The Stronger Towns Fund: government offer won't help held back towns

The government’s Stronger Towns Fund announcement has not exactly been welcomed with open arms.

The government has pledged most of this fund for the predominantly Brexit (and Labour) voting towns and communities in the North and the Midlands - places which have been held back by years of chronic underinvestment and severe cuts to public services.

The consensus is that this announcement - with three and a half weeks remaining until the UK is set to leave the EU - is an obvious attempt to bribe Labour MPs by a Prime Minister desperate for support for her Brexit deal.

A £1.6bn cash injection for the England’s struggling communities might sound like a positive move to tackle regional economic inequalities. But it’s a drop in the ocean when you learn that it will be stretched across seven years . And it’s a kick in the teeth even for the areas promised the £1bn focused spend when you consider the broader funding context in local areas.

Funding cuts for local councils

The Revenue Support Grant (central government’s money to local councils) has been cut by almost half (49 per cent) between 2013-14 and 2019-20, to the tune of £13.5bn. Local authorities in England will suffer cuts of over £1.3bn in the forthcoming financial year alone.

Analysis by the New Economics Foundation shows that while unrestricted central government grant funding (ie. the revenue support grant) to local authorities in England is due to fall by 37 per cent in the next financial year, an annual allocation of the Stronger Towns Fund would represent just an 8 per cent uplift in money available to local areas. 

Imbalances in funding allocations

The government’s own forecast predicts that the UK economy will be between 2 – 10 per cent smaller after Brexit than if we stayed in the EU, depending on the trade arrangements that replace our membership. This £266m a year from the Stronger Towns Fund looks insubstantial for those English towns in desperate need of focused, long-term and properly resourced funding.

The view that this is little more than botched political manoeuvring is supported by the fact it is not entirely clear how the government has calculated where and how this funding should be allocated. We know that £1bn will be handed to Local Enterprise Partnerships (LEPs) using a “needs-based formula”, with the remaining £600m handed out to local authorities through a competitive bid system.

Furthermore, it is unclear what lies behind the significant regional imbalances in the allocations provided. Towns in the North and the Midlands are in desperate need of investment - but so is the South West, which is only guaranteed to receive £33m per year from this new fund. Government funding for the South West is projected to be cut by 55 per cent over the past 12 months alone - and the £33m only represents four per cent of this money, representing an overall net cut of 51 per cent.

A short-term strategy from the government

This announcement poses a wider question about this government’s focus on a more equal, more prosperous country, local economic growth, better skills and jobs, and a reduction in inequality across the UK. We are still awaiting details on the Shared Prosperity Fund, the money that the Conservatives promised in its 2017 manifesto to replace the EU Structural Funds from 2022 onwards - which would have amounted to £13bn between 2021 and 2027.

Furthermore, LEPs and Combined Authorities across England are expected to produce a Local Industrial Strategy by 2020 for the government’s consideration, plans for local leaders and business to boost productivity and local economic development by building on the particular strengths of the area with a key focus on increasing skills, quality jobs and productivity.

It is unclear how this new announcement fits with either the plans to replace EU funding or the proposed local industrial strategies that are in motion. Is this additional to or part of these plans? How does this announcement sit with other strategic priorities for local economic development? And, crucially, what role will communities play in determining how these funds are used?

We need longer-term thinking

If we are to avoid further top-down regeneration projects that fail to deliver quality jobs and training opportunities to local workers, we need a proper social partnership approach where trade unions and community organisations have a seat round the table.

Places will see an increase in prosperity and living standards when employment rights, decent pay, terms and conditions and investment in the sectors that every place needs – social care, public services, utilities - are included in local economic development plans

This investment not only requires a voice for communities, workers and their unions, but it also requires long-term stability and adequate resources. This rushed announcement is further proof of government’s short-term and damaging thinking.