Written evidence from the Association
of Regional Observatories
1. EXECUTIVE
SUMMARY
1.1 Our view is that there is a necessity
for an economic analysis function to support the Localism agenda,
especially Local Enterprise Partnerships (LEPs). Our track record
of providing economic analysis and modelling means we are able
to speak authoritatively on how best to provide evidence to LEPs
in an impartial and consistent manner, whilst maintaining a wider
national and sub-national view which will aid assessment of need,
measurement of success and comparisons between LEPs.
1.2 We believe that if LEPs are to be successful,
they must have access to reliable and accurate evidence to support
their decision-making, suitable arrangements in place to ensure
that the effects of their activities are monitored as they are
delivered, and robust arrangements to measure and evaluate the
outcomes of their work. This is not to create bureaucracy but
to ensure the most efficient use of public money.
1.3 The skills, individuals and teams already
exist and are able to support LEPs and help them develop, enhancing
and building on the data and intelligence within Local Authorities.
For example Regional Observatories do not attempt to drive or
influence decisions, but instead provide high quality evidence
so decision-makers can make choices with confidence.
1.4 Furthermore, we believe that there is
a role for coordination between LEPs to provide better analysis
of economic data. There are also economies of scale to be gained.
1.5 Our principal concern is that during
the transition to LEPs some valuable functions may be lost that
will only be regained at great expense, with a loss of valuable
data and analysis at a time when LEPs most need it.
2. KEY RECOMMENDATIONS
ARE:
2.1 Ensuring a strong evidence base should
be a core requirement for LEPs, and appropriate sub-national data
must continue to be provided to support evidence-base requirements.
2.2 During the transition from RDAs to LEPs,
the government should resist reducing or removing funding for
analytical work and RDAs should be encouraged to maintain intelligence
assets up to transition to LEPs or other successor bodies.
2.3 The Select Committee should consider
the risk to effective delivery of LEPs if the current sub-national
data and intelligence function is reduced or lost.
2.4 LEP activity should be coordinated to
provide opportunities for complementary activity, economies of
scale, sharing of good practice and avoidance of duplication.
3. A BRIEF INTRODUCTION
TO THE
ASSOCIATION OF
REGIONAL OBSERVATORIES
3.1 Regional Observatories were set up to
provide independent, impartial analysis of data to support decision-making
at a sub-national level, including local authorities. The Association
of Regional Observatories represent England's Regional Observatories
that historically have satisfied the data and intelligence needs
of the Regional Development Agencies, amongst others. Our work
covers the economy, labour market, employment and skills, as well
as sustainability and environmental issues.
3.2 We welcome the opportunity to contribute
to the Business, Innovation and Skills Select Committee's inquiry
into Local Enterprise Partnerships.
4. THE FUNCTIONS
OF THE
NEW LOCAL
ENTERPRISE PARTNERSHIPS
AND ENSURING
VALUE FOR
MONEY
4.1 Our view is that ensuring the successful
function of Local Enterprise Partnerships, and their ability to
deliver value for money, a strong evidence-base is required.
4.2 Working with a sound evidence base and
identifying need and opportunity at local or small population
level enables limited resources to be focussed where they are
likely to be most effective. There is an on-going need for research
and information at these levels, and also for the Office for National
Statistics and government departments to continue to produce a
range of sub-national and local data.
4.3 Establishing baselines on which to assess
progress and impacts against value for money criteria will require
an evidence base for the local economy before LEPs begin operations.
This will also require some benchmarking of the LEP areas against
other LEPs, other national averages and other geographies.
4.4 When appraising LEP bids, the assessment
criteria should establish that the proposals are evidence-based
and focus on key strategic issues. Evidence that the proposed
interventions will achieve the desired impact also needs to be
provided, and that the interventions offer value for money.
4.5 Ensuring value for money will require
strategies and interventions that accurately reflect local needs
and opportunities. Decisions made without data and analysis to
support local knowledge could mean deadweight spend—for
instance committing funds to improve local skills levels without
knowledge of the current skills in the locality or what local
businesses need could easily waste money. Observatories produce
objective assessments using high-quality information, so decision-makers
can make tough choices confidently and target limited resources
where they are most needed.
4.6 The limited resources available to LEPs
coupled with the resource constraints in local authorities, means
there may be limited capacity and capability at the local level
to monitor the outcomes and impacts of LEPs.
