Written evidence from the Yorkshire &
Humber Chambers of Commerce
SUMMARY
1. The Yorkshire & Humber Chambers of
Commerce is the umbrella body for the seven local Chambers of
Commerce in the region. Together, these Chambers have 11,000 business
members in all sectors of the economy, from sole traders to FTSE100
multi-nationals. Chambers' Presidents and Boards are democratically
elected by local business members and are run by business for
business.
2. As both the "voice of local business"
on a wide range of local economic partnerships in various guises
over many decades, and as a major provider of business support,
skills and enterprise services, Chambers are in a unique position
to contribute to the policy framework and establishment of Local
Enterprise Partnerships.
3. We are very pleased to be able to submit
evidence to the Committee as part of this important inquiry. Local
economic circumstances vary across the country and the development
of LEPs will rightly reflect the different priorities and circumstances
in localities. This submission therefore provides our perspective
on the development of LEPs in our region and builds upon the evidence
submitted by the British Chambers of Commerce which we endorse.
4. The key points of our submission are
as follows:
Chambers support localism and the principles
behind LEPs. The core objective of growing the private sector
must be the driving force for all LEPs.
The LEPs must "ramp up" business involvement
way above what has been done in most LSPs in the region and in
the Leeds City-Region pilot. Government should reject LEP proposals
that cannot demonstrate a true partnership with business.
Our early experience of LEP formation in Yorkshire
& Humber is that some local councils have not yet fully involved
local business in the preparation of their bids for 6 September.
Businesses need to be directly involved in the formative stages
of the LEPs, not asked to sign up to a pre-defined structure and
plan.
LEPs must have a clear and distinctive long-term
plan to grow their private sectors, but they must be focused and
only take on the functions they need to achieve their aims.
We believe the LEP model emerging leaves room
for a business-focused Yorkshire wide organisation which works
with the LEPs to capitalise on the Yorkshire brand and delivers
a few services for BIS and LEPs where this makes sense.
KEY MESSAGES
5. Government must do more to promote economic
growth outside the South East. Chambers recognise that the Coalition
is taking a very different approach to stimulate local economic
growth via LEPs, the Regional Growth Fund and reduced NICs for
start-ups outside the South East. The era of quangos with big
budgets developing economic strategy and allocating resources
has passed. We agree with the Government that it's vital to rebalance
the economy towards the private sector; empower local council
and business leaders to take more decisions for themselves; and
tackle the deficit.
6. However, Yorkshire and Humber faces a
bigger economic challenge than ever. Like every other part of
the UK, our regional economy was growing up until the recession—but
it was not catching up. We support the commitment to rebalance
the economy but this must be backed up by hard policy. The corporate
tax cuts, Regional Growth Fund and LEPs are all good policies,
but will not be enough to address the following:
(a) Yorkshire has not closed the gap in economic
growth rates and had the third slowest growth in the decade to
2008.[135]
(b) A major reason for this is that Yorkshire's
productivity has fallen relative to the England average year on
year since 1999.[136]
(c) Public spending in Yorkshire & Humber
has treated the symptoms of economic underperformance, eg unemployment
and deprivation, but it should refocus and redress the "investment
gap", eg by eliminating the long standing gap in transport
funding which has a detrimental impact of the region's competitiveness.[137]
(d) The recession hit Yorkshire and Humber particularly
hard and it emerged from recession with the highest unemployment
in the country.[138]
(e) Rebalancing is not simply an over-reliance
on the public sector. Places such as Hull and Bradford do not
have a particularly large public sector, but have relatively weak
private sector economies.[139]
(f) Half of Yorkshire's biggest towns and cities
suffered a net loss of private sector jobs during the supposed
boom up until 2008[140]:
PRIVATE SECTOR EMPLOYMENT 1998-2008
| Net gain in private sector jobs
| | Net loss of private sector jobs
|
| Leeds | gained 25,400 | +9.1%
| Bradford | lost 7,700 | -5.4%
|
| Sheffield | gained 11,200 |
+4.8% | Doncaster | lost 5,000
| -6.2% |
| Wakefield | gained 11,000 |
+12.5% | Hull | lost 4,000
| -4.7% |
| York | gained 600 | +0.9%
| Huddersfield | lost 2,500 |
-2.2% |
| Grimsby | gained 100 | +0.2%
| Barnsley | lost 2,300 | -4.3%
|
Source: Centre for Cities, 2010
7. These sobering figures highlight how difficult it
was to geographically rebalance the economy, despite major Government
intervention. LEPs are therefore only one part of the policy solution
and both the Spending Review and White Paper on "sub-national
growth" will need to be proactive in accelerating the rates
of private sector growth and enterprise in localities across Yorkshire
and the Humber.
