Four Key Budget Takeaways for Local Economic Growth

Last week’s budget didn’t contain any real surprises for the local economic development agenda, but there were some important announcements nonetheless. Here’s my take on four of the most significant:

• Investment Zones– despite being significantly scaled back from their original premise, the proposed 12 Investment Zones provide a welcome step forward from the traditional, recycled Enterprise Zone policy. Predicating these zones around universities, priority sectors, and net zero ambitions will incentivise collaboration between local government, universities and business and, done right, could catalyse and enable cluster development. The onus is now on local partners to be imaginative, take some difficult decisions and prioritise. Making the most of the opportunity will not simply hinge on marketing fiscal incentives to firms but on creating a coherent vision and strategy to provide a focal point for wider investment in local innovation capability and assets.
   
• Levelling Up partnerships – the proposed needs-based approach to targeting funding is long overdue and a welcome respite from the Darwinian cycle of competitive bidding. The Partnerships should result in more strategic investment planning and stronger collaboration between central and local government. No doubt the initial 20 places will welcome the funding regardless of whether the £400m is merely a ‘drop in the ocean’. The jury’s out on whether these Partnerships will be sustained long-term and rolled out to other areas or will simply fizzle out like so many pilots before them. 
   
• Local Enterprise Partnerships – any remaining uncertainty surrounding the future of LEPs was, to a large extent, ironed out, with central government support slated to be withdrawn in April 2024, and functions to be absorbed by local government. Having said that, a version of an LEP is likely to persist in some areas in some form at least, particularly in Combined Authority areas where business boards are embedded in decision-making structures. Meanwhile, the exodus of LEP employees will continue to gather pace (as individuals seek more stable and influential positions elsewhere), disrupting local economic development policy and delivery.
   
• Trailblazer Deals – will see further money and powers handed directly to the Mayors of the West Midlands and Greater Manchester, covering policy areas such as: post-19 skills funding and functions; affordable housing and retrofit programmes and transport (read more about that here). This level of devolution is welcome, but limiting it to only the ‘posterchild’ areas reinforces the multi-tier system of devolution that risks leaving many places even further behind. A two-tier system that has long been in the making. Perhaps most intriguingly, by establishing a single funding settlement covering the whole spending review period, the budget treats the respective Combined Authorities in a similar way to government departments. Piloting a new local government funding system isn’t going to grab the headlines but, given the increased flexibilities and incentives it brings, could this be the Budget’s real lasting legacy for empowering local areas to drive forward local economic growth ambitions?