At the end of June, we gathered together officers from member councils in West Yorkshire to attend our inaugural Policy Café, as Charlotte Maddix explains.
These events are experimental – as a membership organisation we want to be plugged into what our members are thinking, and we’re constantly looking for new ways to do that. Policy Cafés are short, informal, lunchtime events focusing on a topic of interest to local member councils. In this case – economic growth.
Finance is one of LGiU’s key themes for 2017. The local government funding landscape has changed rapidly in the last few years. For a time, it was clear that those councils that could deliver growth would be rewarded. However, since last summer local government has suffered from a vacuum in vision – both in terms of local government finance and local government generally.
Taking economic growth into consideration is crucial for the financial sustainability of local government: councils really feel the effects of a lack of economic growth. Councils are well placed – at the centre of communities – to influence growth. Affecting economic growth involves a massive range of areas – digital capabilities, skills, transport, housing – and requires both direct and indirect interventions. However, in the UK, the totality of public sector spend – never mind local government spend – on economic growth is relatively tiny.
The rollout of the business rate retention pilot has been stalled. There were huge questions over how the rollout would work in practice, so now that it’s dead in the water there are questions about the future of local government funding: what comes next? With the fall of the local government finance bill, is there enough room in the system to change the status quo?
Here are the highlights from our discussions at the first Policy Café – comment below to join in the conversation.
In Bradford, they began developing their new economic development strategy at the start of 2017. Looking at the national industrial strategy, they asked themselves: what’s missing? And, moreover: what differentiates Bradford’s economy from others?
Bradford has a strong manufacturing sector, with a surprising number of textile companies still up and running. High-growth sectors are attractive and can offer big wins, but it’s important that they aren’t the default target. Place has to be at the centre of economic strategy. Bradford is also a young city, with attractive commercial property values and good affordability of housing. It sits between the larger Northern Powerhouse cities. For those developing its new economic strategy, these factors are opportunities. To capitalise on these opportunities, Bradford plans to invest in its young population through education and skills; market itself as a distinct and affordable place; and invest in its transport and digital infrastructure.
Meanwhile, eight miles to the east in Leeds, a new economic strategy is also under development. Like Bradford – which uses detailed intelligence about the city – the new strategy is rooted in evidence and comparisons with other economies. In economic terms, Leeds is as important to the UK economy as Scotland – five per cent of UK plc. It has strong private sector job growth. Its ‘knowledge intensive’ sectors are forecast to grow even more. A decade ago, Leeds was behind everyone else in terms of startup numbers. Now, it’s above the national average. One influence has been the Centre for Cities’ work on replicators versus reinventors – across the UK, few cities have been as reinventive as Leeds in economic terms. The economic development team have taken a granular look at what makes up the economy of Leeds. For example, they’ve learnt those incomers who stay longest in the city – contributing to its economy – are coders who play at least one musical instrument.
In Leeds, the ‘size’ of the city centre is set to double. In the 2030s, HS2 will arrive. There’ll also be significant growth around outlying areas, such as Thorpe Park. The city centre already dominates the economy across the city region. Many aspire for the West Yorkshire region to build a ‘federal economy’, with economic nodes working together rather than in competition.
Across West Yorkshire and beyond, productivity is an issue. The hollowing out of the labour market is forecast to continue – if our workforce increasingly needs highly skilled adults, where do people without formal qualifications find work? We either need to boost the number of unskilled jobs – or seriously invest in adult education. What does growth actually look like? This is the ‘productivity puzzle’ that councils have to solve.
One challenge for areas – and their councils – is that private companies tend to be ‘small c’ conservative. They wait for others to act before acting themselves – and then keep on doing the same thing, if it works. A way of addressing this is to de-risk developments for the private sector: convincing developers to become active in areas by promising to buy the building if a tenant isn’t forthcoming later.
Why do we have economic development strategies? We don’t seek growth for growth’s sake – but to influence where the growth happens, and what we do with it. Economic development strategies are not strategies just for the council – but for the place as a whole.
When we develop economic strategies, we walk a tightrope between telling the sales pitch for a place – while also recognising the need to tackle the difficult issues. Our ability as a sector to effect real and lasting change is hampered by a lack of powers. We can tinker around the edges – but without the power to act, real change is almost impossible. The business rate retention rollout – now delayed – is far from a perfect solution.
If the UK had a properly designed renumeration and taxation system – from minimum wage to corporation tax – what might become possible? Is there sense in a fresh approach to fiscal policy?
Is central government too preoccupied with – as well as shrinking the deficit – the simple aim of creating jobs? The world has changed – unemployment in the Leeds city region is half what it was in 2011. Just to demand job creation, without caring how or why, now looks increasingly bizarre. Is there a smarter, more nuanced way to measure successful growth?
With limited resources, how we support individual businesses to grow may also be due an overhaul. Given the resources of the state, is there an offer to be made to the small business world around providing services that SMEs can’t – for example, occupational health support?
Affecting how companies behave could be a key future role of local government. How, for example, do we encourage businesses to act as part of a community and not as competing businesses – when it is in the interests of the community to do so? Enabling a more collaborative culture between civic and economic life could be an important role for local government.
We need to find the right scale for each economic intervention: Bradford, West Yorkshire, the entire Northern Powerhouse? This isn’t just about legislation and powers, but about aligning local, regional and national agendas in the interests of creating an inclusive and healthy economy.