Examination of Witnesses (Questions 115-154)
GEOFF FRENCH, PAUL GRESHAM, ALEX PLANT, CHRIS FLETCHER,
TOM RIORDAN
12 OCTOBER 2010
Witnesses: Geoff
French, Group Chairman, Scott Wilson Group PLC, Paul Gresham,
Chairman Gatwick Diamond Initiative, Alex Plant, Chief
Executive, Cambridgeshire Horizons, Chris Fletcher, Deputy
Chief Executive and Policy Director, Greater Manchester Chamber
of Commerce, and Tom Riordan, Chief Executive, Leeds City
Council, gave evidence.
Q116 Chair:
Right, good morning everybody. Thank you for agreeing to attend
this morning's session. Just a few words of organisation; we
have something like 30-odd questions for the first session, and
another session to follow with other representatives. So, first
of all, don't feel obliged to answer every question; if we feel
that somebody is evading anything or, shall we say, not participating
in a way that the Committee would like, we would direct the question
specifically to you, but do not necessarily feel that you have
to contribute on every question. Can I also make it clear that
obviously there has been a large number of submissions from would-be
LEPs, and the fact that we have invited you to come here and give
evidence this morning does not imply any particular approval of
your particular bid. However, we had to interview a cross-section
of these schemes, and you have hit the jackpot. Could I just get
you to give your name and the body you represent, just for voice
levels?
Geoff French: Good
morning. My name is Geoff French; I am here representing Enterprise
M3. Until a few weeks ago I was Group Chairman of Scott Wilson,
an international firm of consulting engineers working around the
world, but headquartered in Basingstoke.
Paul Gresham: Good
morning. I'm Paul Gresham. I'm the Chairman of the Gatwick Diamond
Initiative, and I'm also the senior partner of KPMG's office in
the South East, based in Gatwick.
Alex Plant: I'm
Alex Plant. I'm representing the Greater Cambridge and Greater
Peterborough Enterprise Partnership, and I'm the Chief Executive
of Cambridgeshire Horizons, which is the body set up to oversee
housing growth and infrastructure delivery across Cambridgeshire.
Chris Fletcher:
Good morning. I'm Chris Fletcher. I'm the Deputy Chief Executive
of Greater Manchester Chamber of Commerce, part of the Greater
Manchester Local Enterprise Partnership bid.
Tom Riordan: Good
morning. I'm Tom Riordan. I'm Chief Executive of Leeds City
Council. I'm the lead officer for the Leeds City Region Local
Enterprise Partnership. Until recently I was Chief Executive
of one of the Regional Development Agencies, Yorkshire Forward,
as well.
Q117 Chair: Right,
thanks very much. A very general question to start with: why
do you think we need LEPs? Couldn't we just abolish the RDAs
and do without? Very short answers please.
Geoff French: Shall
I start? Just very quickly, I think it's a great opportunity
to continue the integration of business and local authorities,
which, certainly in the North Hampshire area, has been going on
for some time, but I see this as a logical next step in that progression
of greater business involvement with the local community.
Paul Gresham: I
would echo that. The Gatwick Diamond has been going for eight
years and is a very good example of private-public partnership
aimed at improving the economic sub-region that we are, and the
more we can do to encourage that the better, and certainly the
businesses we're involved with would support that.
Alex Plant: I think
the issue really for LEPs is that the business environment, the
conditions that allow for successful economic growth, require
there to be an integration between the business sector, the third
sector and the public sector. During a period where times are
tough, and funding is going to be a very scarce resource, unless
we can actually get a greater level of collaboration between those
sectors we're not going to make the most of what will be a limited
set of funds.
Chris Fletcher:
I endorse all the views that have gone before, but I also think
the point of view of the focus on the functioning economic areas
is where the significant difference is between the RDAs and having
a void there. I think, certainly for a city region like Greater
Manchester, that gives us the greatest opportunity yet for taking
forward economic growth involving both the public and private
sector.
Tom Riordan: I
think if the Government is going to achieve its aim of rebalancing
the economy it can't do it from the corridors of Whitehall. I
think we need our own capacity to be able to do that, particularly
in the North of England, and there's a big gap between the national
and the local, and you need something in between to try and bring
people together in the way that has been said.
Q118 Chair: Thanks.
Some of you obviously have been working almost in sort of quasi
LEP-style structures for some time, which does seem to imply that
you feel there is a need for this sort of structure. What advantages
are there of this sort of structure in comparison to the RDAs,
and what do you think are the major challenges to you because
of the smaller scale of the operation? Tom, we'll start from
your end on this.
Tom Riordan: Thank
you. Chris just mentioned the functioning economic area, which
is quite a jargonistic way to describe it. If you think about
the way that jobs markets work and housing markets work, then
I think certainly what we've tried to come up with in the Leeds
City Region is something that reflects that in the way that we
try and work together. I think getting the local authorities
to work together in our area is vital; we've three of the top
10 biggest conurbations in the country outside London, so getting
that right is vital. I assume the big challenge is going to be--unless
something quite surprising happens--that there are much less resources
for this activity, and I think how we make that work is the central
challenge here.
Chair: You don't
have to repeat each other.
Chris Fletcher:
I agree, but perhaps the main issue is that it puts things right
back at the heart of the communities; we've a great history in
Greater Manchester of the private and public sectors working together.
This is the next stage of that, but something with a real purpose
behind it.
Alex Plant: I think
the opportunity is to make the LEPs more truly business led, because
RDAs haven't always felt as if they were, and I suppose echoing
what both Chris and Tom said, it gives you the ability to have
a genuine local focus and differentiation, because the issues
that concern us in Cambridge will be different from those that
will be facing colleagues in Lowestoft. In a regional context,
sometimes that was difficult--to get the true local focus that
you perhaps want.
Paul Gresham: Absolutely,
the business focus is important. SEEDA, which was our RDA, was
very supportive, but it did have a large geographical patch.
We have a specific local economic sub-region with an airport at
the middle of it and it is very important to major on that, and
it's very important that it is business driven so that we get
engagement with businesses for funding and for resources.
Geoff French: Just
one other factor, if I could, Chair, that hasn't been mentioned
yet, which is the fact that the LEPs give you the opportunity
to look at the geographic areas and have logical areas for each
LEP, rather than areas that are dictated by historic boundaries,
which are really no longer applicable in many instances.
Chair: Thank you.
Alex Plant, you wanted to come back.
Alex Plant: Thank
you, Chair. One other opportunity we didn't mention is that the
RDAs were dealing with a certain set of issues, which was effectively
the BIS agenda at a more local level. I think one of the interesting
things for me is this is an opportunity to bring the BIS and the
CLG agendas together, because that's traditionally been quite
difficult. In Whitehall you've tended to have the departmental
side of BIS, CLG and, I might add, DFT as well. If we get LEPs
right you could have a genuine co-ordination of the issues around
housing, planning, transport, environment, skills, and really
make that happen through place, and that is an opportunity I think
perhaps we should try to grasp.
