Earlier this month, the Institute of Economic Development (iED) – like all 27,000 respondents to the Industrial Strategy consultation, Invest 2035, received the headline themes from the analysis and an overview of the wider process and timelines as the policy develops.
Our concluding thoughts in our own submission, which we echoed in our House of Lords reception last week on Economic Development and the Move to a Modern Industrial Strategy Under a New Government, are that its success will depend on a holistic, integrated approach on the issues that represent barriers to investment. More importantly, one that empowers local and regional government in the right ways to tackle viability challenges and bring forward schemes for development. We are looking to help create the conditions by pushing forward the asks in our Grow Local, Grow National manifesto.
Making economic development a statutory function of local government – and to give it the proper recognition, regulation and resources that means it no longer suffers from the Cinderella service that it has become over the last 15 years of financial restraint in the sector – is a really important part of how we can unlock growth across the country. Given the direction of travel on Industrial Strategy, the case for economic development to be formally recognised as a statutory function provided by local authorities intensifies.
The iED, in representing 1,500 practitioners at the coalface of supporting the execution of Invest 2035, continues to seek direct conversation with the Industrial Strategy Advisory Council and to be consulted on national strategy. However, from the perspective of senior leadership in local government, there are two issues that need to be especially considered.
Removing barriers to investment
Investing in regional growth is hindered by several key barriers. One of the most significant is the lack of local business support mechanisms. Not every region has access to the necessary resources or expertise to engage effectively with businesses and attract investment. This gap in support services leaves many areas underdeveloped and underfunded.
To address this, the Government must prioritise business development and investment support at the local level. For example, devolution of business development funding, alongside clear and consistent infrastructure planning, would enable local authorities to create targeted strategies to attract businesses, boost productivity, and create jobs.
The Growth Hub model, which fosters local business development, should continue to be supported, along with multi-year funding streams to provide long-term stability.
Developing people and skills for a growing economy
To ensure the growth sectors are sustainable, there must be a focus on skills development and workforce readiness. The future workforce needs to be equipped with the skills demanded by modern industries, from AI and digital technologies to green energy and healthcare.
The Government can support this by devolving skills funding to local authorities or MCAs. This would allow regions to tailor their skills strategies to the needs of local industries, ensuring that the workforce is prepared for emerging sectors. Local authorities would play a central role in assessing skills gaps, providing training, and creating clear pathways into employment.
In addition, the Apprenticeship Levy should be reformed to provide greater flexibility, enabling employers to better align training opportunities with their specific needs. By fostering stronger partnerships between local government, businesses, and training providers, the UK can create a more agile and responsive workforce, better suited to the demands of the modern economy.
Beyond these two core issues, creating a more flexible, place-based strategy, fostering innovation, and investing in skills and infrastructure, the UK can unlock the potential of its regions and drive long-term, sustainable economic growth.
In summary, our overarching call for local government to be given statutory powers over economic development remains. They have that functional integration at local level which follows the conclusion of the LEPs, and given the direction on Industrial Strategy that argument intensifies in the period ahead. It is compelling argument for many areas of the country, and other nations we represent, which places the real geography of economic growth at the heart.
Local governments have a unique understanding of their communities and economies, and by empowering them with the tools and resources they need, we can unlock growth potential.
Tom Stannard is Chair of the Institute of Economic Development, and Chief Executive of Manchester City Council
