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Four ideas for boosting economic growth

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Commentary on four models on how councils can improve their local economy

Finance gloom of the day: Tony Travers: the magic money tree will bear councils few fruit

Social care gloom of the day: Instability puts radical social care reforms on the slide

Happy ministerial appointment story of the day: New housing minister announced

Driving local economic growth will remain a priority for councils, even though speculation is mounting that the government may put full business rates retention, supposedly the best means of incentivising it, on the back burner.

Irrespective of their own council’s tax take, chief executives know that economic growth – and particularly inclusive growth – means more prosperous, secure populations that are less likely to draw on council resources.

The models and ideas for driving economic growth vary and some are more successful than others. Here, we’ve brought together our top case studies.

 

Better banking

Staffordshire CC director of finance Andrew Burns wrote this week for LGC about how a system of regional banks would better stimulate local economies that huge government-run investment funds. Mr Burns argues national banks are less likely to lend to businesses than regional banks with superior knowledge of local firms, which acts as a brake on growth. The best proponents of this model are mission led, with a dual social and financial mission, and can still benefit from economies of scale by collaborating nationally while retaining their regional autonomy, Mr Burns writes. 

 

Councils as investors

Where banks fail to invest in businesses, councils can step in. Durham CC created a finance company that plans to invest £20m in local businesses and generate an investment return of £6m for itself. In his article for LGC, Simon Goon, managing director of Business Durham, says 70 companies in the county will be supported over 10 years. 

 

Councils as benefactors

Grant schemes for local businesses are fairly common but some councils are taking these to the next level. North West Leicestershire DC’s £400,000 business grant scheme, in its former chief executive Christine Fisher’s view, is the widest-ranging in the county, in that it does not exclude businesses in any sector. Ms Fisher says the scheme has helped to lever in £2.8m private sector investment to the area.

 

Councils as businesses

Many councils run business support services, but Barnsley MBC has taken this one step further. Its digital media centre, a building with facilities designed to attract high-growth digital businesses to the area, was originally contracted out to a third party to run. But when this failed to attract enough tenant businesses or turn a profit, the council took over with a comprehensive plan, which has attracted more firms to the building and turned the centre into a viable business that provides the council with income.

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