Chair: Thank you.
Nadhim.
Q119 Nadhim Zahawi:
Thank you, Chairman. Can I just press you a little bit further
on this and ask you what you all think the critical mass is for
a LEP—whether it is size of geography, population, area
GDP? You may want to come to it from your own perspective, because
obviously there will be differences in different parts of the
country. Why do you think your proposal, and how it would work,
is better than possible other options?
Paul Gresham: Shall
I kick off with that? From the Gatwick Diamond perspective, it
isn't about population; it has to be about the local economy and
where the businesses in the local economy look to. With Gatwick
and Crawley at the hub of it, we get businesses looking from Brighton
up north to Gatwick, and we get businesses looking down from Croydon
and then the east and west. That would give a population of between
800,000 and 1.2 million to 1.5 million, depending on what you
put in, but you can't necessarily have businesses perhaps in rural
Chichester, which would look towards Portsmouth and Southampton
rather than Gatwick. It has to be very much about the local economic
area.
Tom Riordan: I
think the further away from London you are, the more critical
mass you need, from my experience of the last few years in the
RDA. Particularly in the North, we need significance to catch
the eye of those national agencies and policymakers who sometimes
find it quite hard to get their heads around the geography of
the country. With Leeds and Manchester in particular, there is
a real opportunity to create a new economic growth area in the
country that really starts to punch its weight and is seen as
a positive to people such as those in the Treasury. The LEPs
do give us an opportunity to do that; there is a lot of enthusiasm
from businesses in particular. Critical mass around economy,
geography and population in the North would be my argument for
what is needed.
Q120 Nadhim Zahawi:
What size population?
Tom Riordan: We
are 3 million Leeds. I don't think it's an exact science, but
the growth areas around the Leeds City Region and the Greater
Manchester areas are the ones that I think could really drive
some additional growth for the country.
Geoff French: Building
on what Tom said, it needs to be larger as you go away from London,
so those of us on the fringe of London will be smaller, because
the prime requirement is coherence—coherence of the area.
It is difficult to have a huge area adjacent to London and have
that coherence. I was looking at the evidence given by the Local
Government Association, and its spokesman spoke about having areas
that were small enough or appropriate enough that you could have
a passion for them--that was the word he used--or an affinity
for them. I think that's very much the case. I can have an affinity
for North Hampshire and the M3 corridor, because that's where
I spent all of my working life, but not for some larger amorphous
mass.
Alex Plant: I think
there's an issue about the areas around London, outside of the
metropolitan cities, which have a different spatial make up, a
different economy, but also that some of our small cities really
matter, and a lot of the high growth potential is in those small
cities, as well as in the metropolitan areas in the North. You
look at somewhere like Cambridge, which has fantastic high-tech,
high-growth opportunities in there, and one of the few areas in
the UK that is a genuine global brand. Therefore, that scale,
in our case, is about looking at Cambridge and its travel-to-work
area, looking at our neighbouring city of Peterborough, with high
growth potential as well, and putting those together into a single
place. The population of that is about 1.3 million, but we are
also one of the most rapidly growing areas of the country, so
our population growth is expected to go on to about 1.5 million.
I often look at somewhere such as Cambridge, which
has this depth in terms of knowledge economy and the best university
in the world, and it feels like it has the conditions that allow
for a rapid economic growth, such as Manchester perhaps experienced
200 years ago, when all the conditions were right in the industrial
revolution. We are at a knowledge revolution now, so how do we
make those buoyant cities really work for the country as a whole?
Q121 Nadhim Zahawi:
Thank you for that. So just following the logic of being close
to London, we need smaller clusters and, further away, bigger,
do you agree with the submission that we had from the South East
Diamonds for Investment & Growth, which suggested that it
was right for there to be a greater number of LEPs in the South
East? Do you think there are disadvantages associated with that?
Paul Gresham: I
do not think there are necessarily disadvantages, because you
have to get the size according to the economic area. I don't
think there are disadvantages other than, is there overhead that
gets put into it? If you operate, as we do, is on a very low budget--our
budget last year was £200,000--you can then actually scale
according to what you have; you don't have to put a lot of resource
into it.
Alex Plant: Once
the LEP landscape becomes a bit clearer, what will naturally happen
is you will have the core operating base, which is the LEP, but
there will be times when you then come together across a broader
geography, because issues will naturally lend themselves to that.
You need to treat this with a degree of flexibility.
Geoff French: As
the other South East LEP at the table, I ought to add my voice
to that. All that's been said here is right, although I suspect
that the number of LEPs that there should be around London depends
on the number of good bids you get for LEPs around London, quite
honestly. I think there is a fundamental point there: rather
than forcing things, the whole idea of this process was to see
who put forward coherent proposals based on strong business support,
functional areas and the like, and that ought to be the discriminating
factor. I do not believe there is any problem in the Diamonds
working together where they have common purpose and common cause.
Q122 Nadhim Zahawi:
Let me push a bit further on that point: you think there is no
disadvantage at all in having the smaller LEPs, but do you think,
then, you will have sufficient leverage and voice with national
Government, and outside bodies, to be effective if you are smaller?
Geoff French: I
think we are just trying to strike a balance. I think if you
go back to what I said earlier, it's areas that you can feel passionate
about or have an affinity with, so to get business really motivated
in your area, it needs to be a relatively small, coherent area,
but we're all big boys; we will come together where we have common
cause to make with Government or whatever. We already have worked
significantly in the Basingstoke Diamond, with Reading and with
Oxford, which are other Diamonds, and when appropriate we will
very happily work with Paul and the Gatwick Diamond to my left
here, so I don't see that as a problem at all.
Paul Gresham: I
believe we've been punching above our weight in terms of size
for a number of years, because we have existed for a number of
years with the airport at the hub, so I don't think we would have
an issue.
Q123 Nadhim Zahawi:
Does everyone feel the same way?
Chris Fletcher:
I would use the Goldilocks argument a little bit: it's either
too big, too small, and it's what feels just right is what you
should actually go for. Not too far away from Manchester, we've
the situation in Lancashire, for example, where there's a lot
of open warfare, I suppose, breaking out and putting three bids
in instead of one. It's what feels right, and it's also about
what potential there is there. There's no point setting up one
of these bodies if it's just going to go along in glorious isolation;
there has to be something that it's going to address. We've got
significant issues in Greater Manchester, and we see the LEP for
Greater Manchester forming a real answer to some of those problems
around worklessness, productivity and so on. So sometimes what
you're actually setting up to achieve and deliver is just as important
as the size of it.
Size: does it matter? It is the agreement between
partners about what they are actually there to do—that is
the most core, fundamental thing when people are putting these
things together.
Tom Riordan: It
is the objective that you're aiming for that's important and form
follows function. The objective may be slightly different. As
I said before, nearer to London it's much more of a stimulation
of private sector investment that's possibly going to be there
already, and organising that better. In the North, and those
places further away from London, it is more of a challenge, I
would say, for those areas that are going to be hit hard by the
public sector cuts, and there isn't the tradition and the culture
of strong private sector growth. I think there is a risk in that
for those areas.
