Our local economic future
About us
actions for the next government to harness the power of place to deliver change
Economic change may be dreamt of by aspiring national leaders, but it is delivered at the local level. Ahead of the General Election, CLES is calling for political parties to rediscover the power of place and take six bold actions to harness the power of local to deliver change.
How?
5. Power up local employment pathways
1. Reverse austerity, power local economies
Austerity is bad for growth. Since 2010, more than £15bn has been stripped from local economies by government cuts. This has had wider knock on effects, in terms of jobs lost, assets removed from local control, a decline in the quality of local services and, ultimately, a rise in poverty. And the issue isn’t just a lack of money. The way that funding is handed down to local and combined authorities - over short time frames and in “pots” allocated through competition-style bidding processes - compounds the problem.
Added to this, the formulas used to calculate the amount of funding allocated to our places are based on outdated measures and often do not reflect the difference in need between the most and least well off areas.
Action
Provide a long-term funding settlement for local government
This means:
- Developing a task force on local government finance which builds on the lessons of the fair funding review but gets to work immediately to address the crisis in local government.
- Committing to providing a five-year settlement for local councils within the next 12 months and to providing a ten-year settlement before the end of the next governmental term, future-proofing the capacity of councils to plan for better local economies – and better lives – in the long term.
- Developing a new system of measurement for how funding is distributed that ensures that those whose need is greatest receive their fair share.
- Requiring councils to report on the economic, social and environmental impact of their spend using measures that reflect the specific economic context of place (rather than nationally imposed measures).
2. Reframe devolution
English devolution isn’t working. The idea is sound, but the execution thus far has been patchy, poor and there remains little awareness locally of the power combined authorities hold and how people can have their say in decision making processes. The government currently set the parameters for what combined authorities do and, therefore, the economic model that they seek to apply in our places replicates the dysfunction of the Treasury’s “growth-at-all-costs” approach.
Not only that, but there is a real risk that English devolution, rather than augmenting and supporting the role of local authorities by helping them to make strategic decisions on the big challenges, will be used to remove power, discretion and even funding from them. As it stands, many councils see few benefits from being within a combined authority and find working with them an additional administrative burden which they can ill afford. If we are to have devolution in the UK it needs to be at a scale that is relatable and makes sense for most people’s lives.
I
Action
Develop a clear framework for English devolution
This should include:
- A clear set of objectives for what devolution seeks to achieve, with metrics that go beyond GVA growth and incorporate improving health outcomes, reducing poverty and inequality and tackling climate emergency.
- A recognition that the governance of regions and sub regions looks different in different places, in terms of economic geography and governance arrangements across local government and health.
- A recognition that local authorities are more than just the building blocks of combined authorities, they have important and unique abilities to drive economic, environmental and social benefits appropriately for their place.
- A mapping of powers and budgets to be held by all devolved authorities and how these relate to and augment local authority and integrated care system powers and budgets.
- A funding formula for combined authorities which takes into account local need.
- Mechanisms and funding to further support joint working between devolved and local authorities.
- Expectations for citizen involvement and accountability in devolved authority decision making.
- Clear learning from the devolution experience in Scotland, Wales and Northern Ireland.
Public institutions are a fundamental component of our local economies, but all too often they are unable to act as the responsible stewards they would like to be. Councils, hospitals, universities, housing associations and more – all of them are rooted into our places and all have large spending power, employ by the thousands and own land and properties that are centrally placed and capable of delivering positive outcomes for their places by encouraging the growth of local supply chains and good local employment markets.
Restrictions on who they can buy from, outdated guidance on what constitutes good value in procurement and a lack of understanding on local need means that these “anchor institutions” are often – despite being willing – unable to use their economic power to support the very communities they are designed to serve.
Action
Make supporting the growth of a fairer local economy a priority for all public sector organisations
Any plans for local growth must recognise the important role that local public institutions play in shaping the local economy and deeply involve them in their development.
Local economic development should be considered a core service of all public sector institutions, not only local authorities. This is already happening in the NHS through integrated care systems - which provide a vital forum to address and improve the relationship between social and economic conditions and a variety of adverse health outcomes - but could go further, with support from the Department of Health and NHS England.
Anchor institutions from all sectors should also be supported to work together, with guidance and funding provided to establish formal networks, potentially via the devolved combined authorities.
