Prime Minister Andy Burnham has signalled the end of the 'cap in hand' reliance of local authorities on Whitehall for funding, as his government promised £285m in 'transitional seed funding' to help struggling councils next year.
The announcement comes after Bury Council admitted it is seeking bailout cash as it struggles to balance the books, while Stockport Council has asked the government for £40m over the next two years to cover potential gaps in its budget. All ten local authorities in Greater Manchester have been offered financial support by Greater Manchester Combined Authority, in the form of interest-free loans to cover any funding gaps.
Pressure since austerity
Since austerity in 2010, local authorities have come under severe pressure to maintain services as government grants were slashed and residents became used to above-inflation rises in council tax bills.
Chancellor John Healey will pledge to unlock growth across Britain by putting communities in control of their economic future in his budget speech on Wednesday, with the aim of 'ending the era of power and resources being hoarded in Whitehall'.
The plans will give local authorities more flexibility and authority to make investment decisions. The government will also confirm that it will work with mayors to design a new £1.5bn borrowing facility from 2028, giving them access to capital needed to back the local priorities that will build growth 'in every postcode'.
Shifting power closer to home
Mr Burnham, the former mayor of Greater Manchester, said: "I'm calling time on local leaders going cap in hand to Westminster. That is no way to run a country. When I became Prime Minister, I said that if a decision can be made closer to home, it should be. Today we're putting that into practice, shifting power into the hands of the people who know their communities best."
His government pointed to 'similar pioneering fund crowding' in Greater Manchester where private investors have been encouraged to build new housing and back other investment projects. The plans are said to be the result of the Treasury and the Ministry of Housing, Communities and Local Government, No 10 North and local leaders working 'to rewire the state and deliver growth in every postcode in Britain', according to the government.
Bev Craig, Mayor of Greater Manchester, said: "We have pioneered this new economic model right here in Greater Manchester. The Good Growth Fund is turning our ambition into action. It's unlocking investment, creating jobs, delivering new homes and transforming places across our city-region. We've approved more than £1bn of investment in its first year alone, funding projects across every single borough in Greater Manchester. This has included supporting the delivery of 5,600 new homes, the transformation of Oldham and Wythenshawe's town centres and providing over 2.3 million sq ft of employment and innovation space like QIAGEN's new campus. But it's about more than just bricks and mortar. Through its social value contract, every project ensures the benefits of growth are felt by people in their pockets, on their high streets and when they go out to work."
Criticism and support
The policy has come under fire from critics who point to the lack of affordable housing and the price of rents in schemes such as Manchester Life, a joint £1bn venture between the owners of Manchester City (Abu Dhabi United Group) and the council which has delivered 1,800 homes with more on the way.
Secretary of State for Housing, Communities and Local Government Angela Rayner said: "We're putting a stop to mayors and local leaders being forced to come to Westminster cap in hand, asking for the power and funding that should rightfully be theirs. We're backing our leaders to deliver what their communities need, from much-needed housing developments, stronger and better transport links, and the regeneration of the places people care so much about. That is what our devolution revolution really means – real decisions made locally, backed by real money, so every town and city can shape its own future."
Chancellor John Healey said: "Every community in Britain has potential – for too many it has gone untapped and wasted while money and power has been held in Westminster. Mayors and local leaders know what their communities need to grow, which is why we are giving them more money, more power and more capacity to get projects moving, build homes and make the right decisions for their areas."
Strategic authorities will also get £150 million of funding next year to build their capability to take on the new powers and manage complex projects and investment programmes.
Claire Ward, chairwoman of the UK Mayors Network and Labour's East Midlands mayor, said: "Having the right powers and resources through increased devolution will help us to turn our ambitious plans into reality and deliver real, lasting change for our communities. I welcome this commitment from Government and will continue to push for the tools we need to help our regions to thrive."
Labour's London Mayor Lord Sadiq Khan said the greater ability to invest could "help unlock transformational infrastructure projects" including the West London Orbital route, the extension of the Bakerloo underground line and Docklands Light Railway and the development of Stratford International station.
