By Richard Johnstone | 16 April 2012
Councils have today been urged to become ‘social venture capitalists’ by contributing more funding towards regional developments that might have stalled following spending cuts.
The New Local Government Network wants authorities to set up cross-boundary joint investment funds, which could borrow to help make up the more than £4bn drop in regional development funding.
These funds would seek a commercial return from investments that lead to economic growth, says the NLGN report, Grow your own: skills and infrastructure for local economic growth.
Money could be invested in restarting developments, providing ‘seed funding’ to promote new companies and jobs, backing new infrastructure or even taking equity stakes in local business.
Councils are the ‘the last man standing’ able to provide such regional funds, the report says, following the abolition of regional development agencies.
However, they do not have enough powers to take on this role, the think-tank adds. It wants the government to extend the current City Deals programme – so far agreed for Liverpool and Manchester – to Local Enterprise Partnerships. This would give regional groups of county and district councils powers over skills and infrastructure.
The report also calls for devolution of 5% of the Whitehall skills budget to ensure training meets the growth priorities for England’s towns and cities.
NLGN director Simon Parker said: ‘While central government is focused on deficit reduction, councils are increasingly taking on responsibility for delivering growth.
‘Opening up a new era of social venture capitalism requires local authorities to overcome historical boundaries and collaborate across cities and shires to unlock investment. It also requires a new wave of devolution from Whitehall, with more skills money routed through LEPs to provide a hard-edged incentive for trainers to deliver the skills that matter most to local employers.’
