Insights
Two weeks from election day, we have manifestos from the main parties. In this blog, we look at the Labour and Conservative manifestos and ask what existing evidence tells us about the likely effectiveness of some of their policy proposals for local growth.
Labour: more devolution, but in line with the national plan
The Labour Party wants to devolve power to local authorities on transport, adult education and skills, housing and planning, and employment support, and deepen existing devolution settlements for Combined Authorities. This will involve places developing new local growth plans, aligned with a national industrial strategy. Labour will also create a youth guarantee of access to training, an apprenticeship, or support to find work for all 18- to 21-year-olds.
Our previous work on developing evidence-based local industrial strategies suggests the importance of identifying the underlying, unique nature of challenges facing a local economy. Are the issues on the demand or supply side? What is the sectoral makeup of the local economy and how does it plug in to wider value chains in the national economy? These, and many other, questions will result in local answers, so a national strategy will need to be clear enough to be meaningful while flexible enough to accommodate local responses to diverse challenges.
Evidence on the impact of apprenticeships suggests that these can have positive impacts on subsequent employment and wages for individuals. Ensuring there are enough places will mean in part encouraging employers to offer them – some evidence from our apprenticeship financial incentives toolkit shows that employer subsidies may help. Finding training places is only part of the puzzle though, and supporting uptake of apprenticeships can also matter. On this, some evidence indicates that pre-apprenticeship programmes (which prepare people for doing apprenticeships) can help.
On small businesses, Labour say that they will reform the British Business Bank, giving it a stronger mandate to support regional growth, and make it easier for small and medium sized enterprises to access capital.
Access to finance programmes can have a positive effect on businesses’ ability to get debt finance, though evidence on their impact for equity finance is more limited and mixed. How access to finance filters through to improved business performance is also slightly less clear – 14 out of 17 studies in our access to finance review showed positive performance results, but when looking at any one specific outcome, only half of studies finding a positive effect. We found no evidence to tell us whether programmes targeted at small and medium-sized enterprises are more or less effective than non-targeted programmes, and as our evidence briefing on access to debt finance notes, local impacts will depend on how this finance is used (e.g. finance used simply for cash flow is unlikely to increase employment). For these reasons, properly evaluating any new SME focused interventions will be important.
Conservatives: levelling up continued
Two key local spending promises in the Conservative manifesto involve funding for levelling up projects around the country. An existing scheme for left-behind towns that provides places with a £20m endowment over 10 years will be expanded to cover a further 30 areas. And the flagship UK Shared Prosperity Fund will be extended by three years – before being wound up with the money used to fund a new National Service scheme.
The endowment fund allows spending on a range of priorities, with one suggested area being renovating high streets. Our evidence briefing on improving high streets and town centres suggests that these types of interventions alone are unlikely to make large differences to struggling high streets. Local transport investment, another area the fund can assist with, may help if it can make it easier for people in a local area to reach central retail locations.
UKSPF money might be available for skills investment, assuming current funding themes continue. Our evidence briefing on employment training covers a range of skills-related interventions, and find that these can have positive effects on wages or employment, especially where this is on-the-job training.
The manifesto also promises more freeports and business rate retention zones, along with continued support for investment zones. These types of area-based incentive policies take the same approach – draw an area on a map and make the cost of doing business cheaper inside that area. As previous blogs on investment zones have discussed, the key issue here is displacement (do businesses just move from slightly outside that area to inside of it) and deadweight (would new businesses setting up in those areas have done so anyway). Too much of either and they can be a waste of money.
Elsewhere in the manifesto, the Conservatives promise to continue the movement of government outside of London, with a further 25,000 civil servants moved out of the capital. As our evidence briefing on public sector relocation notes, the important thing here is whether that is going to be movement of individuals or movement of roles – whether it can support local growth will depend in part on the number of new jobs created locally, relative to the size of the local labour market. They also promise access to finance support for small businesses, including through potential creation of Regional Mutual Banks. Our recent rapid evidence review on community finance initiatives (of which mutual banks are one) as part of our debt finance briefing mentioned above, found positive evidence for their impact, including that they might be more willing to lend to local businesses, and their lending may be more stable.
Procurement – cross party agreement?
One area of agreement is on the role of procurement in supporting SMEs and farmers. Both parties promise to make it easier for SMEs to be given public procurement opportunities, and both make the commitment that at least 50% of public sector food spending will be on locally produced food or food produced at higher environmental standards.
When we looked at local procurement policies, we found evidence that procurement can help meet certain policy objectives, particularly when used to encourage innovation and adoption of green practices. Limited evidence suggested that SMEs may be more likely to benefit from green-focused procurement, but one study also found evidence that procurement might allow for the survival of inefficient SMEs. Costs tend to increase too – not great in a time of tight fiscal rules. Ultimately, we need more evidence of procurement’s usefulness here, so whoever wins the election should commit to rigorously evaluating their use of it for driving policy objectives.
Using evidence to meet the promises in election manifestos
Evidence in public policy is important for making sure government is delivering on their commitments, and spending money wisely. Whoever wins the election will need to carefully assess the evidence on how best to meet their manifesto promises, but also should evaluate their approaches as they do so, to discover what is working well. For more on other local policy issues, you can read all our evidence resources here. Our next pre-election blog will discuss the importance of the next government using evidence in more detail.
