Local Councils' Economic Development Activities

Author(s): Ronnie Scott and Kathleen Hoye
Document Type: Chapter
Year: 1999
Title of Publication: Policy Aspects of Employment Equality in Northern Ireland (Vol. 2)
Publisher: Standing Advisory Commission on Human Rights
Place of Publication: Belfast
ISBN: 0 9527528 1 6
Pages: 217-243
Subject Area(s): Economic Issues, Equality Issues
Client Group(s) : Employers, Employees

Abbreviations: LEDU - Local Economic Development Unit, IFU - International Fund for Ireland, EU - European Union, LEA - Local Enterprise Agency, LED - Local Economic Development, LEDM - Local Economic Development Measure, DED - Department of Economic Development, TEA - Training & Employment Agency, TWA - Travel to Work Areas, NI - Northern Ireland, MBW - Making Belfast Work, TSN - Targeting Social Need, SWOT - Strengths Weakness Opportunities and Threats, PPR - Programme for Peace and Reconciliation

Background to the Research

  • Prior to the late 1980s district councils involvement in economic development had been minimal, despite the powers given to them in this area in the Local Government Act (1972). Two initiatives in the late 1980s gave impetus to district councils involvement. LEDU, the IFU and the EU funded the establishment of LEA premises in each district council area. Secondly, the Tourism Operational Programme initiative (1989-93) allowed councils to apply for funding for major public sector tourist projects.
  • The Local Government Order (1992) gave councils the power to make payments for promoting LED to an annual limit of 2p in the pound of the rateable value of the district - this was raised to 5p in April 1995. In 1994/5 £3 million (1.2%) of district council expenditure was used for LED. The LEDM was introduced under the Single Programme Document for NI Structural Funds in the mid 1990s.

Research Approach

  • The authors sought to explore the socio-economic and labour market context at council level, councils potential spend on LED, the allocation of funds under the EU LEDM, councils economic development strategies and planned expenditure strategies.
  • The authors carried out documentary research of councils' powers and potential expenditure in relation to LED and reviewed and analysed the 26 councils' economic development strategies and action plans. In-depth interviews were carried out with 5 councils - Ballymena, Belfast, Derry, Fermanagh and Magherafelt. Interviews were conducted with representatives of the voluntary and community sector in NI.

Main Findings

  • The Robson Deprivation Index shows that at district council level deprivation is mainly concentrated in Belfast and in the predominantly Catholic West and South of the region. The Greater Belfast areas and the rural East, which are predominantly Protestant are less deprived.
  • In the planning of labour market services the DED uses TWAs as the minimum unit of analysis, the TEA uses 5 geographical areas and LEDU 6 regional offices. Therefore, because of the small size of some councils, there is a case for councils to co-ordinate and co-operate in joint projects.
  • Estimates of labour force and employment growth in the next 5 years, based on past trends, show employment in Catholic council areas would need to grow by between 10% and 15% between 1995-2000 to match labour force growth. Based on data from the last 2 decades employment is unlikely to grow by more than 7%. In predominantly Protestant areas, both employment and labour force growth is lower and the gap narrower.

Council Expenditure

  • The maximum expenditure by district councils on LED in 1994/5 is estimated to be £9 million, this is equivalent to 2% of total government expenditure on economic development in NI. Assuming that councils could gain matching funds from the EU and the private and public sectors at a ratio of 1:3, the maximum could rise to £36 million per year.
  • There is wide variation in the rateable value of council districts, Belfast has the highest and Strabane the lowest. Eleven of the 26 council areas have a majority Catholic population and a rateable value lower than the NI average. In contrast, 7 of the 15 which have a majority Protestant population have a rateable value higher than the NI average.
  • Deprived areas have lower rateable values and have less to spend on economic development and are less able to raise the rates to meet greater expenditure or raise income from other sources.

Allocation of the LEDM

  • The allocation of £8 million of EU structural funds under LEDM from 1995-97 was based on the quality of councils' action plans and the amounts councils could raise through the rates. Belfast, Antrim, North Down, Derry, Ballymena, Coleraine, Lisburn and Craigavon have received more structural funds per head of population than the NI average. All are in the Belfast TWA or the North East of the province, except Derry. Outside urban areas, the share has favoured areas with high employment and low unemployment.
  • The 5 areas with the lowest share per head of population are Newry and Mourne, Dungannon, Newtownabbey, Strabane and Cookstown. These areas are predominantly Catholic and have high unemployment, except Newtownabbey.
  • The allocation of structural funds has tended to shadow and reinforce inequalities because LED spend is linked to the rateable value of district council areas. On the other hand, the allocation of District Partnership sub-programmes of the EU special PPR is made on the basis of need and population share.

