3 The Functions of Local Enterprise
Partnerships
Former RDA functions to be transferred
to the national level
57. In the joint BIS and CLG letter of 29 June 2010,[73]
the Government stated its belief that certain RDA functions would
be best led nationally, specifically: inward investment, sector
leadership, responsibility for business support, innovation and
access to finance, such as venture capital. The weight of evidence
to us elicited the following conclusions:
- national leadership of activities
such as inward investment and response to economic shocks would
be inadequate without local knowledge and support;
- there is scope for cost saving through an appropriate
level of national delivery of business support;
- quality of delivery at local level is critical;
- clarity of delivery is also important (that is,
who is doing what);
- there should be, as the CBI put it, an "appropriate
cascade of functions" (that is, devolution where possible);
and
- the level of service provision should offer value
for money.
It is also worth noting that the Manufacturing Advisory
Service and the Technology Strategy Board both received good feedback,
with the latter being identified as a worthy candidate to coordinate
innovation activity, especially during the period of transition
to LEPs.
58. In relation to the list of functions contained
in the joint letter from the two Secretaries of State, Tom Riordan
of Leeds City Council said:
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.[74]
59. John Cridland of the CBI acknowledged that there
were some issues where "a stronger national framework may
well be desirable to get better outcomes, particularly in more
austere times."[75]
In particular, he highlighted the area of inward investment which
he agreed should be led at a national level because RDA management
of inward investment had been counter-productive:
Was it helpful that RDAs were opening international
offices, having stands next to each other at international trade
fairs? In our judgment, it probably was not. It was a laudable
attempt to promote their brand in international markets, but frankly,
in most international markets, we need initially to promote a
UK brand and then—and this is my point—disaggregate
that.[76]
He explained that a form or either sub-national or
local delivery would still be necessary and gave the following
as an illustrative example:
if a Brazilian company has made a decision to
come to a particular part of the UK, the Midlands or the North,
people on the ground can then help that business make the right
investment choice, so that it is not left to national Government.[77]
He concluded that this aspect of handling inward
investment had not been reflected in the Secretary of State's
letter.
60. The Government has obviously listened to some
of these concerns, because the White Paper set out a more nuanced
approach, which indicated that the Government would "look
to devolve functions to the local level wherever it makes sense
to do so."[78] The
White Paper also stressed that "national leadership does
not necessarily imply a monopoly of power and responsibility,
and there will be scope to share and pool power and responsibility
between national and local levels."[79]
61. We welcome the fact that the Government appears
to be taking a flexible approach to the national and local functions.
However, for this to become a reality, the Government will need
to demonstrate that it is committed to devolving functions where
there is clear evidence to show that they have already been managed
well at regional level.
Priorities for the new Local
Enterprise Partnerships
62. The majority of evidence submitted to us emphasised
the importance of LEPs focusing on the core areas of encouraging
enterprise, removing barriers to growth and rebalancing the economy.
Steve Radley of EEF reflected the view of many when he said that
the focus of LEPs should be on promoting and strengthening recovery
and helping to rebalance the economy. He identified planning,
housing and transport infrastructure as priorities, on the basis
that they made a real difference to productivity and encouraged
enterprise and employment.[80]
The IoD likewise took the view that transport, infrastructure
and planning were the key items.[81]
The importance of an adequate housing stock to local growth was
stressed by several bodies.[82]
On the other hand, the South East England Chambers of Commerce
argued that LEPs should not be overly concerned with planning
and infrastructure at the expense of business goals and that skills,
business development, new enterprise, innovation and exports must
be high on the agenda. The Regional Studies Association also argued
that LEPs should not be distracted by attempts to influence national
policies on infrastructure, higher education and science.[83]
63. The IoD[84]
and EEF[85] both stressed
that the focus should not be on those areas of regeneration which
were only indirectly connected with economic regeneration. The
IoD did not oppose the inclusion of wider regeneration in principle,
but argued that "so often the regeneration itself becomes
the objective rather than the consequent economic development."
