Hidden Quarter-Trillion: Councils’ £276bn untapped economic potential - LGA

Councils across England could unleash £276 billion of untapped economic potential—equivalent to more than a tenth of national output—with government support to break down place-specific barriers to growth, according to new analysis released today.  

Commissioned by the Local Government Association, the analysis strips out national, sectoral and regional trends to pinpoint genuinely local economic potential, identifying areas where local leaders, with properly resourced councils, could make a significant difference in tackling local economic challenges, unlocking local jobs and boosting business opportunities. 

This is part of wider work by the LGA to highlight and profile the role of local government in delivering inclusive growth. 

This analysis - produced by the Growth and Reform Network as the first part of a detailed investigation into the role of local government in supporting inclusive growth - is published as the LGA's Annual Conference takes place in Liverpool, where thousands of councillors and officers working in local government come together for the sector's biggest event of the year. The Growth and Reform Network consists of Metro Dynamics, the Future Governance Forum, and the Centre for Progressive Policy. 

It shows that urban centres dominate with at least £234 billion share of the opportunity, according to the analysis, but rural areas also present untapped potential worth a minimum £42 billion - equivalent to nearly 10.7 per cent of the rural economy.  

Meanwhile, non-devolved areas - those outside formal devolution deals or Priority Pathway areas - represent at least £77 billion in potential, equivalent to nearly 12.6 per cent of their local economic output.  

While the Government has proposed that Mayoral Combined Authorities hold responsibility for Local Growth Plans, councils around the country - whether they are a constituent council in a combined authority or not - have a unique and critical role to play in driving local, inclusive economic growth.  

The decision to focus investment in mayoral areas underlines the challenge for those areas yet to secure a devolution settlement. Councils across the country are keen to play their part in driving inclusive economic growth and all communities stand to benefit from new investment.

The LGA is calling for: 

• Greater clarification on how the four new growth funds announced at the recent Spending Review will operate and the total resources available to support inclusive growth across England.
  
  
• Properly resourced councils so that they can provide key services creating economic conditions for growth (e.g. planning, transport), and address barriers to work, such as poor health and housing.
  
  
• Every area to receive funding to support local inclusive growth ambitions, with funding allocated through a transparent formula based around need rather than operating a competitive bidding process.
  
  
• Long-term funding – it takes time to overcome challenges and deliver economic opportunities. Councils and the private sector need to have confidence that investment is secured for the longer-term.
  
  
• All of local government to have funding and powers to plan a locally responsive employment and skills offer for their residents and employers, which is so critical to delivering inclusive growth.

Areas such as Leeds have led the way in driving the shift to good jobs and inclusive growth in their local economies, through modelling good employment and procurement practices. 

The Leeds Anchor Network, set up in 2018, spent over £270 million in the Leeds economy in 2020/21 and employs over 55,000 people. 

Essex County Council has invested in a new Electric Vehicle Centre, which will fund 50 free places over a 24-month period for Automotive Technicians to develop the skills and knowledge to maintain and repair EVs, futureproofing local employers and raising local awareness about the benefits of EVs  

Burnley has worked across community/voluntary sector partners - including the local CVS, football club and College, focusing on economically inactive people. Support has ranged from providing digital skills and budgeting sessions to careers and emotional therapeutic support services. 

In response to an ageing workforce and lack of training opportunities, North Devon is supporting the delivery of a Heritage Skills Initiative. This is helping to support an estimated direct economic output of £32,200,000 through the expansion of restoration skills. 

Cllr Louise Gittins, Chair of the LGA, said: “Growth is a shared national, regional and local priority, which we all have a part to play in.  

“Only councils have the detailed knowledge of their communities and business and are best placed to unlock economic potential and better jobs. 

“Councils can also break down barriers to inclusive growth, by using their frontline services to improve people's health and wellbeing, as well as employing people in their own right and buying from their local places. 

“Mayoral Combined Authorities, while trusted to deliver, can only realise the full economic potential of their areas if their constituent councils are able to work in partnership and fire on all cylinders. 

“Nowhere should be held back in delivering for their communities.

“Economic growth is the number one mission of the Government. Providing sufficient funding is a very cost-effective way to ensure all councils, including those not in combined authority areas, can fully play their part in delivering local inclusive growth - driving up living standards and funding vital public services.”  

Notes to Editors 

The Leeds Anchor Network brings together 14 of the city's largest employers including the council, NHS trusts, higher and further education, culture, and utilities. Together they focus on areas where they can make a key difference for the people of Leeds either as an employer, through their procurement, through service delivery or as a civic partner. 

The analysis presented is original research carried out by the Growth and Reform Network on behalf of the LGA. It is based on an adapted shift-share analysis to break down economic growth into national, industrial, regional and local factors. Additional technical detail is available upon request.