Invest 2035: The UK’s Modern Industrial Strategy

The Local Government Association (LGA) is the national voice of local government. We are a politically led, cross-party membership organisation, representing councils from England and Wales. 

Our role is to support, promote and improve local government, and raise national awareness of the work of councils. Our ultimate ambition is to support councils to deliver local solutions to national problems.

The Local Government Association welcomes the publication of the Industrial Strategy Green Paper. The Government has rightfully identified Kick Starting Economic Growth as one of its Five Missions. As we set out in our local government white paper the public wants to see a return to greater prosperity, with a fairer distribution of wealth, alongside the protection of the environment. We believe that these ambitions can best be achieved by working in partnership with councils, drawing on their crucial roles in identifying the opportunities for growth, working with the private sector, undertaking planning and regeneration, working on skills and training and facilitating accessible and affordable transport and digital infrastructure.

In recent years there has been a deliberate shift in government policy to put councils front and centre in delivering local economic outcomes. However, as highlighted in our recent spending review submission councils face a funding gap of £6.2 billion over the next two years.

Continued pressure on local government budgets affects non-statutory services like economic development significantly. Some economic development services consist of just one officer based in a larger team. Added to this, shorter-term, competitive, national bidding rounds add pressure on economic development services to commit scarce resources into writing competitive bids.  If local government is to continue to play its vital role in driving inclusive growth, these services must be properly funded, including continued resources for recently integrated Local Enterprise Partnership responsibilities. 

While the Industrial Strategy Green Paper is largely structured around eight sectors, it is important to recognise that the sectoral composition of local economies varies across our communities. As such, individual local authorities will want to make the best case for their areas building on their vision for their local economy and the sectors important to local prosperity. 

The LGA has a good track record of working with Government to support its ambitions for inclusive growth and greater productivity, including joint work with the Cities and Local Growth Unit to produce a Local Industrial Strategy support offer for local authorities as part of the previous industrial strategy. We stand ready to do the same again, building on our shared commitment to reset the relationship between national and local government.

This response reflects the broad and vital role councils play in supporting their local economies, including the eight growth sectors identified in the Industrial Strategy green paper. As a result, we would like to emphasise the following key messages:

• The Industrial Strategy should be framed by the pursuit of inclusive growth and prosperity. This reflects both the importance of increasing economic performance and the need to improve the wider co-determinants of community well-being as well as addressing climate and nature crises. Both are vital in achieving the Government’s mission to kickstart economic growth.
• What local growth and prosperity looks like varies from place to place. Whilst all places will share some common priorities, the main drivers of economic growth and prosperity are intrinsically local, with challenges and opportunities unique to each place. Councils create the conditions for growth and prosperity through the services they provide and their unique convening role, driven by long-term local economic strategies and plans produced in partnership with business. Government must continue to engage with local government and support its vital work in this space. 
• Local authorities need to be supported to deliver for their places alongside other key anchor institutions. The potential prize is significant. If those council areas with below median growthin GDP per head in the period 1998-2021 had instead matched the median growth rate across all councils, it would mean England generating an additional £73 billion in GDP today. 
• Continued pressure on local government budgets falls disproportionately on non-statutory services including economic development. In addition, staff are often funded through short-term resources such as the UK Shared Prosperity Fund and therefore sit on fixed-term contracts. Entry to the profession is less clear compared to other professions and lacks structured work-based or qualification routes beyond graduate entry. Failure to address this is already undermining the ambitions of local leaders across all parts of the country to achieve inclusive growth.
• Devolution is an enabler of economic growth. The LGA supports the transfer of powers to communities, furthering devolution, recognising that local leaders are best placed to make decisions for their places. However, it is important that Government recognises that local authorities are the ‘delivery arm’ for devolution. Even in areas with mature devolution settlements, it is critical that local authorities are enabled with the appropriate powers and resources to shape and deliver in place.
• The LGA welcomes the Government’s focus on regional growth within the Industrial Strategy green paper. We also recognise that city regions and clusters have a key role in leading growth. We also note the Government’s assurance that growth clusters may reflect large geographical areas. However, it is important that all councils across England are equally recognised for their role in delivering local growth. This includes urban areas but also those which are non-metropolitan and rural. Many places have not yet reached their full potential. In 2021 we produced research into the unique challenges facing coastal and rural areas in which there was a £102 billion productivity gap compared to the national average.
• The newly established Leaders’ Council provides a valuable platform for collaboration on delivering the industrial strategy. We would welcome further engagement with the Government to strengthen this partnership, including representation on the Industrial Strategy Council and a greater understanding of the outcomes associated with the Government’s Growth Mission.

The Local Government Association supports the Government’s ambition to deliver growth through the Industrial Strategy ‘that supports high quality jobs and ensures that the benefits are shared across people, places, and generations.’ However, we believe that it is important that alongside economic growth the Industrial Strategy should also focus on delivering prosperity within our communities.

In our Devolution First report, we highlighted that while economic growth can be more easily measured at a national level, prosperity is often related to local conditions, such as whether people feel safe and whether they can access the vital services that they need. These local differences in prosperity can add up to significant losses to the economy, with a small change in life satisfaction worth an estimated £13,000.

Ensuring the benefits of economic growth and prosperity are felt as widely as possible is an important policy aim for local government. While there is no formal definition of ‘inclusive growth’ councils work hard to ensure opportunity is accessible to as many people as possible and local growth contributes to reductions in inequality and poverty. For example, Leeds City Council have defined inclusive growth by complimenting GDP figures with the Social Progress Index. 

The UK has a growth, prosperity and inclusivity problem:

• Low growth. The ONS found in the 15 years after the financial crisis (2008-2022) there were eight years where annual GDP growth was below two percent; in the 15 years before the financial crisis (1993-2007) there were only two years where annual GDP growth was below two percent.
• Barriers to prosperity. The ONS found the proportion of UK adults reporting low levels of life satisfaction was 4.6 percent in 2018 but has risen to 5.8 percent in 2023. The proportion of UK adults who were satisfied with their health has declined from 51.4 percent in 2015/16 to 44.7 percent in 2022/23.
• Barriers to inclusion. Some examples are the incomes of lower earning households stagnating while the incomes of higher earning households accelerate; women typically earning less than men, with the gender wage gap widening after the birth of a first child; and London’s economy significantly outperforming all other areas of the UK.

Against this background we believe the pursuit of inclusive growth and prosperity should frame the Industrial Strategy.

An understanding of place is at the heart of successful local economies and the strength of UK industry: housing is critical to accommodate residents of growing towns and cities; efficient transport networks and comprehensive digital connectivity enables economic activity, attracting new and supporting existing employers and sectors; and investment in the health and skills of local people will lead to increased productivity; enhancing the public realm, promoting local culture, and the visitor economy enhances the local identity and attractiveness of places to investors.

Local authorities have a unique understanding of their local economies.  Through the services they provide, their work on producing local economic and industrial strategies and their crucial convening role, councils are ideally placed to both identify and support growth sectors and important subsectors. 

For example, Cornwall Council has a total of 20 documents that are relevant to growth and prosperity whilst also embodying a decision-making model which recognizes the boundaries of both a thriving society and a thriving planet. Engaging with local government is therefore vital if the Government wants to understand the needs of growth sectors and what drives them.

Local government’s role in creating the conditions for growth and convening partners occurs across all eight of the growth sectors identified in the Industrial Strategy. However, it also occurs more widely. For example, Gloucestershire County Council leads and co-ordinates the work of the Agri-Food and Rural Business Group, which includes local agriculture universities, the NFU and SMEs. The group supports and develops individuals and rural businesses to service the needs of the Agri-Food industry, addressing key economic opportunities and challenges within the county and develop initiatives to promote and develop local food supply chains, including food producers, retailers and affiliated services.  

By talking to councils, the Government can get a better understanding of important sub-sectors and foundational sectors. Councils have an unrivalled understanding of the businesses that operate in their place. Through our Local Industrial Strategies: Lessons Learned and Devolution First reports, we highlighted that local authorities have strong relationships with individual businesses. They convene business to influence emerging strategy formation, and by providing direct support through business support functions they remove barriers to activity such as limited commercial facilities. 

This support also extends to small and medium enterprises (SMEs), including microbusinesses, which play a critical role in local economies. In 2021, microbusinesses accounted for 33 percent of employment equating to roughly nine million employees and collectively they provide 21 percent of the economy’s turnover. Local authorities play a key role in supporting microbusinesses, including: developing local business strategies, convening local partners to provide support to microbusiness, investment into business infrastructure such as access to commercial property, coordinating funding opportunities for local businesses, and signposting information. The crucial work of councils in this space is detailed in the LGA’s report How well do you know your microbusinesses?

In addition, local authorities have recently incorporated, additional growth functions following the integration of Local Enterprise Partnerships. The LGA has produced two reports to support and learn from this process. The Government could do more to resource and support local authorities to take advantage of these new functions. 

