Spending on Economic Growth Set to Fall as Councils Feel the Pinch; DROP IN COMMUNITY DEVELOPMENT FUNDS

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Byline: CLAIRE MILLER

SPENDING by councils on economic growth is set to fall across Wales despite the country's return to recession, we can reveal today.

As councils strive to keep spending on education and social services at the same or higher levels than last year, spending on economic development incentives to persuade firms to set up or expand business in the area has fallen by pounds 6.6m across Wales in 2012/13.

Community development funds, used for improving and promoting the well being of the community, also dropped by pounds 8.8m compared to 2011/12, according to figures given to the Welsh Government.

Business organisations said it was always likely economic growth would lose out to more pressing concerns.

Head of external affairs at the Federation of Small Businesses Iestyn Davies said the organisation was calling for local authorities to be allowed to keep a proportion of the business rates as long as they use the money to encourage business development and therefore grow the level of business rates collected.

He said: "Because businesses don't vote, it's people who haven't had their pothole filled or who's school budget has been cut or their library has been closed. There's no particular incentive for local authorities to get involved in development or local regeneration.

"That's why we think a partial retention (of business rates) would be useful because they should be doing more to encourage more economic growth but why would they unless there was an incentive above the greater good?" Emma Watkins, regional director CBI Wales, said the issue was not just about the money but about how councils support local businesses.

She said: "There is some concern about the money being cut but the emphasis should be the activity (of local authorities), of them having a general pro-business approach involving a number of activities under their control, whether that's awarding contracts or whether it's helping businesses get their planning through or working with schools and businesses to provide the people businesses are looking for."

Among the councils cutting back are Neath Port Talbot, which is reducing its economic development budget from pounds 11.3m in 2011/12 to pounds 6m this financial year.

Gareth Nutt, head of property and regeneration said: "There are always variations year on year and nearly pounds 5m of the variation between this financial year and the last can be attributed to changes in two particular externally funded programmes.

"The first was the Future Jobs Fund which ended across the UK in 2011/2012. The other was as a result of the European funded Workways project being extended. Reprogramming budget profiles over the life of the extended project timescale meant that the actual annual expenditure for 2012 was less than anticipated."

However, Robert Lloyd Griffiths, director of the Institute of Directors in Wales, said the constrained funds might help focus spending where it will be most effective.

He said: "I would say wise and prudent spending is far better than profligate and wasteful spending. It's got to be sensible, it's got to be proportional, it's got to be relevant."

He added that with businesses unlikely to only operate within one council area, there needed to be more joined-up thinking between different councils and the Welsh and UK governments.

SOCIAL SERVICES SOCIAL services is one of the areas to benefit from an increase in spending this financial year, with an extra pounds 34.5m for children's services across Wales and another pounds 23.8m for vulnerable adults.

Looked-after children appear to be the main beneficiaries according to figures given to the Welsh Government, with an extra pounds 16. …