New report warns that the ‘levelling up’ agenda cannot overlook shire counties – calling for major new powers for those councils in devolution whitepaper

A new report published today warns the government that it cannot overlook shire counties in its ‘levelling up’ agenda – with new analysis showing economic growth and productivity in these areas lagging behind other parts of the country.

Ahead of the Budget with its expected focus on levelling up ‘red wall’ areas in the North and Midlands and the Northern Powerhouse, the report from business and financial advisor Grant Thornton UK LLP for the County Councils Network, lays bare the economic challenges facing communities in county areas, which cover almost half the population of England.

Download the new report here.

Grant Thornton identify that county authorities are the key player in economic growth in individual local areas, but they need the tools to make a bigger difference. It argues that those county authorities are best placed to deliver change and results on the ground for residents, but they need ‘place-based’ resource, stronger powers, and reforms – tailored to those communities.

It recommends that significant budgets and powers be devolved down existing county authorities with new duties those councils to convene growth boards alongside a return of strategic planning powers to upper-tier local authorities and greater consideration of the infrastructure needs in shire counties.

The report, titled ‘Place-based growth – unleashing counties’ role in levelling up England’, reveals:

• Growth, as measured by Gross Added Value (GVA), in county areas has lagged behind the rest of the country by 2.6% over the last five years. GVA in the 36 county areas has grown by 14.1% between 2014 and 2018, compared to 16.7% for the rest of England.
• In total, 25 of these counties have grown at a rate slower than the rest of the country. The research finds no north-south divide, as the county areas experiencing the some of the smallest economic growth are Herefordshire (5.3%), Oxfordshire (5.6%) and Cumbria (8.2%), Gloucestershire (9.2%), and Wiltshire (9.7%) – showing that one size fits all policies will not work.
• Some 30 of the 36 county authority areas have workplace productivity levels below the England average. At the same time, counties have witnesses sluggish business growth, with county authorities averaging 7.9% growth over the last five years – almost half of that of the rest of the country’s figure of 15.1% over the period 2014 to 2019.

Figures produced by Grant Thornton for the report reveal that councils in London are able to spend over 50% more per person compared to counties (£506 compared to £333) on growth related services such as roads, junctions, enterprise parks, and business support – aimed at boosting local growth. The largest cities in England, the core cities, are able to invest 35% more than counties (£448 per person).

Investment in multi-billion-pound regional growth schemes is significantly higher in city and urban areas. England’s core cities receive on average over a third (33%) more – £580 funding per person – compared to counties (£437) while the smaller cities and urban metropolitan areas receive almost a quarter (23%) £537 per person more.

These figures include the government’s recently-announced Towns Fund, with county areas being home to almost half of the recipient areas – illustrating the gulf in funding to boost economic growth between counties at the cities, despite this new policy.

To address these regional disparities in growth and local powers, the report’s key recommendations include:

• Rather than a focus on the ‘north-side divide’, government economic and investment assessments should identify those places where the economic ‘gap’ is greatest – Either to the national average or between different places –and focus investment decisions on closing that gap and levelling up local economies.
• The devolution white paper must consider how devolution of powers to county authorities could assist in levelling-up the country. This should include devolving significant budgets and powers down to councils, shaped around existing county authorities and local leadership but recognising the additional complexity in two-tier local authority areas and whether structural changes are required.
• Growth boards should be established in every county authority area. As part of this a statutory duty should be placed on county authorities to convene and coordinate key stakeholders (which could include neighbouring authorities). These growth boards should be governed by a national framework which would cover the agreed ‘building blocks’ for growth – powers, governance, funding and capacity.
• Planning responsibilities should be reviewed with responsibility for strategic planning given to county authorities. In line with the recently published final report of the Building Better, Building Beautiful Commission, the government should consider how county authorities, along with neighbouring unitary authorities within the county boundary, could take a more material role in the strategic and spatial planning process.
• The National Infrastructure Commission should ensure greater consideration of the infrastructure requirements in non-metropolitan areas. Their national infrastructure assessments could consider how better investment in infrastructure outside metropolitan areas could link to wider growth-related matters that would help to level up the economy across the country.

Cllr Barry Lewis, County Councils Network spokesperson for economic growth, said:

“Since the general election, there has been a clear focus on the ‘red wall’ seats that the government has won. But if it wants to genuinely back up its rhetoric and level-up England, then a narrow focus on these areas will not work.

“The levelling-up agenda cannot bypass and forget about shire counties, with many of these areas experiencing economic growth that is lagging far behind the rest of the country. Communities in the likes of Devon and Cornwall in the South West, to Lincolnshire and Nottinghamshire in the East Midlands need as much focus on why they have been left behind as the likes of Wokingham and Blyth.

“Today’s report underlines that county authorities will have a huge role to play in the success or otherwise of this agenda. These councils know their areas intimately yet are able to deliver change through their investment and influence. They are the main economic players in their communities but need powers and resource – the devolution white paper provides a perfect opportunity for a step-change.”

Paul Dossett, head of local government, Grant Thornton UK LLP, added:

“The need for extensive infrastructure investment as part of the “levelling up” agenda is clearly well recognised by government. However, prioritising need is not as simple as transferring money to the “red wall areas”. It requires proper analysis of need and recognition that there are significant disparities both within and between places.

“The need for local strategic oversight is vital. The government’s commitment to capital spend is clear, but this alone is not enough. It must come with revenue support and a clear focus on locally led schemes that drive improvements in connectivity and productivity.

“Without proper analysis of need and recognition of the importance of local strategic leadership, a significant opportunity to make a real difference to communities will be missed.”

Download a separate document with detailed case studies here.

Notes to editor

• The County Councils Network is the national voice for England’s county councils. It represents all 26 county councils and 10 county unitary authorities. Collectively, they represent 26 million people, or 47% of the country’s population. It is a special interest group of the Local Government Association. For more information, visit org.uk.
• Grant Thornton is one of the world’s leading organisations of independent assurance, tax and advisory firms. Proactive teams use insights, experience and instinct to understand complex issues for privately owned, publicly listed and public sector clients – helping them to find sustainable solutions.
• You can download the new report, ‘Place-based growth – unleashing counties’ role in levelling up England’ here.
• Growth in this press release, and the report, is measured by Gross Value Added (the value of goods and services produced in an area, minus the costs of producing them). The percentage changes are taken from this Office of National Statistics dataset, with Grant Thornton calculating the percentage increase in economic growth by comparing 2018’s dataset with 2013’s. The ‘rest of England’ figure is the economic growth figure for all areas of England with the 36 county areas outlined in the table below taken out.
• The figures on workplace productivity in this press release are taken from Grant Thornton’s GVA per job figures, taken from the GVA dataset above and the Business Register and Employment Survey
• The figures on business growth are derived and are a measure of new businesses starting up in an area, minus the amount of businesses closing down. This five-year snapshot 2019 to 2014 is taken this dataset from Table 1 – with the county areas all added together.
• The figures in page ten of this press release comprise of EU Structural Funding, Growth Deal funding, Innovate UK funding, and the Towns Fund. See page 58 of the report.