Local authorities are one of several anchor institutions that drive economic development in communities. In part, Integrated Care Systems exist to help ‘the NHS to support broader social and economic development.’ The Local Government Association has produced research alongside the NHS Confederation on creating effective Integrated Care Partnerships. To enable the greatest benefit in communities, the Industrial Strategy should be driven in place rather than fragmented across different institutions.

The potential prize is significant. If those council areas with below median growth in GDP per head in the period 1998-2021 had instead matched the median growth rate across all councils, it would mean England generating an additional £73 billion in GDP today.

We welcome the establishment of the Leader’s Council which will provide a valuable platform for the voice of local government and was called for in the LGA’s Local Government White Paper. To further strengthen the relationship between central and local government, the Local Government Association calls for the sector to be represented on the Industrial Strategy Council.

Local government is under incredible financial strain. A stark new survey by the Local Government Association has found that one in four councils in England report  they are likely to have to apply for exceptional financial support to stave off bankruptcy in the next two financial years (2025/26 and 2026/27). 

The LGA is calling on the Government to deliver a sufficient and sustainable funding settlement for local government, as set out in our Autumn Budget and Spending Review submission. Not only will this support councils to meet the growing demand for statutory services like social care and homelessness, but it will also allow them to continue their leading role in driving inclusive growth. 

As highlighted in a recent LGA report, continued pressure on local government budgets falls disproportionately on non-statutory services including economic development. In addition, staff are often funded through short-term resources such as the UK Shared Prosperity Fund and therefore sit on fixed-term contracts. This makes the retention of talent difficult. Entry to the profession is less clear compared to other professions and lacks structured work-based or qualification routes beyond graduate entry. Some economic development services consist of just one officer based in a larger team. Failure to address this could undermine the ambitions of local leaders across all parts of the country to achieve inclusive growth.

To support this we believe the Government should create a Skills and Capability Fund for local authorities. This would be comparable to the Mayoral Capacity Fund and allow councils to build their expertise and capacity to boost growth and prosperity. 

Alongside greater revenue funding for economic development teams local authorities need to be able to flex the growth funding for investment they receive from central government to reflect local priorities and opportunities for growth over the long-term. This would better support councils to pivot towards emerging sectors and new technologies. Critically, longer-term funding provides certainty and confidence to private investors.

The LGA welcomes the Government’s intention to reform the growth funding landscape to rationalise the number of funds, move away from competitive bidding, and better supporting local leaders to drive growth. A University of Sheffield study and survey in 2022 found that for Round 1 of the Levelling Up Fund, authorities spent £14.7 million on bids that were unsuccessful, with £5.5 million spent on bids that were unsuccessful and not supported by capacity funding.

We have called for a simplified, consolidated and long-term approach to growth funding, allowing local leaders flexibility over where and how investment decisions are made locally. We hope the government will adopt the principles set out in our report, Future of Growth Funding, when outlining their ambitions for growth funding in Phase 2 of the Spending Review.

Devolution is a key contributor to economic growth. We have supported work by IPPR North that sets out how greater decentralisation can improve economic growth and also lead to more equal outcomes and reduce regional inequality. Research by Europe Economics has also highlighted that fiscal decentralisation of tax revenues could lead to significant GDP gain: increasing tax decentralisation by 10 percentage points is associated with around 0.09 percentage points more growth or, in the long run, with around 1.75 percent higher GDP per capita. More widely, LGA research into the future of local government finances identified that future fiscal reforms could incentivise local government to pursue growth-based policies.

Councils need certainty over financial reforms. The Government should clarify its plans for, and the timing of, any reset of accumulated business rates growth at the earliest opportunity as part of a broader effort to provide certainty to the sector on planned reform, making sure the sector is properly engaged and consulting on any potential changes in a timely manner. The Government should introduce a transitional mechanism as part of any reset of accumulated growth, to ensure that local authority services that residents rely on are not put at risk.

The LGA supports the transfer of powers to communities and we welcome the government's commitment to further and deeper devolution through the English Devolution White Paper. 

We have previously supported calls for a National Devolution Baseline for England, with powers made available to every council that wants them, without the need for a lengthy process of negotiation or local governance reform. This should include a new ‘duty to co-operate’ to require local and national partners, including all government departments, to work together to explore devolution.

We would urge the Government to ensure that those areas that may not support a mayoral combined authority are not excluded from the Industrial Strategy or Local Growth Plans. In a similar manner to the National Planning Policy Framework’s proposal for Spatial Development Strategies, it may be appropriate for local authorities outside of mayoral combined authorities to self-organise into appropriate geographies.

We would welcome further co-production with government to ensure the devolution framework is underpinned by local government's pre-eminent place shaping role and is combined with sufficient funding so that all councils, including combined authority areas, can deliver growth priorities, unlocking the full potential of economic development teams which have been diminished by budget cuts. 

The LGA recognises that combined authorities have a valuable role to play in the strategic coordination of public services. However, it is important that Government recognise that local authorities maintain a key role within place and stand as the delivery arm of devolution. Even in areas with mature devolution settlements, it is critical that local authorities are enabled with the appropriate powers and resources to shape and deliver in place. In this view, the concept of ‘double devolution’ is critical. Where appropriate, powers should also be devolved directly to local authorities.

We call upon the Government to ensure that local areas are sufficiently resourced and have capacity to deliver Local Growth Plans.

Our report Local Industrial Strategies: Lessons Learned we highlighted the need for robust local evidence underpinned by accessible data. Establishing a centralised data library, housing a wide range of datasets relevant to local governance, is therefore crucial. This library should be accessible to all levels of government – central, regional, and local – fostering a collaborative environment. 

This would empower local government and combined authorities to make informed decisions, aligning strategies, and driving local economic growth. Furthermore, collective procurement of data resources would optimise costs and promote data standardisation across different levels of government.

Currently, national statistics make it difficult to identify issues at a granular level or judge the impact of national and local interventions in the economy – for example, deprivation in rural or coastal communities and in pockets of larger urban conurbations elsewhere. Innovative companies, such as Data City, may be valuable in identifying and producing comprehensive local indicators. 

Government should also support local strategy creation with analysis, expertise and coordination from the centre. It will also be vital to ensure that future workforce data identifies emerging technologies and sectors. We call for the Government to adopt the principles contained within the Local Government Association’s Green Jobs Framework which would allow local authorities to make timely interventions into their localities.

The LGA welcomes the Government’s focus on regional growth within the Industrial Strategy green paper. In the decade after the 2009 great recession, urban areas led the recovery – accounting for 78 per cent of total GVA growth, almost three out of four new jobs in England and Wales, 92 per cent of productivity growth, and 70 per cent of population growth. Two point three million urban residents entered jobs over this decade, with an increase in full-time employment in high-skilled occupations, and in roles paying above the Living Wage.

We also note the Government’s assurance that growth clusters may reflect large geographical areas. However, it is important that all councils across England are equally recognised for their role in delivering local growth and supporting our industries. We are keen to ensure that all areas of England can contribute to the Government’s mission to kickstart growth and that responsibility for driving growth is inclusive of all local authorities and their communities. This includes urban areas but also those which are non-metropolitan and rural.

The Local Government Association recognises that not all areas in England are reaching their full potential. For example, in 2021 we produced research into the unique challenges facing coastal and rural areas in which there was a £102 billion productivity gap compared to the national average. Despite this, council areas with the highest life satisfaction scores tend to be more rural than councils with the highest GDP per head. As we have outlined elsewhere, it is important that Government ensure that monitoring the Industrial Strategy involves both a broader range of datasets which reflect growth and prosperity, but also a deeper set of indicators that are representative of all communities.

Councils also directly drive local growth and prosperity. In the first quarter of 2023 there were a total of 1.2 million people employed in English local authorities. Billions have been used by councils to make commercial investments in their local economies (as well as the investments made more widely in the UK – and across the world – by the hundreds of billions in assets held by the Local Government Pension Scheme). Equally, councils use local supply chains to buy products and services, further stimulating economic activity. The continued financial sustainability is also directly relevant to many communities where the public sector is one of biggest employers.
 

In this section we have responded to those questions most directly relevant to the role of local government.

Question 7: What are the most significant barriers to investment? Do they vary across the growth-driving sectors? What evidence can you share to illustrate this? 

As convenors of place, local authorities have a core role in driving and supporting economic growth. With their unique knowledge and connections with the people and places they serve, councils deliver both public and private investment to the right places at the right time. Local authorities invest directly into their communities. In Attracting Investment for Local Infrastructure, the Local Government Association found that 40 percent of all government expenditure on infrastructure in the UK in 2016 came from councils.

There are several factors impacting the ability of local authorities to attract public investment into their areas. As outlined earlier, continued pressure on local government budgets affects non-statutory services like economic development the most. Added to this, shorter-term, competitive, national bidding rounds add pressure on economic development services to commit scarce resources into writing competitive bids. We hope the government will adopt the principles set out in our report, Future of Growth Funding, when outlining their ambitions for growth funding in Phase 2 of the Spending Review.  