Q124 Nadhim Zahawi:
Thank you very much. I'm conscious of the time. Just a supplementary
for the 'de-flawless' Gatwick Diamond: your memorandum says that
it is crucial to recognise the Gatwick Diamond as a functional
economic area, not to disadvantage it by forcing it into partnerships
with areas that are not part of the airport-led economy. What
will you gain if you end up being part of the Coast to Capital
partnerships, and what will you lose? Is the real thrust of your
submission that you don't really want to be linked with a rural
tourism economy?
Paul Gresham: What
will we lose being part of the Coast to Capital, if I can answer
that first? The main thing is that it has to be cross-county-border
and the problem with pure Coast to Capital is it doesn't include
Surrey, and Surrey is an important part of the Gatwick Diamond
economy. We have to make sure we have the interaction with businesses
and with the Surrey authorities, and at the moment we have six
district councils, three in Surrey and three in West Sussex.
One of the benefits of what we have been doing is getting them
to talk to each other, to think about planning, to think about
transport, to think about the economy, to think about skills and
education. We mustn't lose the benefit of that gained over the
last eight years.
What do we gain from it? I think we can look further
north and further south, and we've had more discussions, as a
result of this process, with Brighton and Hove, and with Croydon,
which I think is great, because they can say, "Actually,
we do feel part of the Gatwick Diamond." Do we have an affinity
with rural West Sussex? It is an important part; we have a national
park in West Sussex, which goes into the Gatwick Diamond, so tourism
is important. We get lots of visitors coming through the airport,
but we don't have quite such an affinity from an economic and
a business point of view, because some of the risks and issues
are different. Does that answer?
Chair: Could I
bring in Brian Binley?
Q125 Mr Binley: Just
a quick supplementary, really. It's interesting, gentlemen, that
you all think size doesn't matter—I find that a particularly
interesting comment—but can I press you on what I saw as
a contradiction? On the one hand, you're arguing that it's areas
that people have a passion for that really matter, and I have
some sympathy with that, but on the other hand, you argue that
the traditional boundaries don't matter. Yet people have a massive
passion for traditional boundaries. Believe me, in Northamptonshire,
Sir, they do, and they did in Hereford and Worcester, and they
did around Avon--let me finish--when Peter Walker was involved
in local government reform in 1973. Counties do matter to people.
Traditional boundaries do matter. How do you pull those two
things together?
Geoff French: Well,
since you were looking at me as you asked that, let me try and
answer. I am sure there are some areas where people have a great
affinity for the current counties and the current county boundaries,
and in those cases I would expect to see that reflected in the
LEP submissions that came in. In other areas—I think Gatwick
is quite similar to the North Hampshire example—when you
are at one edge of a county, or at the edges of several counties,
and we are at the northern edge of Hampshire, the western edge
of Surrey, and the southern edge of what used to be Berkshire,
now Reading, there isn't quite the same affinity, especially if
the characteristics of that area are significantly different from
the rest of the county.
To take Hampshire as an example, you will think either
green, rural economy or you'll think Portsmouth and Southampton.
Neither description applies to North Hampshire, which is completely
different. It is horses for courses.
Tom Riordan: Could
I just add to that? I think it is different, as has been said,
and one of the problems with the RDAs was that they never managed
to become creatures of our regions enough, because of the lack
of democratic accountability and despite lots of efforts by people
and good working relationships with local government. The people
are more passionate, where I come from, about different things;
even in Leeds, people are more passionate about being from Morley
than from Leeds in some parts of Leeds; people are passionate
about being from Yorkshire and from Leeds. I do not think that
is the dictating factor in what we have put forward. What we
want to do is try and get an approach that allows flexibility
within it; if Leeds and Bradford need to work together on something,
they can. If all of us need to work together on something else,
they can.
Chris Fletcher:
To add to that, a lot of the business support model was done on
a regional boundary basis, and in various city regions and various
areas in that, you have that local identity, but the overarching
regional delivery structure wasn't delivering properly on the
ground for big people in those areas. That is where you have
this local pride, local focus, against the larger local area.
Paul Gresham: Counties
matter to the residents probably more than the businesses. Often
businesses do not mind whether they are based in Surrey or West
Sussex. How do I see that? Our vision is that people go, "We
might live in West Sussex, but we are part of the Gatwick Diamond,
which is a vibrant business economy."
Alex Plant: We
very much take it from a business perspective.
Chair: I think we have
probably explored this one. Rachel Reeves, you had a separate
one?
Q126 Rachel Reeves: Yes.
A few weeks ago we had representatives of the five main business
bodies in front of us, and they said very clearly, all five of
them, that the number of LEPs did matter; that there were far
too many bids in; that 50 or 60 LEPs was not a sustainable number;
and they wouldn't get the business buy-in that they needed. I'm
hearing contradictory things from you today, but that is very
clearly--I think we will all agree--what the business representatives
said to us. What level of business buy-in are you getting for
your bids, and do you think that we can have 60 LEPs, especially
with the funding arrangements and the size of the Regional Growth
Fund, which is about a third of the money previously available
to the RDAs?
Chris Fletcher:
Do you want me to lead on this, coming from a Chamber of Commerce
perspective in Greater Manchester? First of all, the number issue,
I think, goes back to what Geoff or Paul said--I cannot remember
which--but it is very much around what works. It is not a numbers
race; it is what works. The bids have to be effective, and if
that is 20, 30--
Q127 Rachel Reeves: Is
it about economies of scale as well?
Chris Fletcher:
Absolutely. Also—this is going back to the Greater Manchester
proposal—we have roughly 100,000 businesses in Greater Manchester;
that's a huge number of businesses, roughly 1 million employees,
and a GVA of about £50 billion. That is larger than some
European countries in some respects, around the size of the economy,
so it makes perfect sense if there is one for Greater Manchester.
Businesses are very interested in this; there's a great deal
of interest out there—a surprising amount of interest out
there—and part of that might have come from the fact the
RDAs are going and the LEPs are taking their place, so immediately
they are aware of what local enterprise partnerships are.
From our members' perspective it is very much around
making certain that the LEP represents what they want from businesses,
what they want to put in place and support their growth; there
is a lot of business backing for these and a lot of interest.
However, obviously what we need to see, when we get the "yes"
or "no", is how that is delivered on the ground; that
is the key thing. The people who are then responsible for the
LEP will have to bring with them that level of support that we
have seen up to now, and that is the crucial litmus test for things
going forward.
Alex Plant: To
answer your question, our businesses' response to this has been
very much seeing that this is their area. When we're talking
to businesses in the Science Park in Cambridge, they're interested
in their immediate area, their labour market, and that is what
drives them. The reality of the true economic geography might
be that, in the South and East, you have the area that you're
in and the labour market you fish in; then you have London, and
then you have, in our case, West Coast US. We're not going to
have a LEP that covers that, because it's not possible, but doing
something bigger—to pick up an economy of scale mentioned
in the conversation I had with lots of our business colleagues—started
to lead them to disengage. It goes away from the things that
really drive their businesses.
