Written evidence from Universities UK
1. Universities UK, representing UK higher
education institutions, is pleased to respond to this consultation
on the new Local Economic Partnerships (LEPs). A list of recommendations
can be found at paragraph 17.
EXECUTIVE SUMMARY
2. Universities are key drivers of economic
growth within their localities, regions and nationally and have
significant and extensive links with local communities and businesses.
This submission welcomes the recognition by the government of
universities as key partners in relation to both Local Enterprise
Partnerships and the Regional Growth Fund and outlines the need
to ensure that developments build upon existing networks, projects
and success, minimising disruption and confusion. Universities
are significant local employers and businesses in their own right,
often the largest employer in a locality. Universities should
be engaged as key members of LEPs rather than just partners, in
many areas it would be a major weakness for an LEP not to have
a major employer and business such as university included as a
full member. The LEP approval mechanism needs to ensure that all
LEPs effectively engage universities within their areas if the
full benefits of LEPs and the RGF are to be realised.
3. We note that in relation to London discussions
are currently underway with the Mayor of London. The London Higher
Education Regional Association, London Higher, should be included
as a strategic partner in any discussion to ensure that higher
education in London can play a full role in supporting this initiative.
London Higher already has in place a Business Development Unit
that is well-placed to engage with these discussions.
4. Universities UK is the major representative
body and membership organisation for the higher education sector.
Our members are the executive heads of UK universities. We work
to advance the interests of universities and to spread good practice
throughout the higher education sector and in England work closely
with the nine Higher Education Regional Associations.
KEY FACTS
5. Universities have a key role to play
in supporting the development of innovation, enterprise and private
sector growth, especially in many areas that have a lower than
average private sector contribution to economic growth, recognised
by the RDAs and HEFCE and also by the significant European funding
that university activities and initiatives leverage.
6. The recent reports from Universities
UK, Making an Economic Impact: Higher education and the English
regions (Universities UK, 2010) and The impact of universities
on the UK economy (Universities UK, 2009) demonstrate the
importance of universities to economic growth. The reports confirm
the growing economic importance of the sector which generates
over £59 billion to the UK economy, bringing in larger revenues
to the economy than the advertising, pharmaceutical and aircraft
industries. The sector employs more than 1% of the UK's total
workforce, with universities often one of the largest employers
in their locality or region. For every 100 full time jobs within
universities more than 100 other full-time equivalent jobs are
generated through knock-on effects and for every £1 million
of university output a further £1.38 million or output is
generated in other sectors of the economy. Revenue from "core"
public sources accounts for 48% of all university income, with
total revenue from all UUK public sources accounting for 61% of
university income. This demonstrates that universities generate
over a third of their funds from non-public sources and this includes
over £2.9 billion in export earnings.
7. The Sainsbury Review (Race to the
Top—A Review of Government's Science and Innovation policies,
October 2007) commented in relation to clusters of high-technology
companies that "universities are one of the driving forces
behind the formation of clusters" (paragraph 9.20, page 143)
and "having many companies on one city does not in itself
create a high-technology cluster. A cluster grows out of the research
excellence of a university" (paragraph 9.21, page 143). The
importance of clusters was that "strong and competitive clusters
are a critical component of a good business environment and can
drive regional innovation and economic growth" (paragraph
9.37 page 148). If clusters are critical to innovation and economic
growth, and universities are essential to the success of clusters,
any reforms dedicated to improving economic growth must avoid
undermining the success of universities in driving the formation
of clusters and supporting business.
8. An example of where a university in close
collaboration with FE colleges, the local community and business
can make a significant economic impact is the Staffordshire University
Quarter started in early 2008, an education-led regeneration project
bringing together Staffordshire University, Stoke-on-Trent College
and the City of Stoke-on-Trent Sixth Form College. The planned
impacts of the project over ten years include, as well as a significant
increase in the number of students and employment in education
in the local area, to support 300 new businesses and start-up
companies and engage with 640 employers to improve their skills.
A project like this is already making a major contribution in
the areas proposed for LEPs and the RGF.
THE FUNCTIONS
OF THE
NEW LOCAL
ENTERPRISE PARTNERSHIPS
AND ENSURING
VALUE FOR
MONEY
9. There needs to be as much clarity as
possible about the former functions of the RDAs that will be led
nationally, the functions that will be led by LEPs and how they
will effectively relate. One particular area of concern is innovation
which is to be dealt with on a national basis and enterprise which
will be within the remit of LEPs. In our view these two aspects
of economic development are complementary and partnerships between
LEPs and businesses could be held back if too much time is spent
defining the remits of the government department and the LEP.
10. Universities very much welcome the ambition
of having LEPs defined by coherent and meaningful economic areas
bringing together local communities and businesses. As significant
and often leading local employers and businesses, universities
have always had strong links with local communities and businesses.
LEPs have the potential to both reduce the complexities around
the support for local and regional economic development and to
develop a coherent approach to all of the areas outlined in the
remit of the LEPs. To ensure that LEPs achieve this it is vital
that all universities are involved and local authorities should
be encouraged to involve universities on LEP Boards.
