Memorandum submitted The British Property
Federation
INTRODUCTION
1. This submission by the British Property
Federation has been prepared in response to the BIS Select Committee's
request for evidence on how the proposed new structure for Local
Enterprise Partnerships (LEPs) will work, alongside issues such
as distribution of funding, value for money, accountability, timing,
transitional arrangements and required legislation.
2. The British Property Federation (BPF)
is the voice of property in the UK, representing companies owning,
managing and investing in property. This includes a broad range
of businesses—commercial property owners, financial institutions
and pension funds, corporate landlords, local private landlords—as
well as all those professions that support the industry.
THE PURPOSE
OF LEPS
3. We welcome the creation of LEPs which
demonstrates a recognition within Government of the need for a
continued focus on economic growth below national level. Managing
the transition towards private sector-led local economies will
require a long term view to be taken in many communities. LEPs
have the potential to play an important role in fostering a long-term
(and even a cross-party) approach but their effectiveness will
depend on the resources they have available, the remits they are
given and the degree of buy-in they can command both from participating
local authorities and the business sector. Much of this remains
uncertain at present. It is crucial that LEPs do not simply create
another bureaucratic tier but rather complement and supplement
existing local structures.
ARRANGEMENTS FOR
SETTING UP
LEPS
4. We note that local authorities are being
asked to work with local business interests to submit their proposals
for forming LEPs by 6 September. We recognise the need to get
new structures in place as soon as practicable so that the dissolution
of RDAs does not leave a vacuum, particularly as RDAs had strengths
and positive impacts which should not be lost. Nonetheless, it
seems curious that local authorities are being invited to submit
proposals before there is clarity about the role that LEPs will
play and what powers and responsibilities they will have. A clearer
understanding of the role that LEPs might play would have enabled
local authorities to frame their proposals more effectively and
helped inform their choice of partners.
HOW MANY
LEPS SHOULD
THERE BE?
5. LEPs are intended to cover "natural
economic areas". This makes a lot of sense. A major criticism
of RDAs was that, whilst some regions had some degree of geographical
and economic cohesion, others seemed to be totally artificial
constructs. Although the Government has stressed that the formation
of LEPs should be a bottom-up process it has also given a steer
that, in order to be sufficiently strategic, partnerships should
include groups of upper tier authorities. It remains to be seen,
however, whether left to themselves local authorities will group
themselves into the sort of natural economic areas intended. Current
discussions between local authorities suggest that there are likely
to be in the region of 40 LEPs whereas 20-25 might be more appropriate
and manageable. Some gentle prodding from the centre may be needed
to make sure that LEPs do not emerge which are patently unsuited
to do the task required.
6. Some areas have more than one natural
focus, sometimes looking equally to two major urban centres (eg
North Nottinghamshire looking to both Sheffield and Nottingham).
To address this the Government envisages that some authorities
could belong to more than one LEP. There is a logic to this but
its practicality may depend on the degree of involvement and commitment
of resource that participation in a LEP involves.
FLEXIBLE BUT
FIT FOR
PURPOSE
7. The Government seems to be taking the
view that it is up to each LEP to work out what its focus and
structure should be. We agree that there is a lot to be said for
a flexible approach as there may be much greater opportunities
for more integrated approaches in some areas (eg in city regions)
than in others. The key issue is that LEPs must be fit for purpose,
with some real clout and an ability to make informed judgements
about difficult issues if they are to act as engines of growth
and job creation, still less get the business buy-in that is needed.
WHAT SHOULD
LEPS DO?
8. The Government suggests that Partnerships
will want to create the right environment for business and growth
in their areas, by tackling issues such as planning and housing,
local transport and infrastructure priorities, employment and
enterprise and the transition to the low carbon economy. Whilst
all of these are areas where LEPS could contribute it is very
unclear at present what the nature of their involvement is likely
to be.
9. As we have mentioned above, we favour
a large degree of local discretion about what role LEPs should
play. However, we would find it surprising if LEPs emerged which
failed to engage effectively in areas such as skills development,
strategic planning, regeneration and transport co-ordination.
10. Our view is that LEPs could contribute
significantly in a number of areas:
Economic Strategy
11. The need to create effective economic
strategies across city regions and other natural economic areas
is clear. A number of reports about the performance of English
cities, for instance, have suggested that many of them perform
poorly compared to their European counterparts. One of the main
reasons given for this is that, in contrast to cities in other
comparable European countries, they often lack a coherent economic
strategy. LEPs have the potential to bring a more unified approach
to economic planning and development.
Strategic Planning
12. The revocation of Regional Spatial Strategies
has created uncertainty about how local authorities will co-operate
in areas such as waste disposal, mineral strategy, flood control
and major infrastructure provision where some degree of strategic
planning is necessary. The Government believes that this can be
achieved in part by imposing a duty on local authorities to co-operate
with their neighbours but it has also suggested that LEPs might
have a role to play in facilitating strategic planning. We agree
that imposing a duty to co-operate would be helpful but, to be
effective, it needs to be coupled with some clear structure within
which that co-operation can take place. We would, therefore, strongly
support the principle of LEPs taking on a strategic planning role.
