2023-07-13 17:53:06
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Rural and county economies in England are recovering far more slowly from the coronavirus crisis than urban and city areas, which regained pre-pandemic economic output last year, according to new research.
The research was carried out by professional services company EY with the County Councils Network, which represents some of the largest local authorities in the country.
The CCN argued that the findings demonstrated an urgent need for government to reform the way economic development is marshalled at a regional level to avoid inequalities between urban and rural areas becoming further entrenched.
“For too long, councils in county areas have been hamstrung in their ability to drive economic growth lacking the powers enjoyed by urban and city authorities with mayors,” said Tim Oliver, leader of Surrey county council and chair of the CCN.
The Department for Levelling Up, Housing and Communities hinted earlier this year that it would scrap local enterprise partnerships — which combine business, local authority and NGOs — and allow their functions to be absorbed into county and unitary councils, as they have been already in areas with combined mayoral authorities such as Manchester and London.
“There is a real risk that the government fudges the decision, leaving county areas at an economic disadvantage. This is why we are calling on ministers to be decisive — and quick. We need all the tools in our armoury to try and close the gap,” said Oliver.
EY’s projections show the 11 LEPs covering urban and city areas in England recovered economic output lost from the pandemic in 2022, with gross added value forecast to grow 6.7 per cent (£60bn) by 2025, compared to 2019.
By contrast the EY report, due to be published on Friday, forecast that 27 LEP areas covering county and rural areas will grow at a more sluggish rate of 3 per cent (£29bn) between 2019 and 2025. They would only recover lost economic output from the pandemic in 2024, it said.
Before the outbreak of Covid-19, the 27 LEP areas covering county and rural areas, encompassing 56 per cent of England’s population, had a larger economy. They were overtaken in 2022 by 11 LEP areas comprised of cities and urban areas, the report said.
While employment bounced back to pre-Covid levels for both groups by 2022, forecasts show employment will have leapt ahead in urban areas growing 3 per cent compared to 1 per cent in rural areas.
Following the abolition of regional development agencies in 2012, LEPs became the official vehicle for encouraging business expansion and capital investment at a local level. They also provided support to businesses during Covid.
The government said in February that it was considering transferring LEP functions to local government in the future. But council leaders feared a “fudged” decision, the CCN said, “either allowing LEPs to continue in some form or transferring functions in a piecemeal way which will leave them with less tools to address regional inequalities”.
The DLUHC said: “Our intention is for the functions of LEPs to be delivered by democratically elected local leaders where this is appropriate and is not already delivered by combined authorities. The Government has consulted LEPs, local authorities and other partners on this proposal and we will outline next steps very shortly.”
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