Paul Gresham: I
would just add that we have very good business involvement so
far, and to carry on it needs to be a mixture of large and small
businesses. It is very important that we have the SMEs involved,
which we do through a business association and through the FSB.
Indeed, one of the co-founders of the Gatwick Diamond owns an
SME. I think that it is particularly important that we cover
all sizes of business.
Geoff French: Can
I jump in quickly? On the whole business about the number of
LEPs, surely you go back to the exam question almost, and that
is, the LEPs are asked to come forward and identify the functional
areas, identify that they have business support, identify all
the other good things. If they don't have business support, if
they haven't evidence that they have business support, that would
be a reason for not appointing them as a LEP. We would not have
submitted the bid if we hadn't got the level of buy-in from business
for the LEP submission that we got. I can't answer for all 57
bids; I can answer only for ours.
Chair: Can I bring in
Jack Dromey?
Q128 Jack Dromey:
Thank you, Chairman. In our first evidence session, the Chair
of Advantage West Midlands said as follows: "It would be
very difficult for six LEPs separately to address either of the
issues of supply chain and international competitive advantage.
Major industries, like automotive and aerospace, which, again,
spread right across the West Midlands, would not wish to deal
six times with different bodies to address the macro-issues that
concern them. All of that points to the need for some form of
coordinating body." We then had evidence from the business
community, and the CBI, the IoD, the Federation of Small Businesses
and the Engineering Employers Federation, in different ways, were
all very clear indeed that in particular regions it was of the
highest importance that you had a regional co-ordinating function
and focus—for example, in the West Midlands on the automotive
industry, in the North West on the nuclear industry, and in the
North East chemicals, process and engineering.
Now, that is what has been said to us in evidence
before this Committee. Do you agree with that, or, can I put
it this way, does anyone disagree with that?
Geoff French: I
disagree with that, because all the examples you quoted were around
the North West, the North East and the West Midlands. I think
the nature of the economy in the South East isn't quite that--
Q129 Jack Dromey: But
I did not refer to the nature of the economy in the South East.
Geoff French: Yes.
I know you didn't. Sorry Jack, I was just trying to answer your
point. I thought it was a general point you were making that
there perhaps should be regional co-ordination in every region,
and if I've misunderstood your point I apologise.
Q130 Jack Dromey:
In the evidence given to us thus far, there has not been the same
strength of feeling in relation to, for example, the South East
and the South West, but the evidence is very clear in relation
to the Midlands and the northern regions in the way that I've
described. It would be interesting to get comments on that.
Tom Riordan: I
would agree with that analysis, and we're working with the other
LEPs in Yorkshire as they're emerging to look at which issues
we still need to collaborate on, and there are issues like--I'll
give you one example--carbon capture and storage, which is something
that Yorkshire Forward did some great work on. We've got the biggest
scheme in the world about to start in Doncaster. It will provide
a massive job generating opportunity if it succeeds; it would
be daft of us not to work with the Humber and with South Yorkshire,
which has the skills. The Humber has the access to the ports;
we have some of the power stations. So it's about working together
on those issues where it matters to do so. So I would strongly
agree with that, and I think that one of the dangers is that the
people we've got working on those things, who are in the RDAs
at the moment, are in danger of just being made redundant and
going, and we, as LEPs, would want to have that specialist expertise
going forward. The difficulty at the moment is working out exactly
what those issues are, what the framework is and how much resource
is available, because once you know those things you can, cut
your cloth accordingly.
Chair: Yes, yes, just
a moment. David?
Q131 Mr Ward: Just
to keep the ball rolling, really, I have a supplementary about
the YEP—that's specifically in the region. Do you want
to tell us about Yorkshire Enterprise Partnership?
Tom Riordan: Yes,
we are talking to our partner LEPs about whether we could work
together, and one proposal that has come through purely from a
group of businesses is to have a community interest company; it's
been called the Yorkshire Enterprise Partnership. I don't think
it is designed to be something that is like a LEP; it's more about
delivering those things that I was just talking about that should
be done on that Yorkshire-wide basis. We have a very successful
tourism body that's increased our tourism, in a recession, by
about 20%. Again, it would be a bit remiss of us to let all that
expertise go. So I think in our part of the country we probably
do need something that's slightly different to do different things.
Q132 Jack Dromey: Can
I just then follow that through. Chris, take, for example, the
North West—nuclear?
Chris Fletcher:
Yes. The work so far on this, and the transition from the NWDA
to however many LEPs there will be in the North West, it's set
in process now where those groups are being formed to look at
those issues, and particular issues like that are being picked
up and recognised. There's a great deal of skill, a great deal
of work has gone in already in the North West, and to back Tom's
point up, the danger is that that just gets dissipated and disappears
completely off the scene. There are a series of groups being
set up to handle the transition over, and to input where necessary
on those region-wide issues, shall we say, and maybe particular
sectors in particular areas. The work, as far as I'm aware, hasn't
advanced yet to looking at those individual issues at that level,
but certainly the drive and determination are there, with the
public sector and the private sector working together to make
certain that whatever advances have been made over the last few
years through the RDA are retained.
The important thing is that whatever the regional
groups are going forward, they are a product of the LEPs, not
the other way around. So, in other words, the LEPs feed into
the region, not the region feeds out to the LEPs, because otherwise
we're just reinventing the RDA all over again. I think that's
an important difference there, and it also reflects the ability
for those local areas—where there may be, for example, a
particular individual company that specialises in nuclear manufacturing,
using that as an example—to get maximum benefit out of it.
It's important we don't lose that connectivity, so plans are
in place.
Q133 Jack Dromey:
So the notion of successful LEPs, sensibly defined, but where
appropriate in particular regions—a continuing regional
co-ordination and focus in particular on key manufacturing sectors?
Chris Fletcher:
I think it has to work like that. It may well be, for example,
that under that model--this has been mooted in the North West--a
particular LEP may take the lead where you have, for example,
a particular cluster of businesses involved in a region-wide specialist
sector. It may well be that the LEP for that area takes the lead,
as it were, among the other LEPs to begin to pull that strategy
together.
Jack Dromey: Preston or
Cumbria depending on--
Chris Fletcher:
It could well be.
Q134 Jack Dromey:
Can I then ask just one other set of questions? It relates to
the Department's list of functions that would be co-ordinated
centrally. Now, I'm not going to go through all the list of the
functions that have been cited thus far, but can I ask about two?
Inward investment: the problem about the evidence that we've
heard thus far is when you do not have an effective regional or
city region focus, or in your case, a passion for Gatwick, and
look at the track record of the UKTI: £6 in £10 of what
has come by way of inward investment through UKTI has gone to
the southern swathe of England. Now, with a passion for Gatwick,
you may throw your hat in the air; I'm not sure that would be
the case in relation to Leeds and Manchester. How do you overcome
the problem of what happens if it's done centrally, including
incidentally in relation to ERDF monies?