However, a significant minority of submissions argued for LEPs
to have regard to the need for growth to be socially and environmental
sustainable.[86] The
FSB concluded that while LEPs should be focused exclusively
on economic development, they should have the capacity
to address all issues that impact on that, including transport,
infrastructure, planning and housing at the strategic level, tourism,
the low carbon agenda, and skills and training.[87]
64. The Local Growth White Paper indicated that local
authorities would be expected to produce local development plans.[88]
We assume that these will be prepared in full consultation with
the local LEP. The White Paper also set out a range of potential
roles for LEPs, including:
- working with Government to
set out key investment priorities, including transport infrastructure
and supporting or coordinating project delivery;
- coordinating proposals or bidding directly for
the Regional Growth Fund;
- supporting high growth businesses, for example
through involvement in bringing together and supporting consortia
to run new growth hubs;
- making representation on the development of national
planning policy and ensuring business is involved in the development
and consideration of strategic planning applications;
- leading changes in how businesses are regulated
locally;
- strategic housing delivery, including pooling
and aligning funding streams to support this;
- working with local employers, Jobcentre Plus
and learning providers to help local workless people into jobs;
- coordinating approaches to leveraging funding
from the private sector;
- exploring opportunities for developing financial
and non-financial incentives on renewable energy projects and
Green Deal; and
- becoming involved in delivery of other national
priorities such as digital infrastructure.
65. We conclude that the Government's list of
potential roles for LEPs appears broadly consistent with the evidence
presented to us on suitable priorities for the new bodies. However,
while we welcome the further details on LEP activity contained
in the White Paper, the Government must guard against a re-run
of the history of RDA mission creep.
The role of LEPs in setting skills
agendas
66. In its evidence to the inquiry BIS acknowledged
that gaps in skills constitute barriers to local growth, and we
heard a strong majority of views in favour of LEPs having a stake
in determining local skills agendas based on business demand.
The TUC[89] and the UK
Commission for Employment and Skills[90]
argued particularly strongly for LEPs to include skills needs
within their priorities, the latter also stressing the importance
of adequate consistent data on which to base decisions.[91]
Illustrating the skills gap, A4e (originally established some
20 years ago to help unemployed people in Sheffield) pointed to
the example of only 4% of 7,000 construction jobs having gone
to people living in the boroughs around the Olympics construction
site because of a mismatch between job opportunities and local
skills.[92]
67. The West of England's submission went further
and suggested that LEPs should have a level of financial interest
in the funding of training:
In order to deliver growth successfully within
the West of England…the Local Enterprise Partnership will
need to ensure that the workforce has the skills required by those
sectors. Key will be ensuring that the needs of local businesses
are understood and that the skills provision is 'demand led'.
The [LEP] will need to be able to coordinate skills to help drive
up participation and attainment and enhance business productivity
and competitiveness. HE and FE institutions are vital partners
in this work and will be members of the Board.
In order to be able to fulfil this important
function it is essential that [LEPs] are provided with sufficient
leverage to bring skills providers to the table and be able to
influence their plans. This needs to be reflected in how HE and
FE planning and funding regimes are organised so that they pay
heed to business demand.[93]
68. Both the Association of Colleges[94]
and South East Economic Partnerships[95]
referred to existing work and knowledge in this area, including
activities being undertaken by Employment and Skills Boards in
improving adult skills for employment. The Association suggested
that that LEPs integrate this work into their strategies alongside
skills needs in general. It further suggested that colleges be
involved as members of LEP governing bodies.[96]
69. Centre for Cities wanted LEPs to have powers
over local Jobcentre Plus offices with a role for LEPs in determining
the number of apprenticeships being developed and in what sector
of the economy they should be offered. However, the FSB stressed
the importance of recognising small business needs, and the limitations
on their capacity to provide apprenticeships particularly where
there are bureaucratic limitations. It wanted fully functioning
group training associations[97]
and apprenticeship training agencies[98]
to help reduce the capacity problem.
