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Councils can be the catalyst to unlocking the UK’s economic potential, but need the right powers and funding from government to deliver on this possibility, according to a new report. 

The analysis – A Force for Growth – explores not just what councils already contribute to the economy, but what they could achieve with the right inputs as well.

With growth being a defining mission of the Government, following years of sluggish productivity and widening regional inequalities, the report sets out how local government is indispensable to achieving this ambition. 

Commissioned by the Local Government Association (LGA), the research identified that councils contribute £117 billion nationally each year through their roles as service providers, employers, and investors, showing that local authorities already play a crucial role in boosting local economic growth and prosperity. 

Their role as growth facilitators, orchestrators, and anchor institutions are essential for shaping the conditions for business to thrive and communities to prosper. 

On top of this already significant figure councils have the potential to unlock an additional £276 billion across the country, and with the right investment and empowerment from government could unleash significant growth, equal to more than a tenth of national output.

The analysis – which was carried out by the Growth and Reform Network – identifies four systemic factors that influence councils’ ability to deliver inclusive growth: devolution, sustainable funding, political leadership, and connectivity across government tiers. Where these conditions are strong, councils can act strategically and catalyse long-term prosperity. Where they are weak, opportunities remain unrealised.

The report is to be launched at an event in Sheffield, where leaders from business, local and regional government, and other key stakeholders will convene to discuss the full potential of partnership working to the national economy – if central government pulled the right levers and trusted local leaders to deliver for their communities.

Using an adapted shift-share analysis to break down economic growth into industrial, national, regional and local factors, combined with quantitative data and qualitative interviews, it identified four key pillars of how local government supports growth.

Cllr Tom Hunt, Chair of the LGA’s Inclusive Growth Committee, said: "Councils are a force for growth. Their local knowledge, connections and deep commitment to their areas make them essential to drive forward prosperity across the country.

“Councils sit at the heart of their local economies and play a unique role to unlock local growth. They provide essential infrastructure and act as a convenor to bring together the public and private sector along with local communities. They also play a significant role as an economic actor by providing services, investing, buying goods and services and providing employment. This adds up into a significant national picture.

“More importantly, this research shows what councils directly deliver and but what their potential is.  Through their detailed knowledge of the local areas they serve, they are best placed to unlock economic potential and deliver inclusive growth. 

“Enabling councils to be an even stronger driver of national prosperity will help to achieve prosperity for all parts of the country."

To unlock the growth potential of the country through councils, the report calls for:

• Multi-year, flexible funding to enable long-term planning.
• Structured engagement across government tiers to align priorities.
• Co-designed Local Growth Plans and investment pipelines.
• Targeted support for councils in non-devolved areas.

Notes to Editors

Breakdown of growth potential by region (note there is some overlap):

Urban centres - £234 billion 

Rural areas - £42 billion

Coastal communities - £42 billion

Non-devolved regions - £77 billion

The Growth and Reform Network is a new platform building on the foundations of the Centre for Progressive Policy, in partnership with Metro Dynamics and the Future Governance Forum. 

The analysis presented is original research carried out by the Growth and Reform Network on behalf of the LGA. It is based on an adapted shift-share analysis to break down economic growth into national, industrial, regional and local factors. Additional technical detail is available upon request.  (1) more information on the definition of old-industrial towns is available  in the article:  https://shura.shu.ac.uk/25497/10/Beatty-RecoveryStagnationBritain%28VoR%29.pdf