Tom Riordan: I
think the point is a powerful one, and I think the danger, one
of the risks at the moment, is that BIS centralises too much,
and I think, as I said at the start, you can't rebalance the economy
from the corridors in Whitehall. We have to be given the opportunity
and the capacity to do that from our patches. My experience of
working with national agencies is that they do find it quite hard
to get their heads round the geography of the country, so they
are going to have to get much better than that. At the same time,
we should almost jointly commission activity with BIS in those
parts of the country where they believe that they want to get
more growth than otherwise would happen on its own. I think that's
a difference again; it's about more of a partnership with BIS,
recognising and accepting that there is a national framework that
we're working within, not as much flexibility as before and less
resources, but given that capacity and those resources to do the
job.
Chair: I'd say that seems
a fairly definitive answer. Is there any other speaker who wishes
to disagree with it?
Q135 Jack Dromey:
Just a final quick question: another function to be centralised,
MAS. How do you have the effective delivery of that kind of advice
service? We've heard in evidence it has been greatly welcomed
by the business community. How do you have that from Whitehall?
What are the regional delivery mechanisms?
Chris Fletcher:
We've been quite clear about that; we're looking to retain MAS
as a key function for growing the manufacturing sector in the
North West and Greater Manchester. There are certain things in
this that it just does not make sense to have as centralised functions
and, in fact, there's artificial barriers being put in place right
from the word go in the whole structure to begin to say, "Well,
these are led nationally; these are led locally." We have
been given the go-ahead for LEPs; it has obviously been recognised
for the ones that have been successful that there is a way they
can work effectively. I think it just needs any powers that they
need to deliver what they've put in their proposal that needs
to be delivered locally, whether that's MAS, inward investment,
business support, whatever it is; they need the full range of
tools to do the job effectively.
Chair: I think
there are signs of, shall we say, flexibility on this. Brian,
can I bring you in?
Q136 Mr Binley: Yes.
I think two of my questions have been well answered, and I'm
perfectly happy with the information we have. I just want to
bring this together, because it is an important part of what we're
trying to do. It seems to me that the old Danegeld line has some
relevance in more ways than one in this debate, because you do
have a sizeable difference between the areas Jack describes—the
West Midlands, North West, North East and Yorkshire—and
the South East, South West and my part of the Midlands. There
are different needs there, and that argues massively for flexibility.
So it seems to me that, as we've already said, the size of the
LEPs doesn't matter, but the powers do. Their powers to co-ordinate
and work in partnership are absolutely vital to the success of
this project. So, should we leave it to the LEPs to decide or
should there be a little bit more direction from the centre in
terms of co-ordination in the way that Jack is talking about,
or looking at those rather smaller needs, which are related to
smaller-sized businesses in the areas that some of you are talking
about?
Alex Plant: Shall
I have first go? I think the key point in the question is that
the barriers to growth, which I think we're all concerned with
wherever we are in the country, are different, as you say, and
the ability for the individual LEPs to be given the tools, the
powers and the freedoms to have a go at unblocking them is absolutely
critical. The issues that I know are preventing the area that
I'm representing meeting from its economic potential are very
different, because we've mainly got an issue about labour markets,
housing supply, transport infrastructure. Skills is an issue
for part of the region, but not all. If Tom or Chris were doing
their analysis of the Leeds or Manchester areas it would be different.
You have to facilitate the ability for the LEPs to get on and
address their individual barriers, and to do so by bringing together
the best of the private and the public sector resources available.
So that goes to a model that is fairly strong in
terms of its devolved powers, and, by the way, needs a bit of
funding. You have to have a bit of funding to get this going
otherwise you're never going to get anywhere. I suppose it also
goes to the issue of rebalancing, which was mentioned by Tom just
now. To my mind, rebalancing—yes, it is about rebalancing
away from the public towards the private sector, which we're going
to have to do given the overall economic prescription that the
Chancellor is giving us, but actually it's in no one's interest
if Cambridge doesn't grow rapidly; that's bad news for Manchester.
What we're trying to go for, surely, is not a North-South rebalancing,
but general growth. So we're investing in areas that can grow
rapidly, and particularly those areas that can grow their private
sector job base.
So you need a little bit of the framework around
it, which I think was your question, which enables those things
to happen, but then gives sufficient powers down to the local
level really to allow them to get on and address their critical
barriers.
Chair: Can I bring
David Ward in?
Mr Ward: Sorry, Mr Gresham,
you look like you might--
Paul Gresham: I
would echo that, but I think it has to be about what are the issues
facing the local economy, and they will differ. He has a best
university in the world; we don't have a university, and therefore
one of our issues is getting the right skilled work force, and
that's something that we would be addressing. Now, I don't need
someone to tell me to do that, because we know, but I would need
help with how we best do it, and that's one of the things that
I think we would be doing.
Geoff French: Can
I come in quickly, Chair?
Chair: Yes, if
you are quick; we are running way behind, and I'm conscious that
we have another team to interview.
Geoff French: A
one-liner: I'm intuitively against setting up co-ordinating bodies
until you've worked out what it is you're trying to co-ordinate.
Q137 Mr Binley: So
on a needs basis? That's what you were talking about?
Geoff French: Yes.
Mr Binley: That seems quite sensible
to me. But not direction from the centre?
Chair: David Ward
on skills.
Q138 Mr Ward: Just
following on the functions theme—where do you see LEPs in
the skills agenda?
Paul Gresham:
I think I've answered that from a Gatwick Diamond perspective;
we want some involvement in the skills agenda, because we know
we have a bit of an issue, and we think we can influence it, but
we do need support.
Geoff French: I
think that is right; it's a classic case of the division between
the national policy, which would apply to universities and that
sort of stuff, and the higher education and that level, and colleges,
which apply within our area and where we can have a direct influence
on what is being turned out.
Tom Riordan: Of
all the policy areas, skills is probably the most complex in terms
of the strategies, the plans, the bodies, the ways that you try
and think; you have to think in five dimensions sometimes around
national, local, clusters, levels, Level 4, Level 3 and so on.
I think if the LEPs are to be given a role on skills it should
be to try and drive simplicity, working with the business community
to try and cut through some of this complexity and really get
universities, FE colleges and businesses working together. We
all obsess about structures and about the public sector bits of
funding, but most of the investment in skills goes on private
investment. How do we work with that better? How do we get that
to work better? How do we get that to help our universities,
which are, as we speak, having challenges of their own?
Chair: Can I just
bring in Luciana with a quick one and a quick answer.
Q139 Luciana Berger: We
know that the Scottish and Welsh RDAs are to remain. How do you
think, or how will you ensure, that LEPs will remain competitive?
Tom Riordan: I
think this is a big problem, and one where we need--I come back
to what I said before--national agencies and Whitehall to become
much better at being geographical when it comes to England and,
if you like, batting for us in a way that perhaps they haven't
needed to in the past. We also need the bigger LEPs in the North
to punch their weight, and to make sure that we work together.
