1: Re-setting the technical foundations
Economic growth is a national priority. But growth doesn’t happen ‘anywhere’; it happens ‘somewhere’ and it is inherently spatial. Place is not simply the contextual backdrop for economic life; it is of formative – even causal – significance[1]. In the wider context of devolution, two documents published by government on 11th June 2025 (alongside the Spending Review) could prove to be foundationally important in seeking to navigate and accelerate processes of place-based economic growth over the years ahead.
Green Book Review 2025
The first – a Policy Paper prepared by HM Treasury – followed a review of Green Book appraisal guidance[2]. SQW was one of the contributors to the review. From the Policy Paper, it is good to see recognition of the need to develop new approaches to assessing transformational change. We particularly also welcome the commitment to place-based business cases.
The Policy Paper notes that place-based business cases should include:
- a set of objectives for a particular place – and a compelling theory of change for achieving those objectives
- a means of considering strategic and economic interactions between multiple interventions in a place.
All of this will be reflected in an updated Green Book (which should be published in early 2026). Its overall impact will depend in large part on effective working arrangements across and between central, regional and local government. To that end, the Policy Paper commits to a new taskforce to explore the issues around governance and approval processes in the wider context of the journey towards devolution.
Guidance on developing Local Growth Plans
In parallel, MHCLG published guidance on Local Growth Plans[3]. The new guidance is commendably succinct. Whilst there is ‘no set template or format’ and no requirement for formal sign-off from government, the guidance describes three basic ingredients of a Local Growth Plan:
- an economic overview with a long term vision for how to make the region more productive, linking to the eight growth-driving sectors in the UK’s modern Industrial Strategy; and an explanation of how devolved powers, funding and functions will be used in support
- a consideration of shared priorities between the Mayoral Strategic Authority and central government which will be ‘co-determined’ to inform national and regional policy
- an investment pipeline which will focus on the 4-10 investment opportunities which are ‘most significant in unlocking growth’.
The guidance also notes that Local Growth Plans should be ‘the guiding star’ in providing strategic direction for a range of other plans and strategies. These include the Spatial Development Strategy that each Mayoral Strategic Authority should develop and which is intended to provide a ‘spatial representation of the Local Growth Plan’.
…considered in combination
Against a backdrop of devolution and local government reform, the Local Growth Plan and investment pipeline should provide the foundation for genuinely place-based responses to government’s growth mission.
In this context, it is surprising that there is no reference to the commitment to place-based business cases in the guidance on developing Local Growth Plans. This really matters: the effectiveness (and perhaps even the plausibility) of place-based business cases may depend very largely on the calibre of Local Growth Plans.
2: The importance of local economic narratives within Local Growth Plans and anticipating place-based appraisals
With the (welcome) emphasis on economic narrative within the Local Growth Plan guidance comes an increasing weight of responsibility.
Past approaches
In the past, many local economic narratives and strategies/plans – whether from councils, local enterprise partnerships or regional development agencies – were vanilla statements. The criticisms that they ‘could have related to anywhere’ and/or that they ‘failed the Tipp-Ex test’ (of the analogue era) are sometimes fair. But they are also cheap shots, for three key reasons:
- Economic strategies/plans have often been partnership documents that needed ‘something for everyone’ because of governance arrangements which sat more or less uncomfortably with local democratic processes.
- Economic strategies/plans needed to be sufficiently broadly cast to anticipate the next short term funding programme from government, whatever and whenever that might be. In other words, they needed to provide a few sentences that could ‘tick the box’ in informing the strategic case for a business case for almost anything.
- Although economic strategies/ plans have generally been evidence-based and have often involved substantial consultation, at sub-regional level they have usually had a limited connection with statutory planning and transport plans. This means that they have often been shaped by local planning policy (rather than informing it).
The new challenges
The guidance for Local Growth Plans sets the bar very much higher, particularly if it is read in anticipation of place-based business cases and appraisals in the revised Green Book.
Local Growth Plans will effectively need to capture a compelling theory of change for achieving local objectives, taking into account the strategic and economic interactions between multiple interventions in a place – and they should frame 4-10 investments of transformational potential.
This will be challenging from at least three different perspectives.
First, the economic overview and narrative will need ‘teeth’: it will need to be specific to the place and to distil what is effectively a place-informed theory of change linked to key sectors identified through the Industrial Strategy.
This is easier in some places than others. Not everywhere has the underlying assets to be ‘best of class’ in the sectors identified in the Industrial Strategy – and having some distinctive capabilities or characteristics does not necessarily mean that these have the potential for transformative impacts on the wider economy.
Even in places that do, there are clear risks associated with ‘backing winners’ – particularly given the scale and frequency of economic shocks which seem to be defining the 2020s. In many respects, macro-economic and geopolitical volatility demands something rather different. The old adage, ‘no plan survives contact with the enemy’, is germane, and Local Growth Plans will need some agility. But a need for agility cannot be an excuse for, effectively, no plan at all. The middle ground will take some thinking through: scenario planning will have a role to play and the way in which theory(ies) of change are conceptualised will also need to evolve, particularly if they start to inform place-based appraisals.
Second, in anticipating a link to place-based appraisals, Local Growth Plans will need to navigate some evidential challenges.
There simply is little real evidence on the strategic and economic interactions between multiple interventions in a place. SQW recently completed a review of academic and policy literature to identify best practice methods used for evidencing place-based impacts and delivery lessons at the level of programmes and places. An immediate finding was that there is little evaluation evidence which considers the combined impact of packages of interventions in specific places. Looking ahead, this is an area that will need focused research.
Third, we would observe that the political dimensions around Local Growth Plans will be onerous and the need for effective leadership paramount; elected Mayors will have a critical role. Local Growth Plans will fail if they are literally ‘something for everyone’ – yet their democratic provenance is also their cornerstone.
In previous eras, there was something to be said for a strong business-led partnership crafting an economic narrative which might have jarred with local political processes (most frequently in the context of housing growth) but at least stimulated a discussion and often some movement from all parties. It will be important that healthy, meaningful and respectful debates are part of the process of developing Local Growth Plans. The business community – not, in itself, part of the democratic process – will need to be both heard and properly listened to. Universities and locally-based research institutions must also be recognised as a key constituency. In some local areas, governance arrangements are evolving to engage external expertise, particularly from the business and higher education/research communities, including for scrutiny arrangements which retain democratic oversight but allow for proper technical appraisal and challenge.
It will be important that arrangements of this nature continue to evolve. Given the direction of travel signalled through the Chancellor’s Mansion House speech (in November 2024), the wider investment community (including the major pension funds) is fast becoming another constituency that will need far greater attention than hitherto. Strategic authorities will need to equip themselves to animate new and evolving dialogues of this nature, and to tailor their governance arrangements in response.
3: Conclusion
The documents published alongside the Spending Review are key technical building blocks of the wider devolution journey, and their full significance needs to be recognised and understood – including in relation to each other. At the same time, the challenges they present to strategic authorities of all genres should not be underestimated. The extent of the differences from what has gone before will need to be fully recognised. New approaches – conceptual, analytical and to a degree political and tactical – will be essential. These will need investment and commitment – coupled with reflection and learning – at local, regional and national levels alike.
[1] Evidence of what works: research and innovation (R&I) and place – UKRI
[2] Green Book Review 2025: Findings and actions - GOV.UK
[3] Guidance for Mayoral Strategic Authorities on developing Local Growth Plans - GOV.UK