Furthermore, the Local Government Association has undertaken extensive research into local authorities’ ability to attract private investment. In Attracting Investment for Local Infrastructure, we noted that one of the critical drivers of success is the ability to identify and approach the most appropriate investors. Navigating this landscape can be complex and requires either in-house knowledge, a track record built through previous projects and relationships, or working with a neighbouring council or an agent. The research also found that, alongside Public Private Partnerships: Driving Growth, Building Resilience, appropriate and effective governance arrangements were a key marker of both attracting investment and project delivery. 

We agree with the Government’s assertion that ‘past industrial strategies have often not achieved their objectives because they have been too short lived.’ For both local government and business, consistency of messaging and policy is key.

In addition, we would like to flag specific barriers to investment in particular sectors.

Planning

Local authority planning departments have borne the brunt of council budget cuts since 2010. Between 2009/10 and 2020/21, local authority net spending per person on planning dropped by 59 percent, the highest of any service, according to calculations by the Institute for Fiscal Studies think tank.

There is a significant challenge in resourcing local planning authority teams. Councils all over England are struggling to recruit planners, and teams are shrinking, increasing burdens on remaining staff. Up to one quarter of public sector planners have left the public sector in the period 2013-2020.

Our members report to us that one of the greatest challenges they face is retention of staff or preventing the ‘brain drain’ to the private sector, particularly with graduates and more senior staff, who are incentivised by higher pay and working conditions.

The picture is further complicated by local authorities becoming reliant on agency staff, fully qualified planners who work on a temporary contract at local authorities earning a far more significant salary than those on full-time contracts. This can result in low morale for other members of the team.

Alongside difficulties in recruiting and retaining town planners, there is a much more significant challenge for recruitment and retention with relation to specific planning skills and areas of expertise, such as enforcement, urban design, viability, heritage, ecology and legal. This results in local authorities either relying on the evidence provided by the applicant or determining which applications’ evidence should be challenged or verified by paying for specialist consultancy advice; totalling far more than an in-house expert.

Net Zero 

Local government is united in the call for clarity, certainty, and a long-term delivery plan to achieve net zero by 2050. There is cross party consensus on the need to back local climate action on net zero and adaptation. Every expert intervention calls on it to go further and faster in empowering local climate action. Over 300 local authorities have declared a climate emergency.

As outlined by UKRI, local climate action can achieve net zero for half the cost of a national approach and deliver three times the growth, jobs, skills and health benefits. Local authorities hold influence to drive down a third of every place’s carbon emissions.

Sufficient grid capacity, enabling new connections, is currently the biggest barrier for the UK becoming a Clean Energy Super Power. Local Planning Authorities have approved thousands of renewable energy generation applications that are currently sitting in a connection queue, sometimes being told they have 6 to 8 years to wait before connection.

Some councils have even invested in grid infrastructure to enable the housing development they need in their own area to meet targets. Not only will limited local grid connection capacity slow down renewable energy generation capacity, it is also likely to slow down the uptake of heat pump installation and vehicle charging, in return impacting on the market opportunities for zero carbon heating and transport.

UK100 estimate that, by 2050, one in five jobs will be supporting the transition to net zero. The scale of the transition of the workforce needed is significant. There is a huge opportunity for local communities to create green jobs which can also help tackle inequalities. For example, with proper investment, local government could retrofit 1,000 properties a day, which would create 31,000 new skilled jobs in construction and retrofit industries, and there is the potential of 1.18 million new jobs by 2050 in low-carbon and renewable energy industries. There are also significant opportunities in nature restoration, food, agriculture, and STEM industries.

Local and national government and their partners are using the power and resources they currently have to develop green jobs and skills. However, they are not able to fully achieve this potential and the scale of change required. Through engagement with local government and their partners, the LGA’s Green Jobs Framework identified some of the main systemic barriers that places current face in the development of green jobs and skills:

a. Lack of long-term certainty for local businesses: The current system does not enable local businesses, specifically SMEs, to invest in the green skills of the future, as they only have the capacity to focus on the short term. UK100 have found that “SMEs are too focused on immediate business needs, not confident that there will be sufficient demand in the nascent market, or simply cannot afford to invest in training”.

b. Funding is short-term and fragmented: There is a lack of coherence across different national funding pots, often with short-term timeframes and competitive bidding. There is also a lack of oversight and alignment between skills and employment funding, which is fragmented across 49 different funding streams, as well as additional net zero grants and funding which is often output driven. This fragmentation makes aligning funding to build the skills, capacity, and local supply chains to deliver net zero investments challenging. Grants such as the Green Homes Grant and Homes Upgrade Grant has shown that unaligned, short term and output focused grants do not provide the capacity needed to create the workforce required to deliver the programmes successfully.

c. Capacity: The availability of trainers and investments in ‘train the trainers’. The short-term nature of funding creates challenges for skills providers, SMEs and micro businesses to invest in capacity building, as well as general local government capacity.

d. Fragmentation of career pathways: There are a range of qualification and training routes available, but these are often difficult to navigate locally, with national and local partners offering different options, with occasional duplication. There is also a great opportunity to develop and promote clear climate change related pathways for young people through strong career guidance, upskill the current workforce and provide opportunities for career change.

Digital and Technologies

Through their own footprint, the services they provide and their workforce, councils are seeking to benefit from increased productivity that digital transformation and new technologies offer. With local government spending standing at £125 billion pounds, the potential benefits to the national economy and the digital and technology industry are potentially very significant. However, more work needs to be done to overcome barriers holding back progress.

A significant legacy estate across the local government estate coupled by market concentration means the costs to update are often unaffordable. This also holds back the creation of systems and data that are interoperable and hinders digital transformation. We would like to work with Government to foster competition, particularly for SMEs, to address concerns regarding market dominance by a few suppliers.

National digital transformation projects need to be less competitive and focused on support for "whole system modelling” rather than narrow new initiatives and maintenance.

Insufficient revenue funding makes the costs of moving to a cloud-based solutions prohibitive meaning that a large proportion of council workloads and data remains on premise. The constraints on funding also make recruitment of IT and highly technical staff difficult (18 percent of IT posts in councils across England are vacant), especially when faced with private sector pay competition. 

Rural councils continue to lag more densely populated areas in the roll-out of 5G and wider improvements to digital connectivity. 17 percent of rural residential premises and 30 percent of rural commercial premises still do not have access to superfast broadband. This connectivity gap hinders the growth of digital technologies. 

Both recruiting and retaining IT and technical staff is challenging due to private sector pay competition. As identified by LGA research, approximately 18 percent of IT posts in councils across England were vacant as of 1 October 2023, and around a third of all responding councils said the vacancy they had found most difficult to fill in the last three years was for a technical /operational /architectural officer.

Councils face significant challenges in addressing digital skills gaps within their workforce. According to FutureDotNow research, 59 percent of the workforce cannot perform all basic digital tasks, and 8 percent cannot perform any. Considering a workforce of 1.4 million, this translates to 112,000 individuals lacking any digital skills. This challenge hinders the adoption of new digital systems and technologies.

Rates of digitally excluded residents significantly impede investment in digital technology and create barriers to digitally enabled services. It was estimated, by the Good Things Foundation, that the UK Government could save an estimated £1.35 billion over a ten-year period in efficiency savings from more services moving online. It was also estimated that with every £1 invested in digital skills training, £9.48 is gained throughout the economy. 

The advanced use of technologies, particularly Artificial Intelligence, is highly energy intensive. Significant investment in crucial digital infrastructure will be necessary to fully realise the benefits for the public sector and society at large. One of the key points at the moment is around data centres.

As set out in our Local Government White Paper, a Local Government Centre for Digital Technology could play a pivotal role in reducing the digital divide, addressing public sector reform, and promoting economic growth if local government is supported and empowered to be more innovative, technologically inclusive and sustainable. The LGA are currently developing an investment bid for consideration by DSIT.

Creative Industries

Councils recognise the creative industries’ potential to boost sustainable economic growth. The LGA work closely with Creative UK and the Creative Industries Council to support councils as they work with their local creative businesses, and to attract new ones to their areas. Before the pandemic, the UK’s creative industries contributed more than £111 billion to the UK economy and supported over two million jobs.  The success or failure of creative industries is important to councils, not just from their economic contribution but its key role in creating local identity, vibrant places and wider opportunities.

Councils invest over £2 billion annually in culture, leisure and related services, which makes councils the biggest public investor in these services, significantly outstripping government funding through lottery distributors like Arts Council England and the National Lottery Heritage Fund.

The LGA has published two guides to support councils and combined authorities grow the creative industries. We found there is a strong and positive benefit from devolution, with councils and combined authorities taking on different but complementary roles to enhance the business environment for the creative industries. Our Combined Authorities guide showed they have focused on bring data and evidential analytics to regional investment, as well as tailored financial investment which is required for the unique profile of many creative businesses. In turn, our council guide found councils using combined authority analysis to shape planning decisions and provision of creative studio space, although there remains a national shortage of this.

Councils and combined authorities are already working to strategically position the creative industries in local growth strategies and are using tools first developed in Business Improvement Districts and Enterprise Zones to support the growth of creative clusters. They have also successfully leveraged national funding, including through the Levelling Up Fund, to develop their local creative sectors and drive regeneration.

