House of Commons - Regional development agencies and the Local Democracy, Economic Development and Construction Bill

Regional development agencies and the Local Democracy, Economic Development and Construction Bill - Business and Enterprise Committee Contents

5 LOCAL AUTHORITY ECONOMIC ASSESSMENT DUTY

Initial SNR proposals

125. One of the SNR's key points was that local authorities needed to place more emphasis on economic development and neighbourhood regeneration within their wider community responsibilities. The SNR proposed that a statutory economic development duty should be introduced to ensure this.[115] This duty would require upper tier local authorities (either on their own or jointly with other authorities) to carry out an assessment of the economic circumstances and challenges of their local economy. The SNR envisaged that the assessment would form part of the analytical underpinning of the relevant regional strategy, local sustainable community strategy, Local Area Agreement and, potentially, Multi-Area Agreements.[116]

126. The Government recognised that this duty was likely to involve additional costs and undertook to fund these fully.[117]

127. The Government also acknowledged that local authorities would need to develop capacity and expertise in these new areas and undertook to support local authorities to do this.[118] It highlighted the Comprehensive Area Assessment (CAA) as an "important driver' in this process, which would "support the identification of capacity and leadership risks in an area while also providing an independent assessment of the quality of partnership working".[119] It went on to state that support to develop capacity and leadership would be provided through the National Improvement Strategy and stressed the importance of central government and RDAs in this development process.[120] In the SNR consultation document, the Government stated that it would work with the Local Government Association (LGA) and the Improvement and Development Agency (I&DeA) to assess capacity and develop a strategy for overcoming any shortfall that was identified, supported through the National Improvement Strategy.[121]

Issues raised in evidence on the initial SNR proposals

STATUS OF THE PROPOSED ASSESSMENT DUTY

128. All the submissions from local authorities highlighted concerns about the status of the new duty. Submissions pointed to the wording of the SNR consultation document which stated that the economic assessment would inform the integrated regional strategy. Local authorities sought assurances that the assessment would have a firmer footing within the process, for example, the County Council Network suggested that the proposals be strengthened to require upper tier authorities to lead, promote and deliver economic development and regeneration more generally.[122]

129. During the Committee's meeting on 7 October 2008, it became clear that private sector representatives also sought clarity on the precise purpose of the proposed assessment. The BCC was concerned:

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LOCAL AUTHORITIES' SKILLS AND EXPERTISE

130. Just as there were concerns about RDAs' planning expertise, there were concerns about whether local authorities would have the skills and expertise in relation to economic development issues they needed in order to undertake this proposed duty effectively. Witnesses alleged that local authorities had little or limited experience in this policy area. For example, the FSB was concerned "that some local authorities neither have capacity to provide the long-term leadership needed to plan for economic development, nor do they have the capacity to implement programme management and delivery effectively, or to perform the proposed economic assessments".[124]

131. When giving evidence, however, the BCC said it considered that RDAs and BERR would be well placed to support local authorities in developing the necessary skills (as the SNR proposals envisaged) , arguing that:

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132. Similarly, the LGA was confident that local authorities could develop sufficient expertise:

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Revised SNR proposals and Part 4 of the Bill

133. The Government has not significantly revised this proposal after consultation. Clause 63, Local authority economic assessment, creates the requirement for local authorities to prepare an assessment of the economic conditions of its area. Clause 63(5) provides that the principal local authority must consult with its partner authorities (listed in clause 64, Partner authorities) and other stakeholders and clause 63(6) creates a duty for upper tier and district councils to co-operate in undertaking this duty. The Explanatory Notes that relate to the Bill state that responsible authorities will be required to have regard to guidance issued by the Secretary of State setting out what an assessment should contain and how it should be prepared, when an assessment should be prepared and when it should be revised.[127]

134. The Government provided a policy statement on local economic assessments in January 2009. The document sets out the process that authorities, together with their regional partners, should follow when undertaking this duty, as well as the core principles that local authorities should apply to their assessments. These include identifying the economic linkages within the area; the comparative strengths, weaknesses and threats; how local authorities and partners can influence economic development within the area; regeneration challenges; causes of worklessness and environmental considerations. The document also confirms that "assessments should form a significant element of the evidence base underpinning local and regional strategies".[128]

Issues raised in evidence on the revised SNR proposals

135. When giving evidence to the Committee, the Minister stated that the purpose of these proposals was to make the incorporation of economic development and regeneration policies within local authorities' remit a requirement rather than, as is currently the case, optional. This was because "some local authorities do that well at the moment but it is patchy around the country".[129]

STATUS OF THE PROPOSED ASSESSMENT DUTY

136. The Minister clarified the status of the assessment within the new regional strategy process, arguing that it would enable local authorities to participate fully:

They (local authorities), through the leaders' board, which will represent local authorities on this, will be able to say "This is our view of the needs in our area", and they are their partners in drawing up the single strategy which involves both the planning element and the economic element in a way that has not happened before. I think you can see quite a clear line there between the assessment duty and the formulation of the single strategy.[

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137. This issue was also raised in the House of Lords during the Committee stage of the Bill on 9 February 2009 and assurances were given by Government Ministers that the economic assessment would feed into, amongst others, the integrated regional strategy.[131]

138. The Committee notes, however, that Part 5, Regional Strategy, of the Bill, including clause 71, Matters to be taken into account in revision, which lists the sources which those authorities drafting the strategy 'must have regard to', does not currently refer to the proposed duty.

LOCAL AUTHORITIES' SKILLS AND EXPERTISE

139. When asked about the capacity of local authority staff to undertake these new responsibilities, the Minister acknowledged that the aim of the SNR is to raise their skills and expertise through the assessment duty. The Minister stated that:

If you are asking me is there an issue of capacity in some local authorities, I think the answer is yes, there is, but the structure of the SNR is designed to raise that by fostering a focus at the very local level through the economic assessment duty and at the regional level through the Leaders' Board and the single strategy. (Q376).

The Committee's conclusions and recommendations

140. The Committee notes the Government's ambition to increase the role of local authorities in economic development and regeneration policy and agrees that the proposed economic assessment duty is one way to realise this. Concerns over local authorities' understanding of business, however, were raised in evidence to the inquiry and the Committee expects authorities to address any skill gaps before the first assessments are undertaken. The Committee recommends that the House seek assurance on this matter as the Bill progresses.

141. The economic assessment duty should not be seen as an end in itself, however, and there should be a clear mechanism to ensure the assessments are considered when the regional strategy is drafted. Despite assurances that this will be the case by the Minister, this is not reflected in the Bill. If this part of the Bill is not amended before it reaches the Commons, the Committee recommends that clause 71(1), Matters to be taken into account in revision, be amended to ensure that the economic assessments must be considered by responsible regional authorities when revising the regional strategy.

142. The Committee also notes the Government's commitment to provide support to enable local authorities to undertake this duty effectively. The Committee agrees that local authorities must be given the capacity required and recommends the Government should provide a statement setting out how this support will be provided and how Ministers intend to monitor its provision.

115 SNR1, para. 6.13 Back

116 ibid, para. 6.14 Back

117 ibid, para. 6.15 Back

118 ibid, para. 6.17 Back

119 ibid, para. 6.59 Back