2.2 Setting the objectives:
Strategic Economic Plans and Growth Deals

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Devolution, supported by the Local Growth Fund, has empowered local communities to shape the future development of their areas. It brings together resources to deliver housing and skills, and includes funding for major transport infrastructure.

As transport services facilitate participation in economic and social activities, it is important to form a view of how economic and social activity will evolve in the future before considering how to best meet those needs with the right investment strategies.

We are at the start of a new industrial revolution, with digitisation and automation playing an increasing role in the economy. Local communities need to embrace this disruption and prepare for different economic futures driven by alternative global trends including: demographic change, changing employment patterns, artificial intelligence, automation, increased digital connectivity and an increase in the sharing economy, amongst others.

Technological change in the transport sector and the arrival of autonomous vehicles may lead to new operating models for the provision of transport services that, over the long term, translate into different incentives for the volume and location of economic and social activity. Whilst it is difficult to predict what will happen, alternative scenarios will need to be considered when making investment decisions expected to deliver benefits over the next 60 years or more.

Setting clear economic objectives with aligned transport objectives will guide the development of appropriate policies and investment decisions. In some instances, the objectives could be relatively strategic, such as those held by the Department for Transport:

  • Boosting economic growth and opportunity.
  • Building a One Nation Britain.
  • Improving journeys.
  • Safe, secure and sustainable transport.

In other instances it will be necessary to be more specific, tailoring the objectives to local circumstances. Providing greater clarity on what it is that local communities want to achieve and the criteria that will be used to assess their potential impact will help with the selection of policy and investment opportunities.

Good strategic planning will need to show that:

  • Stakeholder engagement has influenced planning.
  • The plan delivers the right outputs.
  • Costs of delivering outputs are efficient.
  • Funding and financing arrangements are efficient.
  • The plan deals with uncertainty and risk.

Strategic Economic Plans (SEPs) were produced by Local Enterprise Partnerships (LEPs) as part of their submissions to Government for a share of the Local Growth Fund, and since then many have been updated. In addition to providing an overall vision for local areas, SEPs:

  • Set out strategic objectives.
  • Identify opportunities and barriers to growth.
  • Put forward options for investment.
  • Provide evidence that the chosen initiatives are the best options to achieve the LEP’s vision.
  • Include an implementation and delivery plan.

Competition for scarce capital funding means that local decision-makers need robust and consistent prioritisation techniques to direct investment to those initiatives that are likely to generate the greatest return in terms of their contribution to the Strategic Economic Plan. Consideration of the first three rounds of Growth Deals suggests that:

  • Investments need to be aligned to economic, spatial and local transport plans.
  • Clear focus on the wider economic benefits of the scheme is paramount.
  • Partnership working between local authorities and local businesses should produce efficiencies.

An important issue in the preparation of the Growth Deals is the way in which funding is prioritised across local authority areas to provide an acceptable balance between achieving economic growth whilst at the same time responding to specific local priorities.

As part of the first wave of Growth Deals, the tension between efficiency and equity was managed in some areas through the specification of ‘programme minima’ which identified minimum targets or standards for specific issues across geographical areas. For example, decision-makers in Greater Manchester introduced environmental and social minima, while in Leeds, Sheffield and Glasgow City Regions, decision-makers included minima based on the scale of contributions going into the fund.

Subject to the programme minima being met, prioritisation was then based solely on Gross Value Added per £ of investment. If the programme minima are not met, the objective is to find a way to deliver them at minimum cost in terms of Gross Value Added forgone. The benefits of adopting this prioritisation approach are well understood by HM Treasury, which notes that certain programme minima such as improving employment accessibility can also result in lower unemployment benefits or reduced income support. The approach also helps to de-politicise the prioritisation process by providing a fair and agreed decision-making framework in advance.

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Key takeaways

Strategic Economic Plans provide a vision for growth and the basis for a coordinated and transparent investment strategy for the local area.

Planning policies should recognise and seek to address potential barriers to investment, including a poor environment or any lack of infrastructure, services or housing.

Local Transport Plans should align with Strategic Economic Plans and Spatial Plans.

Individual projects show be aligned to create a programme of activities and expenditures to lead to sustainable and mutually reinforcing economic, social and environmental outcomes, creating attractive places to live and continue to invest in.

Setting clear economic objectives with aligned transport objectives will provide direction, facilitate planning and improve performance.

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2.3 National Planning Policy Framework