Our research found that successful investment approaches for the creative sector required: Leadership at a regional level; Enhancing evidence gathering and understanding; Building capacity within combined authorities and, Infrastructure development, including joined up approaches across regions.

Additionally, contributors to our creative guides noted the importance of clear lines of responsibility for planning and policy making, financial support, and business support across geographic areas, as well as identifying where combined authorities were able to bring added value to support the remit of local authorities.

For local authorities, it is important to have access to maps of existing creative industries, which as small businesses do not always show up on existing economic profiling and embedding creative businesses into cultural plans.

Our Cornerstones for Culture report highlighted the critical importance of cultural provision by councils in enabling creative practitioners to develop their skills and practice before moving into the creative sector itself. In addition, many freelancers move back and forth between public and private sector activities as a way of maintaining a regular and stable income. This grassroots provision must also be recognised for investment, through local government, to secure a pipeline of skills and talent for the creative sector.

Council provision of initiatives like the Business and Intellectual Property Centres have a proven track record of enabling new and underrepresented groups to be entrepreneurs, and over a third of businesses using this approach are in the creative sector. Similarly, library provision of coding clubs and makerspaces provides young people with early exposure to creative opportunities and careers, including green screen filming technology, and will have a multiplier investment effect if expanded across the country, for a very low cost.

Councils have also identified a challenge in securing further investment for their small creative businesses, who are often unable to access investment finances due to their small size and the way in which intellectual property is treated. It is essential that a way is developed to recognise intellectual property as an asset. Possible comparable approaches are undertaken by Big Society Capital and the Public Works Loan Board and these could act as initial models for developing a bespoke creative sector vehicle.

It is crucial that a placemaking approach to investment is taken, which means avoiding a tunnel vision on specific technologies and sub-sectors. A place-led investment approach will enable the conditions for a whole range of economic sectors to flourish and support each other, creating or enhancing creative clusters and, over a longer-term, creative corridors. The ‘Better Places Partnership’ approach by the DCMS arms-length bodies is a positive step towards this, but the emphasis needs to move from government direction of spend to a place-led one. A framework for accountability measures needs to be developed alongside the roll out of compact funding to support this.

Question 8: Where you identified barriers in response to Question 7 which relate to people and skills (including issues such as delivery of employment support, careers, and skills provision), what UK government policy solutions could best address these? 

As a nation, we face significant labour market and skills challenges. Almost 1 million 16–24-year-olds are not in learning or a job, 2.8 million adults economically inactive due to ill-health, and failure to address labour shortages is predicted to cost the UK £39 billion a year. These challenges mean different things to different places, each with their own unique mix of employment growth, unemployment and skills levels. Local government leaders want to coordinate efforts to address rising economic inactivity and support more residents into work and help existing and incoming employers with their workforce needs.

Through our Work Local campaign, The Local Government Association has long called for devolved and integrated employment and skills services, and developed a cost benefit analysis of the benefits for individuals, the local economy and the public purse.

Our new Work Local: our employment and skills offer to a new Government to boost inclusive growth (2024) published in July put forward practical steps a new Government could adopt, and which move us closer to the ambition.

We recommend three interlinked offers led by local government across England to improve services for: 

• young NEETs to be supported into first job or career path (Youth Pathways)
• adults that need to secure and progress in work (Working Futures)
• local employers to address workforce needs, address skills supply and demand issues, and help residents gain skills for jobs and life (Skills for All)

These offers are based on the sector’s existing and upcoming responsibilities. These would be planned by at least three-year outcome-focused ‘local employment and skills agreements’ (LESAs), within a clear national framework that sets standards. 

We recommend mayoral areas and constituent councils run with this first using existing funds and devolution deals. Other areas would follow via an ambitious devolution path. DWP will grant fund mayoral authorities and ‘clusters of councils’ (in areas outside of devolution) to deliver Connect to Work, a new supported employment ‘place, train and maintain’ service to help ‘economically inactive’ people back to work. This is a significant and welcome shift in DWP policy which tends to nationally contract providers. For councils outside of devolution, we believe this is a clear building block for them to take on new devolved powers.   

To make this happen, several actions including joint national board chaired by a Minister to oversee the change programme; ‘duty to co-operate’ to encourage partnership working; multi-year plan for roll-out of devolution; and an early call for new initiatives or pilots which can enable all of local government irrespective of whether or not they are in a devolution area to test and innovate.  

There are strong similarities between Work Local and the Government’s Back to Work Plan, which announce:

• a National Jobs and Careers Service (NJCS) merging job centres and National Careers Service, which need to ‘connect with local services’;
• a Youth Guarantee for 18-21 years
• work, Health and Skills plans to tackle economic inactivity ‘led by Mayors and local areas’ which will sit within Local Growth Plans
• skills England will deliver future regional skills needs
• reforming the Apprenticeship Levy into a Growth and Skills Levy.

A Get Britain Working (GBW) white paper expected later this year will include more detail on the announcements above. We believe that all of these can be best delivered though a Work Local model focused on delivering inclusive growth through more localised employment and skills services, and we look forward to engaging with the Government to ensure that all of local government can shape employment and skills services for their areas.

As local government will be lead partners in delivering Connect to Work and in efforts to bring work, health and skills together, they and health partners such as the Integrated Care Boards who will lead Work Well need to collaborate, so that services align and customers are supported or signposted seamlessly to the right support. Moving forward, we need to make better use of the expertise that sits within local government to coordinate activity.

As Skills England moves from shadow into permanent form from April 2025, we look forward to supporting it to engage local government given skills needs differ from place to place. Councils work with partners to encourage investment into a local area from a range of sectors from foundational to emerging so understand the skills needed for an area both now and in the future and are working to feed this into local skills improvement plans led by employer representative bodies (ERBs). It Is also important to ensure this translated into careers advice in schools and colleges to inform career options and courses delivered. A clearer role for councils to support ERBs would be helpful.

In addition, there are areas in which it is crucial that investment is made to equip local government workforces with the necessary skills and knowledge. Local government has seen its workforce shrink by 40 pe cent. This has resulted in 94 percent of councils experiencing recruitment and retention challenges, with 78 percent wanting to increase apprenticeship numbers to tackle their skills needs across a range of professions including town planning, social work, environmental health, legal, civil engineering and occupational therapy. Any reform of the Apprenticeship Levy into a Growth and Skills Levy including through Skills England discussions must involve local government. 

As outlined above, this is a particular concern in digital technologies. There needs to be long-term workforce planning and investment in practitioners within local government and across the public sector. This could save considerable sums of money spent on consultants each year and enable the wider adoption of new technologies that may lead to wider productivity gains. For example, the LGA has created a Cyber, Digital, Data and Technology framework for local government. The framework which identifies and defines 73 different skills, is designed to support heads of key council services to identify and articulate the cyber, digital, data, and technology (CDDAT) skills needed to effectively execute the council’s role in commissioning, designing, and delivering services. 

In the creative industries, councils have a particular role in skills development, and are very effective at initiatives that enhance diversity within a sector that is not currently enabling all communities to unlock their creative potential. For instance, Beyond Brontës was launched in 2019 by Screen Yorkshire and Bradford MBC. The initiative increases diversity in the screen industries by providing TV and film production training and work placements to young people aged 18 to 30. The West Yorkshire Combined Authority joined as a partner and funder in 2022, with the programme rebranded as ‘The Mayor’s Screen Diversity Programme’, and increasingly ambitious diversity targets, which were surpassed in delivery in 2022.  

Business and Intellectual Property Centres, delivered through public libraries, have a proven track record of enabling new and underrepresented groups to be entrepreneurs. For example, 55 per cent of users are women, 31 per cent from a black and Asian minority background and 17 per cent have a disability.

Question 9: What more could be done to achieve a step change in employer investment in training in the growth-driving sectors?

The Local Government Association produced a Green Jobs Framework, which outlined how a new relationship, through a national strategic framework and local delivery partnerships model, can enable councils and combined authorities to bring together skill providers, businesses, industries and other organisations to collectively develop the workforce needed to deliver net zero.

To deliver this, the Government should adopt the following principles:

• A co-designed strategic timeline of investments to at least 2030 to enable places to plan for skills and jobs.
• The Government should provide data that enables job and skills planning across national, regional, and local areas.
• Delivery of green jobs and skills should be based on a local first principle.
• Align funding, qualifications and training to provide a dynamic collective response to the green skills and jobs challenge.

Recognising the pre-eminent role of local government to convene partners in place, the LGA would also argue that a similar approach could be taken across similar growth-driving sectors to encourage and create the right conditions for greater employer investment in training.

Question 10 and 11: Where you identified barriers in response to Question 7 which relate to RDI and technology adoption and diffusion, what UK government policy solutions could best address these? What are the barriers to R&D commercialisation that the UK government should be considering? 

More robust and formalised partnerships between local government and academic institutions are essential. Academic institutions possess a wealth of knowledge, expertise, and research capabilities that can spur significant growth.

