Backing good growth locally

The first month of Andy Burnham's term as Prime Minister put ‘good growth in every postcode' at the heart of British politics.This is the language of ‘Manchesterism' and it became one of the guiding principles of Burnham's Manchester mayoralty. The approach focused on devolution of power and place-based investment and has now expanded from Oxford Street in Manchester to Downing Street in London. This, now national approach to the economy, represents a huge opportunity for places across the country.Mayoralities and local authorities are focused on supporting local communities and have increasing amounts of funding coming down the line. But, given the scale of the challenges they are trying to address, they don't necessarily have the resources needed to achieve their ambitions. Incredibly busy staff teams, complex challenges and competing funding priorities are all hurdles for them to navigate.This gap between ambition, expectation and capacity is where social investors like Key Fund already operate. We have spent more than 25 years building the compliance infrastructure, regional relationships and track record needed to get finance into the hands of community and social enterprises across the North and the Midlands.Social investors can act as a ‘capacity extender'. They do not replace the role of the combined or local authority, but can absorb the due diligence burden, the relationship management and the follow-on support, while the public body retains oversight of outcomes and strategic direction.How this looks in practiceSocial enterprises have an incredible ability to operate where conventional business models often struggle – creating jobs, generating income and delivering services truly focused on the needs of local people.We see this every day across our portfolio. In Sheffield, Food Works is tackling food insecurity and environmental waste by redistributing food that would otherwise end up in landfill. While in Trafford, Collaborative Women provides safe housing and support for women escaping violence and abuse.Neither of these organisations would have been well served by a conventional loan or a one-off grant alone. They needed patient, flexible, blended finance to enable them to grow organically and access resourcing when it was needed – rather than in one lump sum. And they needed a partner who understood their local context to make the most impact and properly support their communities.The public sector understands that context, but for all of the reasons already covered, struggles to act on it. There are, however, some ways to combat that.Local and regional government should look to work with social investors with a track record in their area, partnering to advance an approach to develop and grow the local impact economy.Once this is done, blended finance options, like those provided by Key Fund, can be explored sensibly and effectively, while treating due diligence and compliance capacity as a shared resource. That way, local social investment and engagement is done efficiently, enabling local and regional government to offload capacity strain to established social investors with the ability to carry it.The financial case is straightforwardThe funding challenges that local and regional government faces are well documented. Social investors can help, providing investment to support economy organisations to develop sustainable business models that reduce reliance on grants and shift them to a more resilient footing.They can also recycle this investment over time, using repayments to support other organisations in the future.For the public sector under sustained budget pressure, that is something worth taking note of. A social investor can deploy smaller amounts of capital, more quickly, to organisations that mainstream lenders often overlook and in areas that really need it.A backdrop that shapes the caseI grew up in South Yorkshire, a place that knows all too well what happens when economic change arrives without a plan for the communities left in its wake.The closure of the coalfields and the demise of steel, and the decades of underinvestment that followed, are an economic story that Burnham himself references. But more than that, they were a story about what happens when growth strategies are designed at a distance from the places they are meant to serve.Burnham's place-making agenda is the right instinct. Its success will depend on how much we can work in partnership across all sectors to use our combined skills, experience and resources. I am certainly ready for the challenge.Matt Smith is chief executive of Key Fund

Title

DEVOLUTION

Backing good growth locally

By Matt Smith | 25 August 2026

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