers in the UK and wider constitutional reform. The Inquiry is chaired by LGA President Lord Kerslake and a full list of members can be found on the Register of All-Party Groups.