A core role of local authority economic development teams is providing effective business support to local enterprises. Investment into business support programmes often results in partnerships with local universities and academic institutions. For example, Cotswold District Council worked closely with the Royal Agricultural University in the development of a £100 million innovation hub that aims to support industry, food producers, farmers, and landowners in developing sustainable solutions for healthy land and nature, food production, and resilience in rural communities. This was a particular asset for Local Enterprise Partnerships. They had buy-in from the public, private and academic sectors, attracting strong local leadership, and bound local partners together behind a clear agenda.

Recent examples illustrate the potential of such partnerships in digital, particularly in the realm of AI. For instance, Hertfordshire County Council, in collaboration with the University of Liverpool (UoL) and technology company Robotiz3d, developed an innovative AI-powered solution for road maintenance. By combining Robotiz3d's and UoL’s AI and robotics expertise with the Council's knowledge of highway assets, they created a robotic AI system to identify and repair road defects.

Similarly, Manchester City Council partnered with Manchester Metropolitan University to engage the public in AI discussions. Through roadshow events and people's panel sessions, the council gathered valuable insights to inform its AI strategy and service development.

The LGA has been fostering stronger relationships with academic institutions, particularly to build a stronger understanding of local government and to inform research agendas. To foster stronger partnerships, increased support is needed to help councils understand the value of academic collaboration, develop compelling cases of research, and identify and engage with relevant academic institutions. By strengthening these bonds, local government can harness the power of academic research to drive innovation, improve service delivery, and ultimately benefit communities.

The Local Government Association’s Leading Places programme encouraged councils, universities and other local institutions to work together on meeting the key challenges facing their residents and businesses. It explored the concept of a ‘civic university’ which, among other things, can be characterised by the institution retaining a strong sense of place, purpose, and engaging with the world and place in which it is located.

Question 14: Where you identified barriers in response to Question 7 which relate to planning, infrastructure, and transport, what UK government policy solutions could best address these in addition to existing reforms? How can this best support regional growth? 

Planning

We welcomed the Government’s proposals in the recent consultation on reforms to National Planning Policy which seek to allow local authorities to set their own planning application fees. We support the model of local variation, which “would not place a mandatory duty on all local planning authorities to set their own fees if they are content that the nationally-set fee will cover their costs, but would allow authorities who wish to set their own fees, within the existing fee categories and exemptions set by the Secretary of State, to have discretion to do so”.

This reform is one part of the solution to address the real concerns and challenges that planning departments are facing across the country regarding resourcing and capacity constraints, and recruitment and retention of skilled staff. 

We are also welcoming of the Government’s recognition of the valuable role planning and planners play to create places, and urge continued and further investment into the profession through the Pathways to Planning programme, Public Practice, the Royal Town Planning Institute and other associated and recognised programmes.

In addition, we are keen to continue working with Homes England to promote the ongoing Local Government Capacity Centre’s learning programmes. These have been well received by the sector. Homes England should continue to ensure that their work complements and avoids duplication with other sector-led support e.g. run by the LGA, One Public Estate, Planning Advisory Service, Local Partnerships.

We have welcomed Homes England’s recent role in chairing a task and finish group to discuss options that could help unlock stalled section 106 affordable homes across the country. We are keen to see continued momentum on this work and look forward to Homes England sharing further details with us and other key stakeholders on the clearing house / brokerage service between housing developers and registered providers.

As we rapidly approach the end of the current Affordable Homes Programme (2021-26) and following publication of the Homes England Public Bodies Review in April, the LGA would be keen to support Homes England engagement with councils to ensure that any future programme can best support their local growth ambitions. Further, the LGA have previously called for a review and increase, where needed, the grant levels per home through the Affordable Homes Programme, as inflationary pressures have caused the cost of building new homes to rise, leaving councils needing grant funding to fund a larger proportion of a new build homes than before.

The LGA recently responded to the consultation by DLUHC on strengthening planning policy for brownfield development. What is truly needed to enable the regeneration and re-use of brownfield land is a resurgence of a holistic and non-competitive funding pot from government, open to local authorities and developers of all sizes, to address the real blockers of brownfield development including land assembly complexities, remediating and securing the safe use of land for habitation and dealing with ensuing viability concerns. We welcome the positive impact that the Brownfield Land Release Fund has had in bringing forward council-owned brownfield sites and greatly support the work of the One Public Estate Programme.

The LGA is calling for, as part of our six-point plan for housing, the roll-out of five-year local housing deals to all areas of the country that want them – combining funding from multiple national housing programmes into a single pot. This will provide the funding, flexibility, certainty and confidence to stimulate housing supply, and will remove national restrictions which stymie innovation and delivery. This too could help unlock complex brownfield sites.

Net Zero

Councils want to work as partners with central government on climate action. Councils are well-placed to do this as place-shapers, convenors of communities and partners, delivery agents, commissioners, and owners of assets. Net zero can only be achieved with decarbonisation happening in every place across the country and this will require local leadership.

Councils need to play a pivotal role in effective energy system planning and operation at the sub national level. Councils, as planning authorities, shape place through the Local Plan making process and through location specific masterplans. Through these processes, growth areas are identified, and areas of land are designated for uses. These plan making processes shape future land use and with that comes future energy demand.

Increasingly councils are looking to play their role in supporting decision-making around the local electricity system. For instance, many councils are now looking to develop Local Area Energy Plans but are also considering other ways to best shape place given the likely largescale shift to the electrification of buildings and transport. Councils, as community leaders, can be a positive and influential partner when taking this agenda forward.

However, many councils do not have the resources and technical skills required for detailed energy planning and therefore a far more joined up partnership approach to delivery needs to be considered. For instance:

• There is a need for financial and technical support to help councils come together at a sub-national level to effectively collaborate with the electricity system.
• In our view this support could be funded by energy consumers via the electricity system rather than by taxpayers
• Further opportunities for collaboration might include Distribution Network Operators (DNOs) and Future Systems Operators (FSOs) placing technically competent resources in councils.

Increasingly, a lack of grid capacity and integrated planning is blocking progress with local net zero delivery and the need for collaboration and coordination is now urgent. This needs to happen across the nation irrespective of whether a council is developing a Local Area Energy Plan or not.

Local smart grids utilising community energy projects have the potential to maximise the efficient use of energy, reduce demand on the local electricity grid network and build resilience. Government should remove the regulatory and grid-connection barriers to allow community projects to sell their energy to their local communities.

Many jobs related to planning, infrastructure and transport are part of local ambitions to deliver net zero.

To enable this, there needs to be an adoption of the Green Jobs Framework, which principles are:

• A co-designed strategic timeline of investments to at least 2030 to enable places to plan for skills and jobs.
• The Government should provide data that enables job and skills planning across national, regional, and local areas.
• Delivery of green jobs and skills should be based on a local first principle.
• Align funding, qualifications and training to provide a dynamic collective response to the green skills and jobs challenge.

The Bristol City LEAP programme provides a valuable case study into how a long-term approach can help to secure private investment.

The Bristol City Council led partnership aims to deliver an ambitious city-wide programme of decarbonisation, expansion of the energy network, renewable infrastructure and retrofit and energy efficiency. It has mapped out the first five years of almost £500 million investment in infrastructure, expecting the creation of 1000 jobs above the real minimum wage. The size and scale of this partnership provides the confidence for businesses and skill providers to invest in skills, with the council using social value to provide certainty for micro business.

The following key performance indicators have been agreed as part of the partnership:

• c. 140,000 tonnes of carbon saving. 
• c.180MW of zero-carbon generation assets contributing to net zero carbon by 2030. 
• c. 327GWh of zero carbon energy generated. 
• £22m of energy efficiency measures deployed. 
• £61.5m of social value including c£50m of contracts delivered by local supply chain.

Question 15: How can investment into infrastructure support the Industrial Strategy? What can the UK government do to better support this and facilitate co-investment? How does this differ across infrastructure classes?

A strong national economy emerges from strong local economies. A lack of local investment is the major missing piece in the UK investment puzzle. Government should provide the tools and framework for councils to co-invest with central government.

A 10-year horizon for funding and planning via Local Growth Plans as proposed for the Industrial Strategy will have major benefits for planning, partnership and co-investment. Councils have a vital role to enable, deepen and widen the benefits of investment. Multi-year funding certainty for councils like that proposed for the industrial strategy will allow councils to develop the in-house capacity, for instance planners and transport planners, and long-term pipeline of local projects every area needs.

Fast growing and successful local economies will have the new homes and better transport needed to deliver quality of life improvements to residents and allow highly productive clusters of firms to continue to invest and expand.

Areas struggling economically are even more reliant on long-term funding certainty. A 10-year plan alongside the Industrial Strategy provides a framework on which to build partnerships and co-investment between local and city or county strategic authorities, business and government to make the deeper structural changes to improve economic opportunity. This could include linking smaller towns and cities into the larger agglomerations within their regions.

The 5-year City Region Sustainable Transport Settlements for metro mayors provides a clear funding model for all councils to bring in-house capacity, develop projects and deliver and procure effectively.

