Insight on the current state of the economy and how it relates to Dorset by Nigel F Jump, Chief Economist of Strategic Economics Ltd (a Dorset Company) and Visiting Professor in Economics at the Universities of Bath and Plymouth.
See: www.strategiceconomics.co.uk
The Economics Story: … Local Policies for Growth
The government has announced a new round of funding for the Local Enterprise Partnerships (LEPs) to spend on economic development through its Local Growth Funds. It argued that this would encourage diversification of growth away from London and the Greater South East, although the distribution of funding planned (with big sums still going to London and its SE neighbours) does not suggest this impetus will be strong. Still, all parts of SW England will get some money with most of the money going on infrastructure schemes related to transport, broadband and energy.
Packages worth £23.9m have been offered to the Dorset LEP in the first year of the next scheme (2015/16) and a further £42.4m of funding may be available from 2016/17 onwards. Compared with our neighbours, Dorset’s first year allocation sits against £46m for the Solent LEP, £62.9m for the Heart of the SW LEP (Devon and Somerset), and £12.8m for the Swindon & Wiltshire LEP.
In its press releases, the government suggests that Dorset’s funding will help to create up to 25,000 jobs, allow more than 3,000 homes to be built and secure another £530m of extra (public and private) investment. LEP and government plans for the money include road schemes to improve access to the Port of Poole and Bournemouth Airport; investment in a new Jurassic Coast visitor centre on the Isle of Portland; and the creation of a research centre of excellence to attract innovative orthopaedics businesses. Hopefully, such investment priorities are derived from soundly based and robust cost-benefit analysis.
At the same time, the Official Opposition recently promised more effort to spread growth outside the SE corner of Britain if it wins the next election. It has promised to devolve £30bn (and access to business rates) for skills and infrastructure in the ‘city-regions’ and their hinterlands, assuming local authorities and more business-led LEPs can band together to create ‘economic powerhouses’. Earlier this year, they promised a Minister for each region.
All-in-all, it looks like a new bout of local economic development initiatives can be expected after the 2015 election. Regional/local economic development exists as a policy priority in most countries all over the world. It is a common tool for addressing spatial economic imbalances. Sadly, in England, such policies have tended to wax and wane with the political cycles of fashion. They have seldom followed a consistent pattern of effective commitment over the years.
Economic development is a long run game. It is about changing sustainable living standards by generating better employment opportunities after boosting absolute and relative productivity growth. The Office of Budget Responsibility put it perfectly earlier this year.”Ultimately, productivity-driven growth in real earnings is necessary to sustain the recovery.”
Real regional economic rebalancing outside the Greater South East will require a sustained and integrated, efficient and effective effort over many years. Hopefully, by the careful focussing of investment spending on innovation, skills and infrastructure, the next government and their partners in the local authorities and business can co-operate to deliver this for Dorset and elsewhere.
Professor Nigel Jump, 11th July 2014
