The Local Government Association (LGA) has urged the government to reform the current system of separate funding pots for local business growth and instead devolve money to local areas through a single, streamlined investment fund.
The LGA, which represents more than 370 councils in England and Wales, said the £23bn spent by the UK government on growth, regeneration, and skills could be better spent by councils rather than the current 70 different national funding streams managed by 22 government departments and agencies.
The LGA said the current system was confusing, wasted public money and created unnecessary delays in getting projects off the ground. It suggested the devolution of growth funding must be used to deliver the Government’s Industrial Strategy ‘as it will benefit local economies and improve the well-being of communities’.
Mark Hawthorne, chairman of the LGA’s People and Places Board, said: “The UK is one of the most centralised economies in the western world, and as a result, has poor levels of productivity.
“Councils are best placed to understand the needs of local economies, but are currently having to spend too much time trying to access growth funding for essential projects to improve their local areas. This is frustrating the efforts of councils to build homes, create jobs and invest in infrastructure, such as transport, to boost our economy.
“Despite improvements, the current system for growth and regeneration funding is still unnecessarily bureaucratic and hindering progress in our towns and cities, as well as creating uncertainty for businesses and investors. Simpler, fewer funding streams would help kick-start more projects more quickly.”
Edward Winterton, UK chief executive officer at Bibby Financial Services, backed the LGA call and said that UK investment was too London-centric and the economic potential of local economies was under-realised.
“Devolving more power to councils will put local decisions in the hands of those who best understand the needs and requirements of the area. This will ensure that funding is utilised more wisely and in turn strengthen the economic output of all regions.
“The Government had the right idea when it introduced the Northern Powerhouse and Midlands Engine initiatives, but it is clear that neither initiative has had the desired effect. Our SME Confidence Tracker shows that more than half of SMEs (53%) in the Midlands have never even heard of the Midlands Engine, while 37% of those in the North have never heard of the Northern Powerhouse. The UK needs to be firing at all cylinders to successfully navigate Brexit, but the lack of balance in the economy is holding the country back.
“As an employer with local offices throughout the Midlands and North of England, we believe the devolution of powers will broaden the contribution of these regions to economic growth by boosting productivity and stimulating local supply chains.”