Beyond funding, local areas need the power to operate and manage their local transport networks effectively. UK government should make utilising tools such as congestion charges, workplace parking levies and controlled parking schemes easier for councils. And it should incentivise and ease their uptake in congested local economies by fully or partially forward funding locally generated revenues to invest in new transport infrastructure. This should cover revenue and capital, with up-front revenue funding for bus services providing long-term lower costs once a dependable, frequent and comprehensive network is up in place that is difficult to distinguish from capital investment.

It is vital that government sets out a framework for local and strategic authorities, from the funding amounts and timelines to the national strategies and guidance they will be working to, in quick order to ensure national ambitions can be translated successfully in each place. Councils cannot be left waiting for the Integrated National Transport Strategy or Infrastructure Strategy as they had been waiting for the updated Local Transport Plan guidance for years.

Question 17: What examples of international best practice to support businesses on energy, for example Purchase Power Agreements, would you recommend to increase investment and growth?

The Local Government Association commissioned a study to understand international learnings on multi-level climate action and governance. The study looked at Norway, New Zealand, South Korea, Netherlands and various states in the USA. The final report is now on the LGA website.

The Inflation Reduction Act in the USA was merited as catalysing sufficient federal funding for climate action, but there was an expectation that demand for funding would likely increase.

A key takeaway from this report is that the most effective relationships between central and local governments that delivered climate action quickly and cost effectively are those developed in partnership. The LGA has been working with Government on their Green Energy Mission, to ensure that it equips local government to play their full role in delivering local climate action focusing on housing, retrofit, clean energy, transport and waste. This includes working with the Government to strengthen the central-local partnership, as called for in our Local Government White Paper. This would build upon the Local Net Zero Forum, which was co-chaired by Government Ministers and the LGA.

Question 18: Where you identified barriers in response to Question 7 which relate to competition, what evidence can you share to illustrate their impact and what solutions could best address them? 

In a local authority setting, there must be a clear rationale for competition. This must consider the importance of the foundational economy in driving growth, of which the main drivers are intrinsically local with councils sitting at their heart. In addition, it must recognise the decreasing resources available to local authorities in recent years. Without such an understanding, competition threatens to pit localities against one another, waste valuable local resources for those that are unsuccessful, and leave the foundational economy without the support it needs.

The UK Research and Innovation (UKRI) Strength in Places Fund is one such example of where competition can deliver benefits. The fund supports existing excellence in innovation and research, investing £314 million through 12 projects across the UK. Local leaders are encouraged to work with businesses and research organisations. The Advanced Manufacturing and Productivity Initiative (AMPI) in Greater Manchester and West Yorkshire will build upon the North’s academic and industrial expertise to support machinery manufacturing. It is expected to deliver 560 local jobs and increase exports by £130 million. 

To make the best use of scarce resources we support the recognition provided by the Levelling Up Fund Capacity Funding that not all areas are able to compete on an equal basis. Some places need more support to grow, particularly where areas suffer from poor outcomes or institutions lack the experience to succeed in competitive processes. As set out above, we call for the establishment of a Skills and Capability Fund for local authorities.

As identified earlier, the proliferation of shorter-term, competitive, national bidding rounds in recent years has added pressure on economic development services to commit scarce resources into writing competitive bids. We hope the government will adopt the principles set out in our report, Future of Growth Funding, when outlining their ambitions for growth funding in Phase 2 of the Spending Review.

In this context, it is also important to consider the reorganisation of Local Enterprise Partnerships. As set out in the LGA’s report Learning from LEP Integration, capital funding came largely at the expense of local authorities, capacity constraints often fell on councils, and they were criticised for governance and accountability concerns compounded in areas with non-contiguous geographies. Places are bogged down in the operational challenges of restructuring rather than strategic thinking about how best to develop local economies, including the role of district authorities. As such, the integration of LEP functions into local authorities could remediate an element of ineffectual competition. 

However, the Local Government Association notes that the Chancellor intends to cease funding for Local Enterprise Partnership functions as part of wider and deepening devolution. Whilst the LGA is supportive of further devolution, we also note that LEP funding is local authority funding, and economic development is a strategic, long-term agenda. It cannot be undertaken without clarity of mandate and funding, which in turn presents a risk to attracting and retaining local business leadership. This is particularly challenging in the context of local authority funding constraints. Local government must have sufficient and sustainable funding, and a clear mandate to continue to deliver economic development functions. 

Decreased competition should not lead to fewer resources for local authorities. This is a particular concern for those areas currently without a mayoral combined authority, and who may not support this outcome, who are left without a Local Growth Plan and wider clarity over their role in growth. 

In external facing procurement, a lack of market competition is particularly pronounced in local government. Market failure exists in several key service areas within local government, including, but not limited to, revenue and benefits, social care case management systems, planning, elections, and housing. 

Many of the issues with market concentration within local government are well-known and understood within the sector. However, there is currently limited publicly available information to substantiate supplier behaviour and the extent of the challenges facing local government. Government intervention in certain markets is a delicate balance, as supplier withdrawal could exacerbate the negative market dynamic. We know that the Procurement Act 2023, when live, will encourage contracting authorities, including councils, to publish key performance information for the larger contracts.

While the Local Government Association (LGA) has made efforts to represent councils' needs in national negotiations with major suppliers like Microsoft and VMware, a national approach is rarely taken with ‘legacy suppliers’, solely serving local government. Some government departments, such as the Department for Education and the Department for Health and Social Services, have taken steps to address market dominance challenges in specific areas like social care systems. However, these efforts remain ad hoc and limited in scope. 

Local government specific suppliers are often omitted from central government’s strategic supplier relationship management, such as the Central Digital and Data Office’s strategic supplier relationship management programme, and the Cabinet Office’s Crown Representatives, except that there is a general Crown Representative for Local Government. This is arguably due to the supplier not meeting the cost threshold defined by central government. A broader definition of ‘strategic’ is required to include data risk, number of customers, ease of ability for councils to change suppliers, and/or challenging negotiations, or a priority list developed for local government. The LGA would welcome the opportunity to discuss this further with Government, including possible solutions that would be jointly developed with the sector.

Whilst ad hoc support exists to support local government with procurement, there is no specific function in the same way that the Government Commercial Function, the NHS Shared Business Service and Bluelight Portal exist for other public sector bodies.

The Local Government Centre for Digital Technology as envisaged has an intelligent procurement operational function, which would analyse technology markets, facilitate collective bargaining, and collectively procure products and services for individual councils to use. This would address market failures, improve value for money, and enable innovative procurement practices that promote localised economic growth and productivity. The LGA are currently developing an investment bid for consideration by DSIT.

Question 19 and 20: How can regulatory and competition institutions best drive market dynamism to boost economic activity and growth? Do you have suggestions on where regulation can be reformed or introduced to encourage growth and innovation, including addressing any barriers you identified in Question 7?

The role of regulation is to provide a level playing field on which market dynamism can thrive. Poor regulation can hamper innovation; good regulation facilitates it.

The dangers of regulatory failure and the importance of regulation in providing a level playing field have been brought into sharp relief by the report of phase two of the Grenfell Inquiry. The report found that ‘one very significant reason why Grenfell Tower came to be clad in combustible materials was systematic dishonesty on the part of those who made and sold the rainscreen cladding panels and insulation products’ (executive summary paragraph 2.19) in exploiting the failure of the regulatory system around building control in the UK. This regulatory failure not only led to a race to the bottom in terms of meeting safety requirements, and the horrific deaths of 72 innocent victims, but also the vast cost of remediation, estimated by Government at between £12.6 billion and £22.4 billion

Two elements of the Grenfell disaster should be particularly instructive as to the relationship between regulation and market dynamism. Firstly, regulatory failure led to a race to the bottom in terms for the supply of foam insulation for buildings over 18 meters. Second, the investment in effective building control services  in the decade prior to Grenfell would have saved billions compared to the cost of remediating unsafe cladding

We agree that effective regulations can be created by Government in partnership with business and regulators, and that this requires consideration of implementation and enforcement. However, that relationship, as the Grenfell case demonstrates, must be mature and robust, with both regulators and businesses clear about the appropriate role of a regulator. 

As well as an appropriate relationship between regulators and regulated, effective regulation requires adequate resource. Local authority regulators have essential roles to play in delivering regulations in environmental health, trading standards, Licensing and building control. These services are facing significant challenges as a result of budget cuts, an aging workforce and a lack of new entrants to the profession. The Food Standards Agency for example has expressed concern that ‘the numbers starting and completing relevant qualifications to deliver official food and feed controls is not enough to meet demand in LAs, the numbers starting and completing relevant qualifications to deliver official food and feed controls is not enough to meet demand’. Studies by the LGA have reinforced this message. This will have additional consequences for certain growth sectors (e.g. creative industries) which depend upon food and dining.

The LGA has therefore called for Government to assist councils in addressing this issue by:

• Enabling councils to set Licensing Fees under the Licensing Act 2003, which have remained unaltered for several years.
• Fund health and safety at work functions through a fee for intervention approach, with this model also being explored for the funding of wider environmental health and trading standards services.
• Provide dedicated funding for apprenticeships and recruitment programmes related to the regulatory services workforce to boost the future pipeline of officers entering local government.
• Continuing to support the apprenticeship scheme run by Local Authority Building Control.