Such a role would be particularly appropriate if, as intended,
the LEPs that emerge genuinely reflect natural economic areas.
Facilitating Regeneration: Land assets and CPO
powers
13. Apart from a possible strategic planning
role LEPs could help to facilitate the regeneration process in
a number of ways:
— Land assets: It is unclear whether
LEPs will take over RDA land assets. Holding land assets as well
as having planning powers could make LEPs more powerful players.
— Regeneration expertise: It is
not feasible for all local authorities to possess in-house the
full array of specialist skills in regeneration that they may
need from time to time. RDAs have helped to plug that gap in the
past with variable, but sometimes notable, success. LEPs could
be a vehicle for fostering the greater sharing of expertise (in
areas such as land assembly, decentralised energy, regeneration
and conservation) that is needed between local authorities.
Housing
14. Whilst the Government has scrapped housing
targets they have stressed that this is not a signal for local
authorities to sit on their hands. They are looking to local authorities
to respond positively to the country's housing need and are committed
to incentivising local authorities to meet that need. LEPs could
play a role in aiding co-operation over housing issues and, where
there was support for doing so, developing housing strategies
across local authority boundaries.
Transport Strategies
15. Transport is an obvious area where co-operation
between authorities is essential. LEPs could be given the task
of developing a transport strategy for the area and identifying
local investment priorities. We note that the Transport Secretary,
Philip Hammond, has suggested that the DfT might base the replacement
for the Regional Funding Allocation system for managing major
transport scheme spending around LEPs.
Skills
16. The precise role that LEPs will play
in the development of skills and employment generation, another
area of particular interest to business, seems unclear. If LEPs
are going to help create private sector jobs then a focus on the
development of skills would appear to be a core function. There
is a strong case for a pooled skills budget which could oversee
the allocation of skills funding, setting priorities both for
youth and adult skills development.
Business support
17. A range of RDA functions which are central
to the Government's objective of rebalancing the economy by stimulating
growth in areas overly dependent on the public sector—inward
investment, venture capital, leadership on growth sectors and
business support—are to be passed to central Government.
We take a pragmatic view about where responsibility for these
issues should lie. We are not sure what the evidence is that centralising
all these functions in Government will improve performance, particularly
as, at least in some areas, it sits oddly with the localism agenda.
It is also significant that these are likely to be the among the
areas of greatest interest to business. We suggest that the Government
needs to show flexibility in these areas so that responsibility
sits where it will be most effective.
RESOURCES/REGIONAL
GROWTH FUND
18. It is unclear what resources LEPs will
be able to command. The Regional Growth Fund is worth £1
billion and will be allocated largely but not exclusively via
LEPs. That suggests that the average LEP is likely to receive
a comparatively small amount. It is not clear what, if any, other
sources of income LEPs will have. Given the limited funding available
to LEPs it is sensible that the funding should be concentrated
in those areas that require the greatest stimulus to attract private
sector investment. However, if those limited resources are to
be effectively spent they need to be targeted at the most enterprising
and innovative schemes, using approaches which encourage innovation
and reward those with the best ideas. We are therefore supportive
of the proposal that a significant proportion of the RGF will
be allocated on a competitive basis. With access to public funding
more restricted, LEPs will need to find ways to lever in more
private funding.
19. LEPs need to be streamlined, agile bodies.
As the idea presumably is not to recreate 40 mini-RDAs, most of
the resources needed for LEPs will probably have to be drawn from
participating authorities. LEPs, therefore, could play a major
role in streamlining currently duplicated resources, providing
a mechanism for local authorities to pool their existing resources
and operate more efficiently. For instance, many local authorities
have economic development teams and regeneration directorates
which could work with those from neighbouring authorities, possibly
operating in some cases as a single team. In other cases local
authorities within a LEP might share out responsibilities with
each of them becoming a lead authority for a particular purpose.
20. It will also be important to consider
how these arrangements will ensure that the UK maximises access
to European Regional Development Funding.
GOVERNANCE
21. When bodies like this are created there
can sometimes be an obsession with governance structures. Whilst
governance structures matter they must not detract from the real
focus which must be on economic growth and job creation.
22. LEPs will need a strong input from business
and we welcome the Government's emphasis on the business-led nature
of these bodies. However, whatever the original intention, there
has been a tendency in the past for such bodies to be public sector
dominated and we note that (perhaps understandably) most of the
impetus at present to create LEPs is coming from local authorities.
It is important that a proper balance is struck, reflecting both
the contribution of business and the need for a proper degree
of democratic accountability. The proposed equal representation
of elected representatives and business interests envisaged would
seem to strike a reasonable balance.
TRANSITION
23. Current economic circumstances are making
it very difficult to progress regeneration proposals and economic
development, creating a degree of stasis. The transition to the
new arrangements should as smooth as possible and conducted as
quickly as possible. Where it is not possible to move quickly,
as much clarity should be provided as possible about impending
future arrangements.
24. We would also stress that the RGF will
not be introduced into a new policy and investment "space".
It is important to accept the need for continuity of projects
from the previous RDAs' single programme regime, in order to maintain
momentum and regeneration progress.
20 August 2010
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