Economic development cuts could make Industrial Strategy ‘impossible’

More than a third of UK local authorities have had their funding for economic development cut by more than 25% in the past five years, according to new research by the Institute of Economic Development (IED).

A survey carried out by the IED found 38% of local authorities revealed that their economic development budget had declined by over a quarter since 2012, which it claims could make the Government’s flagship Industrial Strategy ‘impossible’ to deliver locally.

The survey also found more than a third (37%) of economic development professionals believe that no new funding will be made available and a further 30% said that more cuts are still likely.

Only one in 10 of those surveyed are expecting an increase in economic development funding as a direct result of retaining business rates.

Some respondents reported that the impact of economic development is not well understood by elected members in their local authority, and many initiatives fail because of this.

A third (35%) admitted economic development could be better understood.

But despite these issues and challenges, 37.5% of respondents believe economic development will be central to their local authority meeting its economic and financial aims over the next five years.

A further 28% said that economic development would increasingly help their authority meet its economic and financial aims and one in five felt it would be increasingly marginalised as other pressures consume their local authority.

IED Executive Director Nigel Wilcock said that the research, which collated 60 responses, raised some serious questions about how councils can deliver the Government’s Industrial Strategy.

‘Members of the profession have seen dramatic cuts to resources, and despite generally believing the importance of economic development has increased, many remain incredibly anxious about their ability to deliver in the future,’ said Mr Wilcock.

‘What is clear is that, in England in particular, structures for delivering economic development are being eroded – ironically at the very time when central government has signalled its greatest intent to deliver,’ he added.

‘The Industrial Strategy represents a watershed moment for economic development and delivering the strategy and associated policies is a vitally important activity within the UK. Yet any amount of wishful economic development thinking from government will be undeliverable if the resources of local delivery agencies are being cut to the point where they will be unable to turn the broad-brush strategy into tangible outputs.

‘The Industrial Strategy has been set out at a national level with an objective for the themes to be cascaded locally. This research shows, however, that the profession in place to deliver the plan has been denuded of resource and without action there is a risk that local delivery of national aspirations will become impossible.’

Last month, Mr Wilcock spoke to New Start’s Thomas Barrett about creating a balanced economy and the north-south divide. To read more of that interview, click here.