Ministers must increase mainstream resources to the UK’s lagging local economies to prevent them falling further behind London and south-east England, councils have warned.

Research by Sigoma, which represents the major towns and cities outside London, found such areas were slowly declining in national economic significance.

Economic activity increased by 22.7% between 2000 and 2004 in Sigoma areas, while the national average stood at 25.3%.

London and the eastern regions of England grew faster than the national rate.

Sigoma’s productivity, expressed as GVA per head, was £16,000 in 2004; the equivalent figure for London was £26,262.

And employment in Sigoma authorities was 70.2%, well below the national average of 75%.

Prospects for the future also looked poor, partly due to poor skills.

‘As time moves on economic growth will become increasingly dependent on enterprise and innovation,’ the research said.

‘The attractiveness of places to highly mobile, skilled workers able to succeed in a global economy, and to high value business investment is clearly important… Although there are very large variations in the areas covered, Sigoma continues to have one of the lowest percentages, 31.4%, of the working age population [qualified to level four or above].’

It warned that the government’s reliance on enterprise and economic development funding to the north of England – currently around three times higher than in London and the south – was not enough to make a difference.

Money for housing and transport is still going south, with funding in these key areas almost three times higher than in the north-east.

Analysis suggests Sigoma councils face a £158m shortfall in funding over the next three years.

The report concluded: ‘To ensure economic growth is achievable and sustainable there needs to be a clear funding commitment from government to allow local areas to plan their economic growth.

This commitment needs to be matched by investment in other key areas such as education, transport and health to ensure that the economic potential of a local areas is developed in a strategic way to suit the individual needs of the locality; there can be no one size fits all.’

by Susan Downer
susan@newstartmag.co.uk