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The great big growth row

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LGC’s essential daily briefing

There’s a row brewing over infrastructure investment.

Counties have had enough of being the poor relation when it comes to investment in transport links and economic growth.

The latest round of growth fund allocations, which ministers have said will favour areas with metro-mayors, is only set to add fuel to the fire. As LGC reported in November, shire areas’ indicative allocations of the distribution of a £1.8bn national pot have fallen well short of expectations, with the County Councils Network claiming they have been rejected on arbitrary grounds.

Writing for LGC today Nicolas Heslop (Con), chair of South East England Councils, says one of the region’s LEPs has only received 6% of its infrastructure needs. As a crowded region in the grip of a housing crisis it is easy to see why SEEC’s members might feel hard done by.

While indicative allocations of the £1.8bn, which is part of the government’s £12bn growth fund, have been shared with LEPs, there is no date as yet for the publication of the final allocations. Just before Christmas the Department for Communities & Local Government told LGC they would be announced “in due course”.

But the issue is much more longstanding.

In a joint position statement on the planned move to 100% business rates retention last year, the societies of county and district treasurers highlighted what they claimed was a historic lack of investment in infrastructure in shire areas. They called for the government to rectify this under the reforms.

In the no man’s land between Christmas and New Year the Local Government Association published some interesting research on growth funding.

It identified £23bn of available funding to support infrastructure investment, housebuilding and job creation, including EU monies. However, this is split between 70 separate funding streams that are managed by 22 government departments or agencies, making accessing it complicated and time consuming.

It is also expensive. According to Mark Hawthorne (Con), chair of the LGA’s people and places board, the current system “requires millions of pounds of public money to be spent on bidding for funds from the public purse”.

In addition the research found that almost two thirds of the streams had no relationship to local priorities while areas with devolution deals, mainly metropolitan areas, had more control over how such funds were spent in their area.

Of course it is the government’s prerogative if it wants to link access to funding to local governance arrangements in this way. But it hardly fits with the prime minister’s stated vision of a “society that works for everyone”.

Brexit adds further impetus to the case for reforming funding for growth and economic development, and devolving it down to local areas in full with far fewer strings attached.

The move to 100% business rates retention provides a timely opportunity for a rethink while the development of an industrial strategy should provide a clear picture of the varied barriers to growth in different parts of the country, including shire areas.

The potential of a single pot of funding to really address the long-standing economic challenges and respond to new opportunities for development would far outstrip the current piecemeal, cap-in-hand system.

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