There may be some issues where we want to choose one or two things
to work together to make sure that we are being heard alongside
the Scottish and Welsh voices.
Alex Plant: I just
would say I think there's a real risk, because at the moment the
position seems to be there would be almost no funding at all for
LEPs. If you end up with a real shoestring position for LEPs,
but very well-funded, big Secretariats in Scotland and Wales,
the consequence for England is not necessarily going to be very
good.
Chair: Can we move
on now to Rachel Reeves?
Q140 Rachel Reeves: Obviously,
economically we're facing an extremely challenging time at the
moment, emerging just very gradually from the recession. In that
context, do you think that this is the right time to be changing
the structure of regional economic development?
Paul Gresham: Given
that the policy has been that it is changing, I think we're all
sitting here saying it's fine to change, as long as what we come
up with is better and makes a difference to the economy, and helps
our local economies grow.
Geoff French: I
have no problem with the change if it makes everything more relevant
to the partnership between local authorities and the business
community.
Alex Plant: Potentially,
it is exactly the right time to do it. It's the point I made
earlier about how we've never managed to integrate those issues
of housing, planning, transport--they've always sat in different
boxes--and, in a world where resources are tight, effective collaboration
becomes all the more important, so we have to get this right,
and I think the chance is now. The problem that I have around
the general position of moving things down to the local level—that's
desirable and sensible, it gives you the ability to address those
things, and it feels like there may be some powers around to do
it—is that you also need the funding ability, whether that's
direct funding or ability to raise funds. Without that it won't
work.
Chris Fletcher:
I agree from a time perspective. I think, when is a good time
to do it? If they deliver in the way that people are expecting
them to, and certainly planning to deliver, there will be a significant
boost in opportunities to get the economic growth and recovery
programme back on track and fully functioning.
Tom Riordan: For
those regions where it worked pretty well, there is a real issue
for the community around the specialist expertise that sits in
those RDAs—how do we hang on to it? How do we make sure
that it's not just going to disappear and then be re-employed
by the public sector at greater cost to the taxpayer? That's
the key transition issue.
Chair: That touches on
a number of issues. Just a moment: Rachel and then Jack Dromey.
Q141 Rachel Reeves: Just
building on that, particularly for you Tom, what would you do
to make sure that that information isn't lost and that we have
a transition that works for the region, for example, where you
and I are operating?
Tom Riordan: I
think BIS, working with the LEPs, needs surgically to look at
what the current RDA does and what the LEPs will be tasked to
do, and to make sure that those functions are resourced, and that
the people who do them at the moment are retained in the new structures.
Chris Fletcher:
The danger is if you don't do that, you could end up with the
LEPs having to reinvent what's gone beforehand, and straight away
any resource that is there disappears on reinventing the wheel,
and that is a real problem, and it's a significant challenge,
and one that should be avoided, because that would be the worst
of all possible starts for the new structures going forward.
Q142 Rachel Reeves: Are
you having those types of conversation with the Department and
are you confident that some of the things and some of the people
who are working at the RDAs could be transferred to the LEPs and
that that would be funded by somebody? Presumably the local councils,
with the cuts that they're having to make, are not going to be
able to pick up the bill for the old RDA functions.
Tom Riordan: We
are having the conversations with the RDA in the region, and there's
this group of business people who are putting forward a proposition.
The problem, as with a lot of these things, will come with the
pension liabilities of the staff, and that's an issue that needs
addressing centrally so that we can retain the people. It would
be the main stumbling block to whether it's councils or chambers
of commerce or groups of businesses that want to take over these
functions. I suspect that will be the main liability that they
would be advised by their auditors or their financiers not to
take on, and that's the key barrier to it happening.
Chair: Jack Dromey.
Q143 Jack Dromey: Just
following on from what my colleague Rachel has asked, so your
message then--it seems to me that it's coming from all of you--is
that two issues are key. First, this issue of transition and
the preservation of specialist skills, particularly of a sectoral
nature. Secondly, Alex, your point about resource. Therefore,
what is your message, not to put words in your mouth? You described
the issue of transition as needing to be sensibly handled, including
with the Department, and the issue of resource, likewise, needs
to be sensibly addressed. You might want to expand on that.
Alex Plant: I think
I agree with both issues, but the issue of resource has to be
dealt with sensitively, particularly during the transition period.
There's a real risk of babies and bathwater coming upon us at
the moment and, for the want of a relatively small amount of funding,
particularly in those start-up years, you might lose some of those
things. Yes, I can see clearly that money is extremely tight,
everybody is going to have to be working as leanly as they possibly
can, but some resource funding and the ability to raise your own
finance, which is a really good question that we may come on to
later on in the discussion, are the key elements. But 2011-12
looks a really tough transition year, and like Tom we've been
talking to colleagues in the RDA and in the Department, but without
a little bit of resource magic none of this stuff is going to
happen.
Geoff French: Whether
it's resources or powers or the ability, as Alex has just said,
to raise money, be that that through TIFs or supplementary business
rates or whatever, some ability to shape your own destiny is needed.
Chair: I need to move
on and bring David Ward in. We're getting very short on time.
If I appear to cut any of the speakers off, please feel free
to submit any supplementary written evidence that you may wish
to give. It is not that we do not want to hear what you say;
it is just that we are running out of time to hear it and we have
other organisations whose advice is equally as important. David,
quickly?
Q144 Mr Ward: Well,
you've successfully identified the baby and bathwater section.
We don't seem to know yet where we want to be, but we are interested
in how we get from here to wherever that will be. The idea of
piloting—is that something some LEPs are trying out and
seeing what works? Will you favour that?
Geoff French: It
depends how many good LEP bids there are that meet the exam question
that was set. If there are a number of good ones, I don't see
any reason why we shouldn't push ahead with them. I think it
would be wrong artificially to constrain the number, especially
if there are good bids.
Chris Fletcher:
The other issue is taking this to intent—why it was originally
put together and the whole idea behind a LEP, which was that no
two would look the same. So to say, for example, the Greater
Manchester model would work in Cambridge, and vice versa, I don't
think it would do. I also think as well the issue there around
pilots is you potentially could be seen to be adding a time delay
into the process. The one thing we haven't got is time to be
playing in the sandpit for some of this, because the economy is
not getting--
Q145 Mr Ward: Maybe
pathfinders, would that be a better word?
Chris Fletcher:
I think there needs to be something whereby the ones that are
initially given the go-ahead need a real, proper look at the lessons
learnt and so on, but there's a fine line between doing too much
of that and delaying actual moving forward with the benefits from
a LEP.
Tom Riordan: The
important thing for me is to move at the pace of the fastest,
not the pace of the slowest, and anything that can enable us to
do that and that recognises flexibility and difference will help.
Chair: Can we move on
to funding and resources with Rebecca Harris?
Q146 Rebecca Harris: A
number of your submissions have made some aspirations at least.
