1 Background to the Inquiry
Introduction
1. In March 2009, our predecessor Committee scrutinised
the performance of the Regional Development Agencies.[1]
Its report examined the merits of the RDA structure and considered
published reviews by the National Audit Office and an ongoing
review by PricewaterhouseCoopers.[2]
In particular, it covered the likely impact of the then Government's
Local Democracy, Economic Development and Construction Bill—including
the Bill's requirements for local authorities to perform economic
assessments, and raised concerns that the RDAs' expanding remit
was distracting them from their core functions.
2. Following the General Election, the Coalition
Government announced that the RDAs would be abolished, with many
of their core functions being taken over by new Local Enterprise
Partnerships. The policy of removing RDAs was presaged to a greater
or lesser extent in the manifestos of both Coalition parties.
The Liberal Democrat Manifesto said that the party would:
[r]eform Regional Development Agencies (RDAs)
to focus solely on economic development, removing duplication
with other parts of government and allowing substantial budget
reductions. We will give responsibility for economic development
to local authorities. Where existing RDAs have strong local support,
they may continue with refocused economic development objectives.
Where they do not, they will be scrapped and their functions taken
over by local authorities.[3]
3. The Conservative Manifesto stated:
We will give councils and businesses the power
to form their own business-led local enterprise partnerships instead
of RDAs. Where local councils and businesses want to maintain
regionally-based enterprise partnerships, they will be able to.[4]
4. The Coalition Agreement formalised the position
of the two parties: "We will support the creation of Local
Enterprise Partnerships—joint local-authority-business bodies
brought forward by local authorities themselves to promote local
economic development—to replace Regional Development Agencies.
These may take the form of the existing RDAs in areas where they
are popular."[5]
5. On 29 June 2010, the Secretary of State for Business,
Innovation and Skills and the Secretary of State for Communities
and Local Government wrote jointly to local authority leaders
and business leaders, inviting them to submit outline proposals
for Local Enterprise Partnerships by 6 September—a ten-week
time period.[6] The letter
itself contained outline parameters for LEP submissions—on
roles, governance and size, as well as listing a number of functions
which the Government believed would be led nationally; for example,
inward investment, sector leadership, responsibility for business
support, innovation, and access to finance such as venture capital
funds. The letter also stipulated that partnerships should "better
reflect the natural economic geography of the areas they serve
and hence … cover real functional economic and travel to
work areas."
6. 55 LEP bids were received by the Department, along
with a further bid relating to tourist collaboration (in the South
East), two others on regional cooperation (in the North East and
the West Midlands), and four more on cross-boundary working arrangements
(in the North West, Peak District, the South East, and West Leicestershire
and Northern Warwickshire).
7. While the bids were being considered, the Secretaries
of State for Business, Innovation and Skills and for Communities
and Local Government wrote to the Mayor of London, London borough
leaders and London business leaders on 8 October 2010 inviting
proposals from partnerships of London boroughs for London local
enterprise partnerships. Submissions were requested by 5 November
2010.
8. On 28 October 2010, the Department announced that
24 of the 55 LEP bids had been approved. On the same day, the
Department published a White Paper, Local growth: realising
every place's potential[7]
which provided further details on the LEP process and abolition
of the RDAs.
9. In a parallel development, in July 2010, the Government
also announced the creation of a Regional Growth Fund to address
the lack of balance in the economy in England.[8]
The two main objectives of the fund would be:
to encourage private sector enterprise by providing
support for projects with significant potential for economic growth
and create additional sustainable private sector employment; and
to support in particular those areas and communities
that are currently dependent on the public sector make the transition
to sustainable private sector-led growth and prosperity.[9]
Initially the fund comprised a total of £1bn
of investment for the years 2011-12 and 2012-13. The Spending
Review, published on 20 October 2010, increased that sum to £1.4
billion, spread over three years to 2013-14.[10]
Committee inquiry and structure
of this report
10. We decided to undertake an inquiry into the Government's
proposals for LEPs in the context of the acknowledged need for
sustainable growth and a rebalancing of the English economy and
to make some observations of our own on a policy that is still
being developed and fine tuned. We therefore decided to make this
area the subject of our first inquiry of the new Parliament.
11. Contributors to the inquiry were invited to submit
evidence on the following areas:
- The functions of the new Local
Enterprise Partnerships and ensuring value for money;
- The Regional Growth Fund, and funding arrangements
under the LEP system;
- Government proposals for ensuring coordination
of roles between different LEPs;
- Arrangements for co-ordinating regional economic
strategy;
- Structure and accountability of LEPs;
- The legislative framework and timetable for converting
RDAs to LEPs, the transitional arrangements, and the arrangements
for residual spending and liability of RDAs;
- Means of procuring funding from outside bodies
(including EU funding) under the new arrangements.
12. We received 131 submissions, which reflect the
breadth and depth of interest in the future of local enterprise
and regeneration. We held four oral evidence sessions during early
September and October 2010, first with a cross-section of RDAs
and the Local Government Association, the National Audit Office
and the TUC; secondly with the British Chambers of Commerce,
CBI, Federation of Small Businesses, and IoD; thirdly with a cross-section
of LEP bidders; and finally with the Minister of State for Business
and Enterprise, Mr Mark Prisk MP, on 21 October 2010. We thank
all the individuals and organisations who took the time to provide
evidence to assist this inquiry.
1 House of Commons Business and Enterprise Committee,
Fourth Report of Session 2008-09, Regional development agencies
and the Local Democracy, Economic Development and Construction
Bill, HC 89-I Back
2
PricewaterhouseCoopers report, Impact of RDA Spending,
March 2009; National Audit Office report, Regenerating the
English Regions, March 2010. Back
3
http://network.libdems.org.uk/manifesto2010/libdem_manifesto_2010.pdf Back
4
http://media.conservatives.s3.amazonaws.com/manifesto/cpmanifesto2010_lowres.pdf Back
5
www.cabinetoffice.gov.uk/media/409088/pfg_coalition.pdf Back
6
www.communities.gov.uk/documents/localgovernment/pdf/1626854.pdf;
and see Annex Back
7
www.bis.gov.uk/assets/biscore/regional/docs/l/cm7961-local-growth-white-paper.pdf Back
8
www.bis.gov.uk/Consultations/regional-growth-fund-consultation?cat=open Back
9
Op. cit., page 6. Back
10
See Table 2.5; www.hm-treasury.gov.uk/spend_index.htm Back
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