Councils' Economic Development Strategies

  • Councils appear to have consulted widely with statutory and non-statutory agencies, the voluntary and community sector, business and, in some cases, academics.
  • Representatives of the community and voluntary sectors reported, in some areas, that the consultation process was perceived as inclusive and took into account the views of local communities. Others felt that the emphasis was on securing funding without much regard to proper planning.
  • In Belfast there was a perception of poor co-ordination between the activities of the council and agencies such as MBW. There was concern that the council viewed economic issues as the focus of their work and TSN was MBW responsibility.
  • Most of the SWOT analysis (which formed part of the local action plans) were adequate, however overall there was a lack of adequate data and research at sub-regional level in NI. The degree of focus on TSN varied from negligible to adequate, although it was clear that many councils took social issues seriously.
  • There was a high degree of mis-match between the SWOT analysis and the action plan. Links between the SWOT analysis and the action plans on TSN issues were noticeably weak.
  • In general, and with the exception of Fermanagh, the action plans contained no mechanism by which programmes would be prioritised nor any criteria for prioritising if funding was not available.
  • While councils have identified potential funding sources, few have identified the required funding commitments by source. The range of required external funding varies between councils. In several cases councils appear to rely solely on EU Structural Funds for matching funds.
  • In general there is an urgent need to establish appropriate monitoring and evaluation procedures on a common basis.
  • In relation to equality issues, on average councils' planned budgets for local economic development expenditure between 1995-97 were split 75%/25% between business-physical development and social projects. There was considerable variation in the spend for social projects, with Ards and Ballymoney spending 5% and North Down spending 54%.
  • Councils had different levels of confidence in their ability to deliver economic development programmes. All felt confident in their ability to tailor programmes to fit local needs when given the power to do so. Some councils felt that statutory agencies were not alive to the potential for councils to shape mainstream programmes to meet local needs.
  • Some councils, more than others, are focusing on particular geographical locations and/or areas of deprivation and some are focusing on specific programme areas.
  • Some councils are ring-fencing PPR functions from mainstream economic development functions and some are focusing on community level LED. Whether community and economic development functions are separated is a key factor in how new LED resources are distributed.
  • Councils whose institutional structures are closely tied to the funding structures supporting them have less confidence in their capacity than those that develop their own strategic vision for the community separate and apart from funding requirements.

Conclusions

  • One of the major roles that councils are likely to have is to act as co-ordinator of local efforts and mediator between the regional agencies and local communities.
  • There is scope for councils and local communities to contribute to increased effectiveness and value for money from mainstream spending by relating and targeting regional programmes to local needs and opportunities. However, over- fragmentation of economic development is possible.
  • The main objective of the LEDM is to promote economic development and not to address equality/equity issues. It is unclear whether all councils, in their development strategies and action plans, have taken TSN and equality issues into account. Although a number of councils, in emphasising community capacity building, have contributed to giving the issue a higher profile.
  • The allocation of planned spend between primary economic and social programmes and projects demonstrates no clear connections between expenditure and opportunity or need. Several affluent councils areas plan to spend more on social projects, while several council areas with high unemployment and deprivation levels plan to spend the least.
  • The main responsibility for TSN remains with the statutory agencies. The development of local district partnerships under the LEDM and the PPR should promote TSN objectives by making the statutory agencies more responsive to local need, yet some of the councils interviewed saw little evidence of this happening.
  • The link between the spending limit on LED imposed on councils and the penny product from the rates favour more affluent areas. Council areas with high unemployment and deprivation levels can spend less than areas where levels are low.
  • The current system is likely to reinforce differences between councils and is likely to prevent convergence in socio-economic conditions between council areas. A fairer system may be to raise additional taxation through the regional rate, rather than the district rate, and redistribute this according to need.
  • The allocation of the EU special PPR to district council partnerships is based on population and deprivation and may be a more appropriate allocation mechanism than the LEDM.
 

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