Growth Deals: firing up local economies

The Prime Minister and Deputy Prime Minister will announce the first instalment of plans to invest at least £12 billion in local economies in a series of ‘Growth Deals’. The money will go towards providing support for local businesses to train young people, create thousands of new jobs, build thousands of new homes and start hundreds of infrastructure projects; including transport improvements and superfast broadband networks.

Today, the first £6bn of local projects agreed as the first wave of Growth Deals are being announced.  This includes the complete allocation of £2bn from the Local Growth Fund for 2015-16, and, because the quality of the proposals was so high, in some cases commitments are being given for following years for important long-term projects so they can get underway.

In addition, discussions with Local Enterprise Partnerships will continue, to prepare for future negotiations on the next round of Growth Deals to build on the momentum now established.

Growth Deals are a revolution in the way our economy is run.  For the first time ever, housing, infrastructure and other funding is being brought together in a single pot, and put directly into the hands of local authorities and businesses to spend the way they know best.

Projects beginning in 2015/16 are expected to be matched by local investments worth around twice the contribution from Central Government.

Across the country they are expected to lead to work on over 150 roads, 150 housing developments, 20 stations, as well as to provide small business support services in every part of England and significant investment in skills training, as well as work to improve educational attainment and to get more people from welfare to work.

Some of the major projects that will be built as a result of these deals include:

• £18 million to revamp the Metrolink transport system in Manchester, which will include 12 new trams, revamped stations and improved bus services. This is part of a £50 million transport package in Greater Manchester.
• £23 million for a new road tunnel linking Swindon to nearby Wichelstowe, creating thousands of jobs and opening up a new site for thousands of homes. This is just one of dozens of road projects which will get off the ground thanks to the Growth Deals the Local Enterprise Partnerships have agreed with the Government.
• Millions of pounds for projects around the country to boost the skills that local businesses say they need, including £55 million for London’s Skills Capital programme and a Glass Academy in Sheffield to train people to work in the city’s glassworks and an Oil and Gas Academy in the Tees Valley. This not only helps businesses, but also young people who might struggle to get a job and take advantage as the economy grows.
• Creation of a new National Agri-Food Campus in York which will help the area become a global leader in food manufacturing, agricultural technologies, and bio-renewable sectors, creating up to 800 new jobs.
• Funding for Birmingham to help the city make the most of HS2 – including improving connection to the Birmingham Curzon Street station so that the area can maximise the benefits in terms of investment, jobs and skills.
• Support and advice for small and medium sized businesses, so that they can grow and create hundreds of thousands of jobs across the country. The Local Enterprise Partnerships will tailor this support to local needs.
• Funding for a new engineering training facility at the MIRA technology park – delivered in partnership with North Warwickshire and Hinckley College, University of Leicester and Loughborough University. The centre will equip people with the skills to work in advanced transport engineering, a growing sector in Leicestershire and the surrounding area.
• Support for a £1m project to create the Silverstone Metrology Centre, a high precision measurement facility for small and medium sized enterprises working in high performance technology industries such as motorsports, enabling them to develop new products.
• Funding for broadband networks in areas where provision is not currently available, such as remote areas of the North East.

The Prime Minister said:

“Growth Deals are a crucial part of our long-term plan to secure Britain’s future. For too long our economy has been too London-focused and too centralised. Growth Deals will help change all that. They are about firing up our great cities, towns and counties so they can become powerhouses. By trusting local people, backing business and investing in infrastructure, skills and housing, we can create thousands of new jobs. And that means more economic security, peace of mind and a brighter future for hardworking people across the country”

The Deputy Prime Minister, who chairs the Local Growth Cabinet Committee said:

“We are ending a culture of Whitehall knows best. Decisions over spending on infrastructure, business support and housing are being made at a truly local level.

“It will help end our over-reliance on the banks and the City of London, and generate growth, jobs, and ambition in towns and cities all across England.

“Growth Deals will create thousands of jobs, provide incredible new training opportunities for young people, build thousands of new homes and improve transport links across the country for people and their families; building a stronger economy and a fairer society.

“We’re placing the power and money in the hands of the people who know how to spend it best, making a real difference to local communities.”

Greg Clark, Minister for Cities, said:

“This is a landmark day for Britain’s local economies.  National growth is the sum of local growth.  For Britain to prosper every part of the country needs to fulfil its potential.  No two places are the same and the people who live, work and do business in each place know best what their area needs to do well.  Today is the day when we back local leaders to create jobs and prosperity in their area.

“These Growth Deals build on the success of our City Deals.  I look forward to meeting with all LEPs over the next few weeks to negotiate the next instalment of Growth Deals building on this momentum.”

Lord Heseltine said:

“In every experience I have had of backing local people, local experience and local initiative the results have seriously exceeded expectations.

“Today’s announcement is a giant step in the rebalancing of our economy.”

Alex Pratt, Chair of the LEP Network Management Board said:

“The zest for growth captured in the LEP Strategic Economic Plans has been met by a powerful vote of confidence in the quality of our bottom-up, evidence-led vision and focus.

“This moment brings us to an exciting new beginning for coalface-inspired growth.  Every LEP will be focussing hard on delivering its growth promises.”

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• The Local Growth Fund was established in response to Lord Heseltine’s Report No Stone Unturned.
• Each of the 39 Local Enterprise Partnerships was invited to submit by 31 March 2014, a Strategic Economic Plan outlining their local priorities to maximise growth.
• In Investing in Britain’s Future (https://www.gov.uk/government/publications/investing-in-britains-future), published alongside the Autumn Statement 2013, the Local Growth Fund was committed to be at least £2bn a year from 2015/16.  It is drawn from the existing budgets of central Government departments.

In 2015/16 £1.1bn of the Fund was already committed (principally to local transport projects).  This left £930m to be allocated competitively in 2015/16.  Plans for using this funding were assessed according to their ambition and rationale, value for money and deliverability.

Complete allocations for 2015/16 were announced today:

*This includes match funding for European Social Fund skills activities and Housing Revenue Account Borrowing, which is to be confirmed during Autumn 2014.

**Includes £2.4m broadband investment; additional payment of this sum dependent upon full delivery of planned LEP projects.

• LEPs will be permitted to exercise flexibility to substitute other projects if they have been rigorously assessed and offer comparable or better value for money.  The stronger the track record of delivery, the greater the flexibility the LEP will have. In some areas, the Government has approved funding beyond 2015-16 to ensure the benefits of long-term projects can be realised. Where future commitments have been made, details are contained in the individual Growth Deals at https://www.gov.uk/government/collections/local-growth-deals
• Growth Deal discussions for future years will begin immediately over the unallocated minimum of £6bn of the £10bn available for 2016/17 to 2020/21.