I think Greater Manchester says you'll be able to operate on
a third of the running costs, presumably for an RDA--
Chris Fletcher:
From a business support perspective.
Rebecca Harris: Right.
I would be interested to hear about that. I gather Enterprise
M3 reckons we are going to be financially sustainable, or aspires
to—
Chris Fletcher:
Aspires.
Rebecca Harris: By 2013
or whatever. It's really just a question to all of you, though:
how realistically do you think that LEPs are going to be able
to resources themselves and whether it's just going to be based
on volunteer time from the private sector, or how you're going
to cover your back-room functions, basically? If you're going
to be able to handle things like getting EU funding, or dealing
with major project management, and the assets and potential liabilities—all
that kind of thing. It's a general question for all of you, going
forward, beyond the transition phase.
Geoff French: Very
quickly, it's kind of difficult to answer that question, because
we don't know how much funding is going to be made available,
what powers we might have, and that sort of thing. But we see
that the North Hampshire and M3 corridor economic partnership
operates at next to zero costs, maybe because the cost is met
by the local authorities for their own staff, and there will be
interest in the business community to give time at very little
cost, because we have, if I can put it this way, a vested self-interest.
We are very interested in our area being a success, attracting
new business, and all the things that are needed to attract new
business are things that make it attractive for us to retain our
staff in the area, so we are very keen to support it.
Alex Plant: All
that is great, but on this transition issue, which we talked about,
in solid state, if the LEPs are really to make a difference to
some of these quite tough, tricky issues that we've discussed,
including things like EU funding, if that's something that comes,
you can't just do it on a voluntary basis. You need some executive
function in place to allow the LEPs to make the most of the kind
of support that Geoff's just talked about. This goes back to
the fact that you either grant fund it or, if you're not going
to grant fund it, give it the means to raise money itself, and
if you don't do either of those things, this won't work.
Geoff mentioned TIFs, for example—the tax increment
finance proposal and the Deputy Prime Minister's announcement
a couple of weeks back that that would be something that the Coalition
wished to take forward. That could be a very helpful means by
which you start to move areas on to a more self-sustaining basis,
but the experience of TIFs in the US is, when they work they work
brilliantly, but they are not a panacea, so you have to be a little
bit careful with them. Certainly we have already put in proposals
for a TIF scheme in our area, and we think where you can deliver
something—for example, infrastructure delivery that increases
business rates, and use the business rates to repay the borrowing
you put in place for the infrastructure in the first place—everyone's
a winner.
Overall, in the end it raises the tax base for the
country as a whole, which allows you to deal with all sorts of
issues, not just the issues locally. Some of that needs to be
given a real push, such that there are tools that are available
for LEPs pretty quickly, so you can start to move to a more self-sustaining
position, but it won't get you there immediately.
Tom Riordan: I
strongly agree with that. It depends on the scale of our ambition:
if we want to go for second prize, we don't need the resources;
if we want to go for first prize and for the areas of the country
really to boost the tax revenue of the country, we need a bit
of priming money to be able to do that. I agree strongly that
the TIF proposal is a good idea and it's something that we should
be able to get on with pretty quickly where we have delivery in
place.
Chris Fletcher:
From a Greater Manchester perspective, there's another layer to
this from the potential for the combined authority to come in
from April next year, which is to say a lot of the local authorities
will begin to rationalise some of their operations. That immediately
gives you some sort of economies of scale to deliver some of this
stuff around the LEPs. Also, some of it is around that maturity
of the people who are involved in the partnership, and the length
of time that they've been working together, to say, "Well,
we can bring this to the table," or, "This is how we
work together to get it done." Money would be great, but
obviously we live in the real world and we recognise that there's
no cheque attached to the LEP proposals. It is a significant
issue, because if these are going to be successful they have to
work from day one, and if half the problem is looking at how we're
going to raise funds to do x, y or z, that's taking the mind off
the key task at hand, which is about that economic growth, securing
jobs, getting jobs and supporting business; straight away, the
objectives become skewed and completely lost.
Paul Gresham: We
have a very low-cost model at the moment, which works very well,
and we use a lot of staff from SEEDA, the local authorities, business
and so on to do what we're doing, which works well. Occasionally,
there will be funds needed to do certain things--perhaps innovation
and growth hubs, those sorts of area where you need to look at
getting funding--so you can have different models, but occasionally
you do need to prime it up with some reasonable funds, such as,
perhaps for us in terms of education or a science park and those
sorts of things, working with the private sector.
Chair: Margot?
Q147 Margot James: I
think I'm happy with the answers that you've given on funding,
so I will just focus my question on the EU grants and the funding
streams that we've enjoyed from that source. Mr Riordan, you
mentioned that it was imperative that we didn't lose the expertise
that did exist in some of the RDAs, and I've been impressed in
my own area of the West Midlands that there is considerable expertise
around the generation of EU bids and management of them. How
ready do you think LEPs will be to obtain EU grants and funding
without the RDAs' support?
Tom Riordan: I
think it is about staff. If we got the staff somewhere attached
to some body in the area, whether that's a council, a residual
body of the RDA or something else such as the LEP or a group of
LEPs, we'll be okay. If we don't have that expertise, I don't
think it'll work. I think the other big issue is match funding;
there's a big problem with the reduction in public sector spend
in that usually you need match funding to come in to get the projects
moving, so we need to address that as well, and perhaps look to
the Commission and others to be more flexible in the way that
we deliver out the last part of the European programmes.
Q148 Margot James: Would
you agree though that the public sector is not the only source
of match funding?
Tom Riordan: Yes.
One of the flexibilities would be to allow more private sector
match funding. European funding is quite a good driver of behaviour,
because it's a pot of money that people want to get moving. So
if you increased the amount of private investment that was needed,
I think that would be a sort of win-win in getting the stuff moving
and getting the private sector into this much more in the way
that the Government wants.
Q149 Chair:
Just before you go on, you've analysed the problem, but exactly
how do you envisage dealing with it?
Margot James: Could I
just add a rider to that?
Chair: Yes, yes.
Q150 Margot James: We
have heard that, although any co-ordinating mechanism should be
bottom up--I strongly agree with that--is this European funding
an area where LEPs, in what might be called a region, need to
work closely together?
Tom Riordan: If
you want a more specific answer in our patch, the collaboration
that we are working on, Yorkshire-wide, would be just the place
to put that sort of activity, because it wouldn't make sense for
us to do it in three or four separate places.
Q151 Margot James: Thank
you. Could we just go on to the Regional Growth Fund. I don't
think we've covered that, have we Chair?
Chair: No, no.
Margot James: What should
be the priorities, in your view, of the Regional Growth Fund,
and do you have any views on how long it should run for?
Alex Plant: To
my mind the priorities should be about targeting money where you
can sustain private-sector job growth, and the current priorities
as written in the first consultation document seem to miss the
point a little bit, from my point of view. How long it should
run for--don't have a strong view; wish it were bigger.
Tom Riordan: Investment
in jobs is what it needs to focus down on, as Alex has just said.
