Has George Osborne revealed his Keynesian side with his boosts to housing and infrastructure in the Budget - or is he just playing catch-up with local government?
Is this the Plan B budget? Not quite, but it is perhaps Plan A 2.0. Certainly there is the faintest whiff of Keynesianism in the air as the chancellor puts £3bn into funding housing and infrastructure growth - though the fact that this money must be found from departmental savings effectively triangulates this approach with his longstanding emphasis on austerity and deficit reduction.
Local government has shown a clear commitment to growth. A recent LGIU survey showed six out of ten councils already planning to borrow to fund infrastructure. So many in town halls across the country will see these announcements as evidence that central government is finally catching up with them.
The announcement of additional money for housebuilding represents an important shift in emphasis that local government will particularly welcome. The National Planning Policy Framework, which aimed to free up the planning system, was based on the idea that local government was standing in the way of new homes. However, with 400,000 plots already approved for development, the real stumbling block is access to finance. It’s encouraging to see government recognise this.
Equally, we know that every pound spent locally on construction generates £2.84 of revenue.
The big question of course is will it work? Additional funding by itself is no guarantee of success. We need to have the right structures in place to make sure the money is spent effectively and that decisions are made that reflect the needs of local areas, recognise that there is no ‘one size fits’ all approach to growth - and that different communities will have different priorities, needs and attitudes to risk.
That’s why it’s important that the government is adopting the recommendations of the Heseltine reviews. We now have a suite of growth policies that includes Local Enterprise Partnerships, City Deals, and the single pot funding suggested by Heseltine.
What we need to see now is strong local leadership to make the most of the new menu of economic development powers, flexibilities and resources potentially on the table for ambitious areas and to align these with ‘traditional’ local government growth levers such as education and training.
We need to ensure that we are able to learn from and spread this best practice and we need central government to have the courage of its convictions and allow that to happen. Growth is likely to be uneven and it will look different in different parts of the country. That may test our resolve, but we know that if meaningful economic recovery is to start anywhere it must start locally.
Jonathan Carr-West is director of the Local Government Information Unit
