House of Commons Communities & Local Government Committee Inquiry into Brexit and Local Government
Executive Summary
Driving local economic growth
- To make a success of Brexit and make the most of the challenges and opportunities it presents, promoting economic development and growth both nationally and locally throughout the country must be a priority.
- Local economic growth is an essential foundation for national economic growth in which all areas – city and county, urban and rural – are enabled to realise their full economic potential for sustainable growth.
- Local authorities have a key role to play, both as local leaders and as deliverers of economic development and growth initiatives.
- Government must work with local government to understand fully the varied local impacts of Brexit across the country and ensure local authorities have the freedoms, flexibilities and resources to play their full part in making Brexit a success.
Risks and opportunities
- Shortages of both skilled and unskilled workers could affect many areas, particularly those dependent on sectors reliant on EU migrants such as agrifood, health and social care, construction, tourism and hospitality.
- Local authorities are affected directly by workforce issues resulting from Brexit. A particular issue is the impact on health and social care provision with uncertainty on rights of non-UK citizens and the relative weakness of Sterling adding to longstanding challenges to recruitment and retention of suitable staff.
- Meeting the infrastructure requirements to ensure the capacity and efficiency of the transport network and access to international gateways is critical to local areas being able to take advantage of the opportunities of Brexit. In this Sub National Transport Bodies will have a vital role.
- Brexit risks deterring and threatening new and existing investments by both UK and overseas owned firms. Government, local authorities and LEPs must build up efforts to attract and support businesses from the EU and elsewhere.
- There are risks to local government finance for economic development both from the financial implications for local authorities of adverse effects of Brexit on local economies and businesses, and from loss of EU funding.
- A major risk to local authority action to drive local growth is that with the move to 100% business rate retention and withdrawal of the revenue support grant, local government will be more exposed to potential loss of income resulting from any adverse local impacts of Brexit.
- EU Structural and Investment Funds are a major source of funding used by local authorities for economic development; CEDOS research highlights the significance of Brexit and the funding gap that will need to be filled.
- A new ‘shared prosperity fund’ presents an important opportunity to streamline and improve upon the often cumbersome processes of current EU funding
Providing more certainty and stability for local government
- Government should assess and clarify the implications for local government and local areas of different Brexit deal scenarios and what it will do in response to provide local authorities with the stability they need.
- Government must take action to protect local areas against adverse effects of Brexit and ensure local government has the resources and freedom of action to meet the challenges and take advantage of opportunities.
- Government must commit to replace EU Structural and Investment Funding, with an amount at least equal to its current value.
- It should make a clear and immediate commitment to a ‘shared prosperity fund’ for economic development, providing a revenue stream for projects and not just capital grants.
- In implementing 100% business rate retention, Government should provide the necessary support to protect local authorities adversely affected financially by the impact of Brexit on their local economies.
Devolving powers from the EU to local authorities
- Local authorities have a democratic mandate to lead their communities and Whitehall should not be the default destination for EU powers coming back to this country.
- There is a need to renew and re-invigorate the process of devolution in England to cover all areas – both city, city-region and county areas.
- There must be appropriate devolution of powers in areas critical to the UK making a success of Brexit, including the development and implementation of an industrial strategy, infrastructure provision and promoting inward investment and exports.
- A significant proportion of existing EU Structural and Investment Funding should be delegated directly to local authority control with minimum bureaucracy and greater freedom as to how it can be spent locally.
- Brexit presents an opportunity to devolve funding for skills and employment investment with local control. Local authorities are ideally placed to lead on this.
- Local government must be directly involved in the design and implementation post-Brexit policy to control migration of both skilled and unskilled workers from the EU and elsewhere and in efforts to increase the supply and employment of appropriately skilled UK workers.
Local government representation in Brexit negotiations
- The Local Government Association is playing a valuable role in representing the local government view to the Department for Exiting the European Union and through regular meetings with Ministers.
- Government must engage fully with all local areas. It must ensure local government has a prominent and formal role in the Brexit process. This will increase its understanding of the risks and opportunities of Brexit in different areas across the country and better inform its negotiating approach.
- Government must work with local government and keep the sector informed as negotiations develop, to allow local authorities to raise concerns and plan solutions as the full implications of Brexit become clear.