I do think it's difficult to do things in two-year blocks, particularly
capital schemes, so it does need longevity. Longevity would get
past the problem of it being smaller, because if you've more certainty
going into the future, you're able to put together more significant
schemes.
Geoff French: There
is also a challenge about how much you back where success is already
happening, to make sure that success continues, and where you
need to back new areas. Given the situation that we're in as
the economy stutters a bit, there's a need to keep the existing
plates spinning, if I can put it that way, as well as starting
new plates to spin, otherwise we might just find that some of
the places that were or are good economic drivers at the moment
might slip backwards.
Tom Riordan: Sorry,
you might expect me from the North to come in on that. We have
the same issue within the North, in that there are some big growth
poles, but there are also some smaller towns and areas that are
really going to suffer from the public cuts. It's a central issue;
to me, it's going back to the objective of this, which is about
investment and jobs. It's not as hard in some parts of the country
to attract that private investment and those jobs as it is in
others, so I think you need to be proportionate to that and recognise
it. Equally, the North needs a strong London and South East,
to grow for the country as a whole, so it's just getting that
balance right, which is always a very difficult one to strike.
Q152 Chair: A
number of submissions have outlined potential alternative sources
of funding for LEPs. I shall refer to some of them. If you have
an opinion, give it briefly; if you haven't an opinion, feel free
not to give it. First, the partial diversion of business rates
to LEPs or accelerated development zones; secondly, tax increment
financing or bond issuing powers, and lastly, infrastructure funds
with recoupment of initial public investment through the planning
system. Those, I think, are a reasonable summary of some of the
suggestions that we've had so far. Again, don't everybody feel
free to comment if your comment has been covered.
Alex Plant:
The first set of issues to my mind are all one and the same thing.
TIFs and ADZs are another name for the same scheme really. Using
part of business rates is the way in which you get a TIF to work.
In simple terms, what it's about is saying, if you're going to
invest in an area, and that generates an uplift in the business
rates over and above what would otherwise have happened, then
you allow the local area to recoup that increment in business
rates to repay the borrowing they have to incur to put the infrastructure
in in the first place.
That's that whole bundle of schemes. Whether you
do it through a bond or whether you do it from prudential borrowing
doesn't really matter; that's just the means of getting the debt.
But those are the things we talked about earlier, around calling
it TIF in that context. To my mind, it is well overdue that this
country gives local areas the ability to invest in some of their
own success. Having spent some time in the US looking at where
it's worked really well—Portland, Oregon, is the example;
if anybody's interested, go and have a look at what they did in
Portland. It is absolutely fantastic--transformed a completely
rundown former rail town into one of the most successful and vibrant
economies on the West Cost of the US, and they did it through
TIF. It doesn't work everywhere, but it's a tool we should have
in the box.
I have no problem with Treasury deciding to have
a look at making sure these are good bets, but we really do need
to have that ability to get some of this stuff away, because currently
we don't have it. So in strong favour of those issues, but they're
all really the same set of questions around the first bundle.
I'll let others talk.
Q153 Chair: Is
there anybody else who wishes to add to that?
Chris Fletcher:
I think the other thing to say is there are already, for example,
business improvement districts, which have been running for several
years. In the majority of cases, once they are set up and running,
they've been relatively successful, so there are mechanisms out
there, but I think things like TIF, ADZs or whatever bring a completely
different dynamic into play. An important thing to say is if
anything is connected with business rates, there's got to be some
mechanism there to consult with businesses to take a viewpoint
on what's going on. Also, an element of hypothecation is important.
Tom Riordan: The
other question is what you do with those areas that can't use
these sorts of mechanism—that won't have that business growth—and
that's where I think there is a big challenge, because outside
the driver of London and the South East, which is where the Olympics
is coming, there is a real issue around housing regeneration and
the construction market. There are not going to be huge, new
public sector schemes. With the cuts coming, what are we going
to do about those areas? There is a different question.
Chair: Thank you. Can
we just finish off with Luciana Berger?
Q154 Luciana Berger: I
think we've covered question 19. My two questions are very different,
but you can perhaps choose to answer both, or either, or just
one of them. We've heard passing reference to the role of the
third sector. How can other sectors, such as further and higher
education, and other third sectors, be involved in LEPs without
losing a strong business-based dynamic? In fact, do you think
they should be included at all? Very distinctly, how do you think
LEPs can avoid becoming politicised or subject to too much business
self-interest?
Paul Gresham: Could
I answer that? We actually have a very strong governance structure
in place in the Gatwick Diamond as it works at the moment, with
representation from the public sector and from business, and it
works very well. You have to make sure that you get the right
balance, and sometimes it takes a bit of discussion. We do have
representatives on our board of higher, secondary and tertiary
education, so FE colleges and a university. That is very useful,
because we then get them to think joined up about the skills agenda
and what is needed. I think it is very important that they are
involved, that there are skills involved.
Geoff French: There
would be a more formal linkage, especially on education between
business and further education, and higher education, as a benefit
of the LEP rather than as a danger.
Alex Plant: I think
we're working closely with our voluntary and community sector
colleagues in our bid. I think that sector is likely to grow
in importance over the coming years, so it's absolutely fundamental
it should be part of your LEP in my view. FE and HE—yes,
of course. Your question at the end was an interesting one about
how you avoid over-politicisation or an individual business interest
driving it. I think the answer there really is around having
appropriate scrutiny mechanisms in place, and probably having
revolving doors in terms of your board membership.
Chris Fletcher:
I agree with that from the point of these sectors; they do need
to be a part of it. From the point of view of the LEP board going
forward, there will be an open recruitment process around that,
and the Chamber of Commerce will be involved in it. As well,
part of our involvement within this process is we're the largest
Chamber in the UK--we have 5,300 members. They employ about a
third of the work force in Greater Manchester, so we have that
input into that body straight away to make certain that it does
begin to deliver what's in the document and also for the benefit
of business on a broader scale. There is that element of governance
in there, outside the board itself.
Tom Riordan: I
think that social enterprise and the third sector need to be an
important part of the equation, and particularly the universities
need to be central to what we're trying to do if it's about investment
and jobs and innovation. There's a difference between representation
and involvement for me, where people do tend to look to the boards
and think, well, if we're in we're in, and if we're out, we're
out, and that can't be the case. On the democratic side, I do
think there's a need for some sort of ongoing link, not directly
on to the boards necessarily, but what will happen is that, in
three years time, if the political leaders have changed, they'll
see these LEPs doing their work and they won't feel ownership
of them, and we'll be right back to where we started--the problem
on the RDAs. So how you get that democratic link without it being
suffocating operationally for the LEPs is the important balance
that you need to strike, but it's really important that we keep
that.
Chair: I thank you for
your contribution. I'll just reiterate what I said before: if,
in retrospect, you feel that there is something that you haven't
said but you would wish us to know, feel free to submit further
written evidence to us. I conclude by thanking you once again
and wish you good luck.
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