Stimulating local economic growth is contingent on a huge variety of factors: housing, transport, skills, schooling, the investment landscape, planning and, of course, macro-economic trends and central government policy.
Councils have a direct role leading work in some of these areas, so their actions can have a big impact. They have a detailed knowledge of how to unlock new new potential in their areas.
However, central government continues to let down local government. There has been a ‘vision vacuum’ on local government finance in general, as ministers grapple with Brexit.
Our report with PwC and the Institute for Fiscal Studies, The Local Vantage, examines this lack of direction, along with the impact of cuts on local government, and how the picture will look in the years ahead.
Survey results analysed for our joint report found that, despite years of cuts, 89% of respondents said service quality was maintained in their area last year. However, just one in three respondents to PwC’s survey were confident they can avoid significant reductions in quality over the next three years, falling to one in six over the next five years.
Councils have little certainty about how they will be funded beyond 2020. There is increasing uncertainty about the impact of 100% business rate retention and many councils fear it is an insufficient fix. It is deeply concerning there is no alternative vision.
We would like to see a rethink about how to broaden the local tax base to fund services sustainably. More creative approaches to fiscal devolution were ruled out of the initial round of devolution talks: it’s time to revisit them.
In the absence of strong leadership from the centre, councils can seize the opportunity to go it alone, building city-to-city, region-to-region relationships, bypassing national government. This approach is working in many areas, such as Stockton-on-Tees BC, which has created links with Japanese firms that have set up in the borough, creating many jobs.
The Northern Powerhouse brand is now recognisable internationally, giving leaders of northern councils an opportunity to advocate for their communities with foreign investors and to forge partnerships with other regions.
There are so many ways of approaching this objective and each must be locally specific. Councils are at the mercy of international market forces but they are still extremely well placed to improve the prosperity and wellbeing of their residents.
We shouldn’t wait for central government to tell us the future shape of local finance; local government must put forward its own case. Whatever happens next with business rates and devolution, it is vital council voices are heard in finding a model that responds to local needs for growth.
Jonathan Carr-West, chief executive, Local Government Information Unit