In digital, more needs to be done to deter and investigate anti-competitive behaviour. The way the new Digital Markets, Competition and Consumers Act 2024 (DMCC) is enforced will be crucial in scrutinising some of the largest technology suppliers. While the LGA welcomes the government's new measures to tackle this key issue, interventions need to look beyond the major global technology suppliers. Several strategic suppliers unique to local government have entrenched market dominance and exhibit anti-competitive behaviour. Many of the measures due to be introduced by the DMCC only target those large technology companies with very high turnovers. Secondary legislation detailing how the new act will be enforced will be crucial to its effectiveness in better tackling market imbalances in the future.

A notable imbalance exists in regulatory burdens across the council and vendor relationship, particularly when delivering a statutory service: councils bear the primary compliance risk, while vendors, particularly those in services areas with market concentration, may be unable or unwilling to provide assurances to councils to support compliance. This disparity can hinder effective service delivery and increase the risk of non-compliance.

While various codes of conduct and standards outline best practices for vendors, most are voluntary and self-assessed, offering limited assurance to councils. Coordinated assurance and compliance from the centre must be prioritised to foster trust in technology that can contribute to innovation and growth. 

In lieu of legislation, an enhanced role for Public Buying Organisations (PBOs), such as Crown Commercial Services, other local government led PBOs or the Central Digital and Data Office should be considered in consultation with local government information and cyber security specialists, to ensure this assurance is done centrally – saving resources and capacity for councils as buyer, and for vendors.

Question 21: What are the main factors that influence businesses’ investment decisions? Do these differ for the growth-driving sectors and based on the nature of the investment (e.g. buildings, machinery & equipment, vehicles, software, RDI, workforce skills) and types of firms (large, small, domestic, international, across different regions)?

We have already articulated at the outset of this submission the factors that local government considers when developing the vision and strategy for local growth. However, we think it is helpful to set these out clearly here.

Economic fundamentals:

• growth rate of businesses and jobs
• resilience of the economy to shocks
• quality and affordability of infrastructure
• skill-level of the workforce, and quality of education and research
• trading relationships within and beyond the UK
• sector make-up of the economy
• quality of place-making, the urban environment, and liveability.

Governance:

• a long-term and shared vision for the area
• strategic plan to realise vision
• attitude and consistency of leadership
• quality of management of the area and effectiveness of public services
• information and data provision.

Practicalities of investment:

• scale of the place, population size, and the number of jobs and businesses
• amount and type of land/assets available
• planning system, and other regulations
• taxation and incentives
• construction costs
• access to finance.

The LGA welcomes the recognition of local leaders within the green paper and we are keen to engage further with Government to ensure that local government’s role in shaping the local conditions for growth and investment is represented as fully in the Industrial Strategy.

Question 22: What are the main barriers faced by companies who are seeking finance to scale up in the UK or by investors who are seeking to deploy capital, and do those barriers vary for the growth-driving sectors? How can addressing these barriers enable more global players in the UK? 

As set out in the LGA’s guide on the role and future skills of economic development teams, a core role includes signposting employers to business support so they can access support at a national, regional and/or local level. This may include supporting local businesses to access finance. Therefore, as set out elsewhere in this response, it is vitally important that economic development teams are provided with the appropriate resources.

Question 23: The UK government currently seeks to support growth through a range of financial instruments including grants, loans, guarantees and equity. Are there additional instruments of which you have experience in other jurisdictions, which could encourage strategic investment?

As outlined earlier, we hope that the government will adopt the principles set out in our report, Future of Growth Funding, when outlining their ambitions for growth funding in Phase 2 of the Spending Review. 

The Local Government Association would also encourage the Government to be more innovative in the design of its funds. For example, one of the funds that worked best in the recent past was the Growing Places Fund. The GPF was a government-backed fund that provided loans to help stalled infrastructure and transport projects. The fund was designed to be a revolving loan fund so that funds could be reinvested to support further development.

The Local Government Association has made representations on the value of pension schemes in driving growth in our Call for Evidence response as part of the Government’s Pensions Review. This was on behalf of the LGPS Advisory Board, which LGA provides the secretariat function for.

The Scheme Advisory Board believes that the Government could do more to increase the volume of financially viable projects for funds to invest in. Government could achieve this through policy change in the tax system or devising a form of financing that guarantees minimum return on projects that would otherwise be deemed too risky for a LGPS funds to invest in. Action by the Goverment which is seen to dilute the fiduciary duty or distort the decision-making process at the expense of returns is likely to be resisted by LGPS funds, other scheme employers and member representatives. It also risks having a detrimental effect on asset prices and returns as LGPS funds are “herded” into an inadequate supply of opportunities.

Some LGPS funds, like the South Yorkshire Pension Authority, have a long history of investing in their local areas. Others have needed their pool to able to realise their desires to do so, as was the case with the Cornwall fund. New ground is being broken in working with metro mayors, as in Greater Manchester. This interest in local investment by LGPS funds is not an accident and nor is it typical of the pensions industry. No doubt this is due in part to investment decisions being taken by a committee made up of local councillors, elected to represent local areas. Strengthening local pension scheme governance would support local investment by a wider range of LGPS funds by ensuring that all decision-makers have the skills and knowledge to discharge their functions confidently and properly manage potential conflicts of interest.

LGPS funds often have a deep understanding about how their local economy works, which gives them a competitive advantage over other investors. But the key barriers are scale and supply of opportunities: we would like to see a deeper consideration of what can be done collectively to address those. Additionally, as there is a global market for capital UK infrastructure projects have to be competitive with other opportunities around the world. We believe that central Government should take a more active role in this space, providing further detail to back up its welcome new industrial strategy. LGPS funds would also like to see more about how the Government will support investment in transition to a net zero economy – similar to those offered in other jurisdictions (like the significant funding commitments announced by the European Union and the US Government).

More broadly, councils have a track record in accessing private finance to invest in infrastructure.  Subject to appropriate governance arrangements, the methods utilised by local authorities may be useful to Government. A recent LGA report set out the eight typical ways that councils have accessed private finance:

• capital loans provide loan funds, or investment capital for infrastructure or other developments that will be paid back over time. This is debt finance and tends to be passive
• managed assets are where an asset is purchased, built and managed on behalf of public sector: to provide investment capital into a special purpose vehicle that builds and manages a public asset, and they are paid back their investment plus a return over time
• direct investment into plots of land, buildings or other assets that are part of a regeneration programme or investment framework.
• lending to or shareholding in public commercial organisation provides capital for investment as part of a council owned asset or service that operates commercially to provide delivery efficiencies or increase return.
• developer contributions to public infrastructures are often made by private developers via Section 106 contributions as part of the planning process. Examples include: primary schools, broadband, spur roads.
• development partners can be sought and appointed to design, construct, build and seek end users or tenants in partnership with a council.
• a franchised operator is when a private company is contracted to provide services on a publicly owned asset – such as a railway line.
• revenue management services are where a private company is contracted to collect revenues for public use of infrastructure, such as parking, roads, bridges and tunnels. The private company providing upfront investment in the infrastructure allowing them to collect revenue.

Question 24: How can international partnerships (government-to-government or government-to-business) support the Industrial Strategy? 

Local government has long played an important role in supporting overseas trade and in facilitating inward investment for the benefit of local areas. Our aim is to ensure that there are opportunities for business collaboration internationally which contribute to economic growth and jobs.

Councils use political, institutional, business and community connections to achieve this aim, either establishing or boosting trade between local firms and international clients, or by supporting inward investments. They work alongside the private sector, central and local organisations, academic institutions, and others to for example: enhance the ‘brand’ or identity of a local area, provide or signpost businesses support, conduct trade missions, or organise trade fairs. 

For example, Essex, Norfolk and Suffolk county councils have encouraged economic ties with Virginia Beach in the United States, particularly in clean energy, having signed a Memorandum of Understand with the city. In addition, Warwickshire County Council is one leading example amongst many authorities who attract inward investment by supporting business to identify property, access funding and ameliorate skills gaps. Coventry and Warwickshire attained 53 foreign direct investment projects in 2023/24 and scored highly when ranked against European counterparts.

Question 26: Do you agree with this characterisation of clusters? Are there any additional characteristics of dimensions of cluster definition and strength we should consider, such as the difference between services clusters and manufacturing clusters? 

The Local Government Association supports the characterisation of clusters as outlined in the Industrial Strategy green paper. However, we would supplement this data-driven approach with engagement with local authorities in order to take advantage of the local intelligence that councils maintain. For instance, clusters should consider the travel to work area in order to maximise the economic impact of investment and align with communities. 

As we have stressed elsewhere, we would also emphasise that all areas of England and all local authorities have a role to play in delivering growth and prosperity. In addition, growth clusters and non-urban areas are not mutually exclusive. 