11. Universities contribute to economic growth locally,
regionally and nationally and collaborate with other universities,
further education colleges, local councils and businesses. This
collaboration, often across regions and likely to be across LEPs,
enables the cost effective management of the administration costs
of engaging with certain activities such as European Funded projects.
LEPs must be outcome- rather than process-driven and will not
ensure value for money if they are too small-scale or undermine
collaboration across LEP boundaries, leading to either increased
administration costs or universities opting out of certain activities.
Depending on their profile and markets, some universities may
have a role in more than one LEP and should be free to engage
in these as appropriate to market needs.
THE REGIONAL
GROWTH FUND,
AND FUNDING
ARRANGEMENTS UNDER
THE LEP SYSTEM
12. We welcome the key role LEPs will have
in relation to the Regional Growth Fund. As the LEPs will represent
coherent economic areas and will be able to identify the priority
areas for economic growth through a partnership of the local community
and business they should be best placed to generate the most value
from the Regional Growth Fund.
13. The RGF consultation paper identifies
the possibility of both block grants and bidding for projects
as options for the distribution of funds. The advantage of block
grants is that they would offer the greatest flexibility for LEPs
and would be the most effective way of ensuring that they are
allocated in response to local priorities and needs. However,
block grants work most effectively when there are robust and transparent
governance and accountability mechanisms in place. Universities,
with their existing robust finance mechanisms, long experience
of contract and project management and considerable and widespread
links with local communities and businesses could provide support
for the practical development of LEPs alongside their key role
in economic development.
14. Universities UK agrees with the proposals
in the consultation paper that there should be some funding allocated
via a bidding process because the advantage of this to government
is that it enables the targeting delivery of specific government
priorities. However, even with a two-stage bidding process, our
experience of such processes it that they are still expensive
in terms of the effort devoted to putting in bids, especially
if these are over-subscribed which could be likely. So we would
recommend that the majority of funding is channelled through block
grants.
GOVERNMENT PROPOSALS
FOR ENSURING
CO -ORDINATION
OF ROLES
BETWEEN DIFFERENT
LEPS
15. Whilst Universities UK is very positive
about LEPs being based on economic areas rather than pre-defined
regional government boundaries, universities operate locally,
regionally, nationally and internationally, as do many employers.
A balance will need to be struck between ensuring LEPs respond
to local and regional economic needs but also that they are not
so different that this leads to excessive bureaucracy and administration
for universities and employers operating across LEPs and across
the UK.
ARRANGEMENTS FOR
CO -ORDINATING
REGIONAL ECONOMIC
STRATEGY—STRUCTURE
AND ACCOUNTABILITY
OF LEPS
16. It will be very important that LEPs
do not establish elaborate administrative/committee structures
and that they operate in a lean and efficient way whilst also
remaining accountable. Any processes that unduly delay the time
between the approval of RGF funding and the initiation of projects
on the ground will undermine economic growth.
THE LEGISLATIVE
FRAMEWORK AND
TIMETABLE FOR
CONVERTING RDAS
TO LEPS,
THE TRANSITIONAL
ARRANGEMENTS, AND
THE ARRANGEMENTS
FOR RESIDUAL
SPENDING AND
LIABILITY OF
RDAS
17. The most important priority for universities,
and indeed for continued and effective support for economic growth,
is clarity in funding streams, criteria and processes in relation
to the different previous functions of the RDA and government
priorities. If an LEP believes that in order for its support to
economic growth to be effective it needs to undertake activities
in areas that have been identified as being nationally led, legislation
and processes should be flexible enough to allow this to happen,
within the context of government priorities, without getting engaged
in prolonged discussions about the definitions and boundaries
of what should be led by LEPs and what should be led nationally.
18. It is vitally important that existing
commitments to projects are maintained, both for economic growth
but also to ensure that local partnerships and links with businesses
are not undermined by uncertainty and reneging on commitments
that could weaken the foundations for effective LEPs.
MEANS OF
PROCURING FUNDING
FROM OUTSIDE
BODIES (INCLUDING
EU FUNDING) UNDER
THE NEW
ARRANGEMENTS
19. It is unclear to us the impact the proposed
changes will have on EU funding but an over-riding priority must
be to ensure that the processes and structures put in place do
not undermine or jeopardise EU funding. Detailed investigation
and advice is probably best undertaken at government department
level to avoid duplication of effort at regional/local level.
Universities have a successful track record in generating matched
EU funding to support economic regeneration and development projects.
20. Universities are keen to work with businesses
and local communities to generate matched funding, however if
a proposal is likely to significantly impact economic growth but
is not able to raise the required matched funding from business
we believe that these should still be considered.
RECOMMENDATIONS
21. Universities UK makes the following
recommendations:
— Universities should be encouraged to
span one or more LEPs if appropriate, reflecting their area of
influence and their contribution to economic development nationally
as well as locally.
— The structure of each LEP should reflect
priorities locally, and a critical mass in terms of membership
should be achieved, whilst maintaining local accountability.
— The majority of funding should be allocated
via a block grant. A proportion of funding available will also
necessarily be allocated via a bidding process in order to meet
specific government priorities.
— During the transitional period in converting
RDAs to LEPs, existing commitments to projects must be maintained.
— The transition framework and timetable
should also reflect the inevitably variable speed at which different
LEPs will become operational.
20 August 2010
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