70. By contrast the IoD[99]
and EEF[100] believed
that this would be a distraction from LEPs' core priorities. Both
stressed the need to avoid re-cluttering a skills landscape which
was already overcrowded. The IoD was also concerned that local
authorities might feel too 'at home' looking at skills needs,
to the detriment of other pressing needs such as in local transport
or infrastructure.[101]
71. The Government's position is set out in its White
Paper which stated that in future all public funding for adult
skills provision will be routed through the Skills Funding Agency
to its network of approved and quality assured colleges and training
organisations. LEPs would be encouraged to develop effective working
relationships with partners to meet local demands. The envisaged
set of LEP potential roles includes working with local employers,
Jobcentre Plus and learning providers to help local workless people
into jobs.[102]
72. We welcome the Government's intention that
LEPs should be encouraged to work effectively to meet local skills
demands. Without distracting from their aim of fostering enterprise
and removing barriers to growth, LEPs can clearly have it on their
radar to identify both opportunities and gaps and should work
with local training providers to address those objectives.
73. Further education involvement in LEPs seems
to us to be particularly important to addressing skills gaps,
while higher education involvement makes sense from the point
of view of encouraging ideas for LEPs to use in innovation. We
believe that LEPs should consider co-opting representatives of
further education and higher education onto their governing bodies,
either permanently or on an ad hoc basis.
73 See Annex Back
74
Q 134 Back
75
Q 75 [Cridland] Back
76
Ibid. Back
77
Ibid. Back
78
Paragraph 2.21 Back
79
Paragraph 2.22 Back
80
Q 72 Back
81
Q 71 [Ehmann], and Ev 140, paragraph 1.29 Back
82
For example, Cambridgeshire County Council, National Housing Federation. Back
83
Ev w192, Executive Summary paragraph 4 Back
84
Ev 140, paragraph 1.30 Back
85
Ev 123, paragraph 13 Back
86
See, for example, Ev w25, Ev w50, Ev w306, Ev w108. Back
87
Ev 126, paragraphs 1, 6 and 10 Back
88
Local Growth White Paper, paragraph 3.11. Back
89
Ev 161, paragraph 12 Back
90
Ev w242, passim Back
91
Ibid., paragraphs 3.8 to 3.13 Back
92
Ev w2, footnote 1 Back
93
Ev w291, paragraph 2.6 Back
94
Ev w12, paragraph 14 Back
95
Ev w225 Back
96
Op. cit. Back
97
GTAs are training and development centres designed to simulate
real working conditions where employers can have employees trained
to their own requirements and benefit from the "at cost"
structure. Most of the country's apprenticeships are managed by
GTAs.
Each GTA is owned and shared by local
employers, each of whom does not have their own training facility
and treat the GTA staff as their training manager and even human
resources manager. Managers of GTAs are experienced in the needs
of especially medium and smaller employers and will direct the
training process, providing most from the GTA's own resources
but also sourcing quality provision from elsewhere if required.
The GTAs will also manage the "bureaucracy" involved
and access the most effective funding relevant to the employee's
training and the employer's needs.
GTAs cover most employment sectors
and the network which has been established since the 1960s covers
all geographical areas. Back
98
The distinctive feature of the ATA model is that it is the ATA
who acts as the apprentice employer and who places them with a
host employer. The host employer pays the ATA a fee for the apprentices'
services; this fee being based on the wage agreed with the host
and the ATA management fee.
The ATA model offers other benefits
for the employer. These include;
Support with recruitment - finding
the right apprentice to meet the employers' needs
Responsibility for the wages, tax,
National Insurance as well as administration and performance management
Supervision of the apprentice during
the Apprenticeship period
Links with an approved training provider
and support to both the apprentice and host employer throughout
the Apprenticeship. Back
99
Ev 140, paragraph 1.30, and Q86 Back
100
Ev 124, paragraph 18 Back
101
Q 86 Back
102
Local Growth White Paper, paragraph 2.7. Back
|
