Economical with the locality?
1 March, 2007

Chris Leslie, Director, NLGN
The MJ

Can the public sector really influence whether economic growth occurs, or whether a community is regenerated, or whether jobs are created? Many see public policy in this regard as more of an “art” than “science”, and while clearly it is enterprise and business that choose to employ or lay off staff, there are distinct influences that the state can have on our general level of prosperity. For a start, monetary and fiscal policy both impact significantly across the national stage; if stable and well-governed these twin policy levers can foster a firm foundation for business growth – if mismanaged they can severely harm companies and veer into a boom-or-bust cycle.

But beneath these macro-scale instruments of taxation and the price of money, where else can the state make an appreciable difference? The answer is increasingly clear – local economic development, tailored to the specific circumstances of differing parts of the country, can be a force for good if pursued in the right way. Classically, local government can make a difference by removing the barriers for labour and goods to the wider market, in particular ensuring that mobility is enhanced through a continuously improving transport infrastructure. I grew up in Bradford District, a city which has undergone structural and industrial decline, but whose resurgence has not yet begun to reach its full potential in part because of the poor rail links to the rest of the country, and the even worse road links to the motorway network. Contrast Bradford’s fortunes with Leeds, where of course other specialisms in law and financial services have made the big difference, but where the ease of access to the east coast main line and the M1 have made it a city of choice for many inward investors.

Local government can and should always strive to lead in breaking down the barriers to mobility and inward investment, and this must go further than the perennial bidding to Ministers for grant. Prudential borrowing and smarter approaches to capital finance must pick up markedly across the local government community, as New Local Government Network’s forthcoming research will show. Local councils are uniquely placed to understand the state of the local labour market, the skills base and the opportunities for change and investment in both the quality of public spaces and retail facilities, and the wider residential environment. Multi-functional local authorities will be challenged by Sir Michael Lyons to raise the priority of economic development – a cause undoubtedly to be echoed by a future Brown led administration which will expect an economic regenerative emphasis increasingly from councils.

Of course, the challenges for many communities span beyond a local authority boundary, and the Government has long recognised the need for localities to join forces across a wider regional level to fight for their future success and work in harmony rather than destructive competition. The zero sum debate about city regions versus regions is a distraction from the clear fact that different parts of England need to pursue different strategies. New layers of governance, for instance at city-regional level, risk perpetuating arguments about which towns are “inside the loop” and which towns are excluded. Instead, we should revisit the issue of English regional coordination but through a more sophisticated and pragmatic lens. The 2004 ‘no’ vote in the North East was a setback for those believing in direct accountability for regional decision-making. But there are alternatives available to break the deadlock, which must involve creative working led by local authority leaders but perhaps in conjunction with national parliamentarians or even Regional Ministers. Regional strategies need to be pulled together, as do the plethora of Whitehall outposts across England. Better governance can make a difference to economic prosperity – we must all try harder to achieve it.