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£357m Greater Birmingham growth fund is good news, but don’t call it localism

£357m Greater Birmingham growth fund is good news, but don’t call it localism

🕔08.Jul 2014

The Whitehall shackles that have gripped local government spending so tightly for decades have been loosened, but councils are not yet as free to make their own decisions as is being claimed.

It is true that the localism bandwagon is rolling at a pretty fast pace. The coalition Government’s announcement of a series of Growth Deals with Local Enterprise Partnerships and councils will plough £12 billion into regional economies over five years, creating thousands of jobs and triggering a massive boost in capital expenditure.

This cash isn’t actually new. It would, of course, always have been spent by Government, but what’s changed is the intention to give the country’s major cities and city regions a little more say on how the money should be used.

The Greater Birmingham and Solihull LEP will be rewarded with £357 million from the £508 million it bid for. The cash will enable a wide variety of projects to proceed over the next five years that would otherwise have been stuck on the drawing board because cash-strapped town halls don’t have enough money to push ahead with major infrastructure improvements, and are restricted by the Government from borrowing more.

Schemes include extensions to the Midland Metro tram system and improved pedestrian links between New Street and Moor Street stations in Birmingham, as well as rapid transit bus routes, an advanced manufacturing hub and a Centre of Excellence for advanced technologies.

Across the country there will be an eruption of new roads, trams, buses, manufacturing hubs, business parks, colleges and houses. The impression given will be that of economic recovery on a grand scale as the dark days of the credit crunch and recession are cast into distant memory, and that’s most convenient for the Government as a General Election approaches.

This is all well and good. But’s let’s not lose sight of the fact that this great splurge of ‘localism’ still depends on central government deciding which bids by the 39 LEPs to accept, and which to reject. The Local Growth Fund is a competitive bidding process, pitting LEP against LEP, where the Government ultimately decides winners and losers.
LEP chairs and officials went to London earlier in the year, where they had to make their pitch for cash to Cities Minister Greg Clark. Mr Clark, you will note, didn’t go to the LEPs.

Of course the Local Growth Fund pot will make a difference, but let’s not get carried away with claims of a cash bonanza. GBSLEP’s £357 million equates to £70 million a year over the lifetime of the next Parliament, but that has to be spread across the nine councils that make up the LEP. By contrast, Birmingham City Council’s total annual budget tops £3 billion.

In a press release welcoming the growth fund allocation, GBSLEP chose to give figures for the five-year period. The Cabinet Office, however, concentrated on allocations for 2015-16, and from this it can be seen that GBSLEP’s award is by no means one of the most generous in the country.

Greater Manchester will get £170 million next year, London £151 million, North Eastern £112 million, Lancashire and the South-east £84 million each, West of England £79 million and Leeds City Region £73 million.
Over the five-year period, Greater Manchester will get £477 million, Leeds £573 million and North East £380 million, London £357 million.

GBSLEP chair Andy Street’s claim that Greater Birmingham is on course to realise its long term vision to become the pre-eminent economy outside of London appears to be based on a very long term view indeed.

The Local Government Association noted recently that councils and LEPs are wasting millions of pounds and goodness knows how many officer-hours producing bids for various funding pots in the certain knowledge that many of the ‘local’ schemes put forward by local people will be rejected by remote civil servants and politicians in London.
Not that you would realise this given the mood music coming from the three main political parties where it’s a case of ‘any localism you can do I can do better’.

David Cameron was flanked by Cities Minister Greg Clark and Tory grandee Lord Heseltine when he pitched up at Birmingham Town Hall to announce the Local Growth Fund deals. Heseltine, whose ‘No Stone Unturned’ report kicked off the dash towards devolution and localism, has enjoyed something of a political Indian summer, although it should be noted that the £60 billion he recommended should be transferred from Whitehall to city regions has been slashed to £10 billion.

The Prime Minister said: “Growth Deals are a crucial part of our long-term plan to secure Britain’s future. For too long our economy has been too London-focused and too centralised. Growth Deals will help change all that. They are about firing up our great cities, towns and counties so they can become powerhouses.

“By trusting local people, backing business and investing in infrastructure, skills and housing, we can create thousands of new jobs. And that means more economic security, peace of mind and a brighter future for hardworking people across the country.”

Nick Clegg, the deputy prime minister gave the impression that the new powers being handed down to LEPs and councils are rather greater than is actually the case.

Mr Clegg said: “We are ending a culture of Whitehall knows best. Decisions over spending on infrastructure, business support and housing are being made at a truly local level. It will help end our over-reliance on the banks and the City of London, and generate growth, jobs, and ambition in towns and cities all across England.”

If only that were true. Ultimately, when it comes to deciding the winning growth fund bids, Whitehall still knows best and final decisions are not being taken at “a truly local level”. The Government’s latest initiative cannot be said to be true localism until budgets are wholly devolved and city regions are themselves permitted to devise and approve projects.

On the plus side, this is at least a start to decentralising power and rebalancing the economy away from the utter dominance of London and the South-east. Crucially, LEPs must make a success of the growth deals they have been handed, and then a future Government may feel inclined to loosen the Whitehall shackles even further.

This is why GBSLEP has correctly identified the timely delivery of the approved growth deal projects as absolutely vital if confidence in localism is to be maintained. This will be as much a task for the GBSLEP’s supervisory committee, consisting of council leaders, as it is for LEP chair Andy Street and his fellow directors.

At the moment, the localism tide is running high. George Osborne, the Chancellor, initially approved a £10 billion Local Growth Fund over five years, which was somewhat disappointing given Lord Heseltine’s opening bid of £60 billion. Mr Osborne then talked about possibility of doubling the figure to £20 billion and went on to get fired up over creating a ‘northern powerhouse region’. Ed Milliband, meanwhile, says a Labour Government will increase the fund to £30 billion if he becomes prime minister.

Both the Conservatives and Labour have their localism champions. Lord Heseltine for the Tories and Lord Andrew Adonis for Labour.

Adonis has talked about the need a “new generation of Joseph Chamberlains – strong, far-sighted city and civic leaders, with bold, credible plans, for the amenities and infrastructure their localities need, working in close partnership with business and social leaders, to make their towns and cities magnets of new and better jobs”.

In a review conducted for Mr Miliand, Lord Adonis concluded: “It is time to give our city and county regions the powers they require to promote growth. Local Enterprise Partnerships (LEPs) – as the regional voice of business – need to be significantly improved.

“In partnership with local authorities at the city and county regional level, they should then be empowered with larger devolved budgets to promote better skills, infrastructure and economic development, in return for credible growth plans.”

Meanwhile, Mr Miliband used the Guardian newspaper to set out his thinking, with suitably embellished phrases about “charting a new course away from the old top-down command model towards an era of people-powered public services”.

He confirmed that Labour would accept demands from town halls that there should be more certainty to budget setting. Mr Miliband said: “Instead of Whitehall setting local authorities’ annual budgets, the government I plan to lead next year will provide long-term funding settlements so councils can plan ahead, improve their services, and reinvest the savings.”

Yes, localism is at the heart of political ideas and policy making as never before. But, as the Local Growth Fund bidding and decision making process has shown, there is a very long way to go before local councils can truly say they have been set free.

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