Budget reaction on local growth: Some significant measures but major stumbling blocks ahead
Authors: Dr Neil Lee
Dr Neil Lee
20 March 2013
The Budget contained several measures to drive local growth, building on the government’s response to the Heseltine Review. The most prominent is a Single Local Growth Fund, with money from several sources pooled to allow local areas to tailor policies to local need. This is a good idea, but it is still unclear how much will go in the pot and it will not be up and running until 2015.
The chancellor also announced more capital spending - £3 billion in 2015/6. Most commentators have been calling for this. But, again, it will not be a short-term boost.
Lord Heseltine’s review promised to leave ‘no stone unturned’ in pursuit of growth - but under every stone there are some nasty bugs. The local growth agenda still faces some big problems. Local Enterprise Partnerships don’t yet have the capacity to deliver growth. They need urgent government support to become effective.
The supply-side measures suggested by Heseltine are important, but the real problem in the economy is on the demand-side. The weakest local economies are suffering from a chronic lack of demand. Without better macro-economic policy, local efforts are doomed.
And growth is a means to an end, not an end in itself. Some cities and regions struggled to grow in the ‘good times’ – it will be tough for them to grow now, even with new structures and finance. Real wages have been stagnant for some time, increasing in-work poverty. Growth at all costs isn’t enough.
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