4. Empower places to lead climate action
Local and combined authorities have a vital role to play in delivering a just climate transition. However, despite a strong willingness they face a number of barriers to delivering on these ambitions. The lack of funding for local government naturally impinges on their abilities to innovate in this area and the centralisation of power and resources has caused uncertainty around the development of green skills and supply chains. All the while, communities often struggle to feel part of the significant changes required.
In order to deliver the green future we deserve, local government must be recognised for its ability to progress climate action with more than just warm words. Many local revenue raising approaches for climate initiatives are now being explored by councils and combined authorities but these approaches are new to many and additional support is needed.
Action
Give local authorities a statutory duty to address climate change
This duty will only be viable if it is backed up by appropriate funding from central government and with support for local authorities to enable them to develop new climate-focused revenue raising approaches. To do this would provide a clear statement of intent that the government recognise that it is not fiscally responsible to let the climate collapse and that local solutions will be more impactful, cost effective and context appropriate than those led from the centre.
Retain local ownership and control of net zero assets
Negotiate hard to ensure that the benefits of investment in net zero projects including electric charging points, energy generation and retrofit are owned locally and that the jobs, skills and innovation they create are used to support local communities.
5. Power up local employment pathways
The UK is in the midst of a skills crisis. Key sectors such as health, and social care, engineering, construction, education and digital and tech are struggling to recruit and this is disproportionately affecting small businesses, with knock on effects for communities across the country. Yet, at the same time those furthest from the labour market face a number of barriers when it comes to accessing employment and training, particularly women.
The solution to these twin problems lies in the public sector. In the UK, it employs almost six million people and has the potential to be an immensely powerful force but that force is not currently being harnessed. Outdated recruitment approaches focus on “filling the job” instead of finding the people who need jobs and ensuring that they can be supported to build the skills and confidence they need to enter the labour market.
Action
Mandate targeted recruitment to ensure funding for public services increases local economic opportunity
The next government can harness the employment power of the public sector to help us build the skills the UK needs for the future and to support the people who need it most into training and employment.
Making public service investment conditional on local collaboration to identify both the jobs that need filling and the support needed by those furthest from the labour market in order to fill them will power up local employment pathways.
Opportunities should be targeted at those communities who need these jobs the most. They can also target opportunities where employees will build the skills needed outside of the public sector where there are the most acute shortages, like retrofit and digital and work with unions to ensure these jobs have good pay and conditions.
6. Reignite local planning
Planning in the UK has lost its way. Speculative developers are making profits on the back of housing shortages, while austerity has stripped out the capacity of local authorities to deliver the local plans needed to secure the long term strategic future of our places. The disempowerment of our planning system means that we have become too used to the idea that high standards of place can only be achieved through boosting land values to secure planning gain.
At the other end of the system, four-fifths of low-income working-age households spend more than a third of their net income on housing costs in the private rented sector while, at the same time, dizzying house price rises mean that, in 2021, there was more money to be made from owning a property than having a job in the UK. This is, in part, a consequence of Right to Buy which has fuelled the growth of costly and poorly regulated private rented housing.
Action
Back our planners
Give them the tools and resources they need to reinstate local plans and give developers the long term security they need to commit to affordable housing supply.
Scrap Right to Buy
Modify the New Homes Bonus Scheme to incentivise affordable accommodation and put in place new rules on borrowing for council house building and housing associations. Use the quantum of public sector land ownership to build well designed, efficient new affordable homes for communities across the UK and retain the ownership of these homes in the public and not for profit sector so that these assets are retained for the benefit of future generations and to help maintain the stability of community life.
About the Centre for Local Economic Strategies (CLES)
Established in 1986, CLES is a Manchester-based charity working towards a future where local economies benefit people, place and the planet. This will happen when wealth and power serve local people, rather than the other way around, enabling communities to flourish.
We have an international reputation for our pioneering work on community wealth building and are recognised as the curators of the movement in the UK. We act as a critical friend to local economies, by working with the economic actors in places to bring them together, connect them to progressive agendas, devise solutions and deliver change. This practice-based research also enables us to advocate for change to national debates and to stimulate governments of all scales to enable local economies to reach their full potential.
Our local economic future
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CLES, 52 Oak Street, Swan Square, Manchester, United Kingdom, M4 5JA
info@cles.org.uk | www.cles.org.uk
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