Question 27: What public and private sector interventions are needed to make strategic industrial sites ‘investment-ready’? How should we determine which sites across the UK are most critical for unlocking this investment? 

Local authorities play a valuable role in determining local sites that will encourage local growth, including surplus council land and assets. This involves considering local political will, timescale considerations, as well as technical, financial and logistical viability. 

It is also important for local government to align with the work Government is undertaking to identify surplus public sector sites, including a read across to public sector land programmes and initiatives. In addition, it is important to understand any under-utilised public sector land and/or holdings that could contribute to site assembly. 

The Local Government Association welcomes the recognition in the Industrial Strategy green paper that ‘clusters can take any geographical shape and often span large geographical areas’ and that the ‘Government will need to strike a balance between alignment with existing administrative and policy structures.’ Strategic industrial sites vary in size, and it is likely that many will span across local authority boundaries, particularly in areas of high population density. It is key that there is early engagement between partners in areas with strategic sites, Core Cities and mayoral combined authorities with Local Growth Plans. For example, the Greater Manchester Combined Authority have worked to include Atom Valley as a Mayoral Development Zone which spans across Bury, Rochdale and Oldham.

Councils have a key role to play in place, in orchestrating a range of actors and activity to ensure strategic sites are investment ready. Effective interventions might encompass:

• Direct funding support through devolution deals and equivalent single settlement approaches enabling councils to act as master developer, coral relevant partners, and orchestrate land assembly.
• Public investment (revenue and capital) in activity to physically de-risk sites (eg remediation on brownfield sites, environmental mitigation actions), again directly through devolution deals and equivalent single settlement approaches. Land ownership and how land value uplift is structured around these sites would be expected to dictate the specifics of funding models (for example local recycling of loan models to enable councils to support further, sustained activity in their locality).
• Support to de-risk from a planning perspective - use pre-application advice and explore Protected Site Strategies to manage habitat and species risks.
• Whilst not directly related to the site and its readiness for investment, tax incentives and flexibilities to encourage investment have had success in the past (in the manner of Enterprise Zones and similar). Councils should be given greater ability to determine where such incentives may be appropriate, however, rather than the historic bidding approaches.

Government itself has diverse interests within the system which may impact strategic industrial sites coming forwards: for example, as land/asset owner; infrastructure controller; plus, regulation functions, and so on. Currently these government interests tend to come to the table in place in a piecemeal way. Government could better orchestrate itself in place and liaise with local authorities and investors in a more coordinated and streamlined way. The One Public Estate programme is developing refreshed thinking to support the government's Growth Mission, which seeks to support a more coordinated approach, and to better 'hide the wiring' to speed up the path to investment and growth. The Office of Government Property in the Cabinet Office is leading this thinking on behalf of the government.

However, international trade is a complex layered landscape of players and support. In 2021, the LGA produced guidance for local authorities in their role supporting the exports industry. The report found that:

• international trade provides benefits locally and nationally
• exporting drives growth and innovation within companies, driving up local productivity
• ambitious entrepreneurial companies help local areas thrive, bringing employment, raising skills and realising local ambitions
• entrepreneurial companies need an encouraging economic environment, business support and finance
• the support layout is often overlapping and confusing to navigate. We should avoid reinventing the wheel.
• leaving the EU has opened potential further flexibility in how local government can support businesses in their trade ambitions.

Question 29: How should the Industrial Strategy align with devolved government economic strategies and support the sectoral strengths of Scotland, Wales, and Northern Ireland?

The Industrial Strategy should be conscious that economic interactions are not strictly bound by administrative divisions. In parts of the United Kingdom, such as between England and Wales where cross-border authorities have signed a Marches Forward Partnership, there are significant economic links that span across subdivisions. Additionally, as part of the UK, Northern Ireland has specific economic and industrial links on an all-island basis with the Republic of Ireland.  The challenges and opportunities within the provisions of the Northern Ireland Protocol and Windsor Framework should be reflected in any UK wide industrial strategy. Similarly, we would advocate for a greater degree of parity between the devolved powers and financial support available to local areas in England and those used to attract investment and deliver growth across the UK.

There is a need for tripartite discussion between UK Government, devolved nations and local authorities over the industrial strategy. There are some functions best dealt with at the UK level, some at the devolved nation level, some at regional and some at the local level. None of those levels is necessarily more important than another. Local support arrangements for industry (e.g. in relation to local planning or environmental issues) can be vitally important to success, but the same applies equally to, for example, having a clear UK strategy, coherence with other devolved policies and the quality of regional transport facilities.  By working together respective roles and responsibilities can be discussed and agreed. These discussions should involve the Welsh LGA, Northern Ireland LGA and the Convention of Scottish Local Authorities. 

Question 30, 31 and 32: Industrial Strategy Council

As set out in our Local Government White Paper, the LGA has sought a fundamental reset of the relationship between local and national government to one that is an equal and respectful partnership. For this reason, we welcome the establishment of the Leader’s Council which will provide a valuable platform for the voice of local government. The LGA looks forward to working with MHCLG, through the Leader’s Council, to deliver the change our communities need. It will be important that the Leader’s Council is able to discuss the Industrial Strategy and that the group has an interface with the Industrial Strategy Council. 

However, the LGA is keen that the Leader’s Council is not the only interface with local government. Recognising the sector’s unique role as convenors of place, the Industrial Strategy Council should seek the insight of local authorities across England as well as the Local Government Association in our role as the representative body for the sector. 

With this mind, the Local Government Association believes that the sector must have a place on the Industrial Strategy Council.

In addition, the establishment of an APPG for Local Growth will create a platform for policy development that places local government central to the government’s growth mission. With the support of the LGA, the APPG can use its convening power to bring together stakeholders from different sectors to help shape government thinking when working to kickstart economic growth at a local level.   

The Industrial Strategy Council should also ensure that all government departments are committed and linked to the Industrial Strategy. This will support a joined-up approach across government, but also ensure that the varied work of local government is reflected on the Council, enabling councils to play their maximum role.

We think there is significant potential for Arts Council England’s Cultural Compacts programme to provide a vehicle to connect creative businesses into local cultural strategies and economic plans. As mentioned earlier, this will strengthen the local cultural infrastructure and ecosystem that provides a pipeline of skills for the creative sector, while more directly aligning that pipeline with the needs of creative businesses. 

We would also support the continuation of existing industry councils, such as the creative industries council and tourism industry council, as a way of supporting and feeding into the over-arching industrial strategy council.

Question 33: How could the analytical framework (e.g. identifying intermediate outcomes) for the Industrial Strategy be strengthened? 

The Local Government Association welcomes the indicative high-level outcomes identified within the Industrial Strategy green paper. In particular, the Successful Places outcome goes some way to recognising the sub-national approach to growth that the LGA has long called for.

However, as outlined earlier, we are also keen to ensure that all councils across England are equally recognised for their role in delivering local growth. The Successful Places outcome should ensure that all areas are covered.

However, we believe that the Government could go further. Recognising the valuable role of local authorities as convenors of place, the LGA is calling upon the Government to ensure that the outcomes (and intermediate outcomes) of the Industrial Strategy include local indicators derived in collaboration with the sector. As set out earlier in this response, this should consider both growth and prosperity in order to reflect the full experience of people and their communities. In this view, using Successful Places as an example, outcomes such as high-productivity clusters as included in the green paper are as important as the upkeep of local high-streets and local pride. However, it is important to recognise that the drivers of prosperity may differ by locality.

Question 34: What are the key risks and assumptions we should embed in the logical model underpinning the Theory of Change? 

As outlined throughout, local government will play a critical role in delivering economic growth throughout communities across England. However, there is a fundamental tension between local authority ambitions and their current capabilities and resources. Local government is under increased financial strain which threatens the ability of councils to act, particularly in non-statutory areas such as economic development. The LGA is calling on the Government to deliver a sufficient and sustainable funding settlement for local government, as set out in our Autumn Budget and Spending Review submission. This must signal a refresh in the funding landscape for investment in local growth and social infrastructure, including the principles set out in the funding to support Local Growth Plans section. 

Question 35: How would you monitor and evaluate the Industrial Strategy, including metrics?

Reflecting that the main drivers of growth and prosperity are intrinsically local with councils sitting at their heart, it would be appropriate for the Industrial Strategy to monitor outcomes at a local level. However, local government should not be subject to unnecessary and burdensome additional scrutiny. Any monitoring framework should be light touch and include adequate resources to provide any additional reporting.

Any monitoring framework should recognise that many of our places will begin at different economic baselines. Setting the performance of an area within the appropriate context is critical and the inclusion of regional inequality is a key component to an evaluation framework. This includes within local authorities. As set out in our Devolution First report, some of the local authorities with the highest GDP per capita figure also contain areas that are within the 10 percent most deprived in the country.

As noted above, it is important that local government is involved in the co-production of any metrics and systems used to monitor the Industrial Strategy. It is also important that such metrics reflect the importance of both growth and prosperity. This reflects both the importance of increasing economic performance and the need to improve the wider co-determinants of community well-being as well as addressing climate and nature crises.