4.7 Value for money also requires detailed
assessment of market failure rationales and economic cases for
investment. Economists and analysts have the skills to do this
and currently carry out this role within existing organisations,
many of which are under threat of closure.
5. THE REGIONAL
GROWTH FUND,
AND FUNDING
ARRANGEMENTS UNDER
THE LEP SYSTEM
5.1 The Association of Regional Observatories
promotes the role of evidence in decision-making. It is therefore
appropriate that we limit our comments to how evidence can support
the Regional Growth Fund (RGF).
5.2 To secure value for money outcomes,
decisions on where to allocate RGF will require an evidence base;
1) to demonstrate need, 2) to show how an RGF allocation will
deliver improvements, 3) to define and measure success.
5.3 We acknowledge that many local authorities
have in-house expertise to deliver this level of detail; however
there are networks already in existence—including the Regional
Observatories—that measure, monitor and communicate economic
development across and between groups of local authorities. Many
of these sub-national networks are under threat, the loss of which
will have financial and evidential implications for LEP and RGF
delivery unless alternative arrangements are in place.
6. GOVERNMENT
PROPOSALS FOR
ENSURING CO
-ORDINATION OF
ROLES BETWEEN
DIFFERENT LEPS
6.1 LEP activity should be coordinated to
ensure LEPs are aware of what their neighbours are planning and
potential impacts. This would facilitate sharing of good practice
and coordination of complementary neighbouring activity.
There could also be efficiency savings where
evidence is coordinated: "do once for all". LEPs could
also make joint bids—natural economic areas vary depending
upon the policy areas being considered—this could enable
increased flexibility into a locally led system of addressing
local needs through local delivery at the most appropriate geographical
level.
7. ARRANGEMENTS
FOR CO
-ORDINATING REGIONAL
ECONOMIC STRATEGY
7.1 The abolition of the regional tier could
leave a serious gap in economic intelligence and data between
the national and the local.
7.2 There are good arguments for coordinating
the development of economic evidence and strategy at regional/sub-national
level in the light of requirements for savings and efficiency
gains. These include:
(i) Economies of scale, for example…
(ii) Enabling research using regional-level data,
where equivalent data is not available at sub-regional or local
authority level.
(iii) Enabling resources to be focussed on areas
or populations where most needed.
(iv) Helping to define functional economic areas,
which are intended to be the geographies of LEPs.
8. STRUCTURE
AND ACCOUNTABILITY
OF LEPS
8.1 Quality evidence and intelligence are
key to delivering robust structures and accountable organisations,
for example:
(i) Comparisons between LEPs on a wide range
of data including skills, labour market and economy.
(ii) Detailed analysis of trends over time.
(iii) Providing common data and methods of analysis
allowing easy comparison between LEPs.
9. THE LEGISLATIVE
FRAMEWORK AND
TIMETABLE FOR
CONVERTING RDAS
TO LEPS,
THE TRANSITIONAL
ARRANGEMENTS, AND
THE ARRANGEMENTS
FOR RESIDUAL
SPENDING AND
LIABILITY OF
RDAS
9.1 Over the next year, LEPs have to become
established, prepare bids for the RGF, and set their priorities
for the future. During the transition from RDAs to LEPs, the government
should resist reducing or removing funding for analytical work.
During this period the ability of LEPs to secure effective intelligence
may be uncertain. LEPs will need to identify their economic priorities
very early on and will need to do so in order to secure Regional
Growth Fund money.
9.2 In order to do this good information
about social, environmental and economic needs and opportunities
will be needed. These assets currently exist within Observatories
and will help LEPs. These include web resources, virtual libraries,
existing licenses, local/regional economic forecasting models,
historical consultancy work, data and models. There is however
a risk that these assets may be lost before LEPs have been able
to fully establish themselves.
10. CONCLUSION
10.1 Ensuring a strong evidence base should
be a core requirement for LEPs, and appropriate sub-national data
must continue to be provided to support evidence-base requirements.
10.2 During the transition from RDAs to
LEPs, the government should resist reducing or removing funding
for analytical work and RDAs should be encouraged to maintain
intelligence assets up to transition to LEPs or other successor
bodies.
10.3 The Select Committee should consider
the risk to effective delivery of LEPs if the current sub-national
data and intelligence function is reduced or lost.
10.4 LEP activity should be coordinated
to provide opportunities for complementary activity, economies
of scale, sharing of good practice and avoidance of duplication.
12 August 2010
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