8. Early LEP formation: We expect between three and five
LEP proposals from across Yorkshire and the Humber by 6 September
and these LEPs will look significantly different in terms of their
scale and priorities. To give the Committee some idea of the varying
scale of the possible LEPs, the following table outlines some
of the possible configurations which could emerge from Yorkshire
& Humber.
| Possible LEP Areas | Population
| Number of
Councils* | Number of
Businesses**
|
| Leeds City Region | 3,221,100
| 11 | 80,215 |
| West Yorkshire | 2,200,600 |
5 | 48,005 |
| South Yorkshire | 1,617,100
| 7 | 23,685 |
| Humber | 912,200 | 4
| 20,595 |
| York & North Yorkshire | 794,600
| 9 | 28,215 |
| Hull & East Riding | 593,700
| 2 | 13,680 |
| North & North East Lincs | 318,500
| 2 | 6,915 |
* includes unitary authorities, counties and districts
** VAT registered
9. At the time of writing the LEPs are developing rapidly
and it is therefore too early to make any judgement about them.
However, our early experiences of the formation of LEPs shaping
up in Yorkshire and the Humber are as follows:
— The fledgling LEPs are not yet fully focused on a
clear mission to grow local business with too much attention on
boundaries and functions. It is vital that the core purpose is
clearly defined before functions are agreed.
— The economic and financial context in which LEPs operate
will require far more creativity and imagination than in previous
partnerships. We have not yet seen significant evidence of this.
Rolling over existing plans and structures into a LEP would be
a missed opportunity.
— We appreciate there is a compressed timescale for
the development of LEPs but meaningful consultation with business
about structures and objectives has been patchy. This first stage
should be about mission, principles and partnership formation.
10. We support the principle of a new Yorkshire-wide
body alongside these LEPs. Yorkshire is unique amongst the old
English "regions" in having a distinctive regional identity
which is famous across the world. The Yorkshire brand has an economic
value that is best exploited at a spatial level below national
and above the LEPs.
11. We agree that such a body must not be a "re-heated
RDA" but there is merit in exploring the potential of a small,
business like body such as the proposed Community Interest Company
which could promote the Yorkshire brand; deliver some nationally-led
BIS programmes; and provide some services to the three to five
LEPs in Yorkshire where they choose to work together on projects
that require both scale and critical mass; or for services which
could be more cost-effectively delivered at a Yorkshire-wide level.
The Government has said it is up to places to find a structure
that works for them. In principle, we believe a locally led arrangement
of three to four strong LEPs working alongside a small focused
Yorkshire-wide body is the approach most likely to grow Yorkshire's
private sector.
12. There must be buy-in to the LEPs across Government.
The success of LEPs will depend in large part on how effectively
they can use existing resources to stimulate private sector growth.
The priorities will clearly vary from LEP to LEP but it is likely
that a range of Government departments could have an important
role to play if the LEP is to be able to take decisions and deliver
change.
13. DWP could work with LEPs to make sure employment
programmes reflect local circumstances (although LEPs should be
focused on creating jobs rather than simply on worklessness).
DfE would have a common interest with LEPs on 14-19 skills or
enterprise education. DCMS might want to work with LEPs on the
local tourism agenda which is particularly important in parts
of our region such as the Yorkshire coast, moors and dales. Treasury
could support LEPs by giving them the financial flexibility and
funding mechanisms to implement their plans. BIS will share LEPs'
ambitions to promote business start-ups and perhaps other functions
it has said it will lead nationally. DfT have a key role to play
in working with LEPs to match local and strategic transport priorities.
This range of activities underlines the importance of a variety
of government departments buying into the LEP model—not
just CLG.
14. Our experience of "devolution" over recent
years, particularly the development of city-regions, has underlined
the importance of building strong links to both Ministers and
civil servants at the centre. LEPs will not succeed without central
Government as a committed partner. Strong and ideally personal
links, at Ministerial and civil servant level are needed to troubleshoot,
remove barriers and champion each LEP in Westminster and Whitehall.
We think Government should consider directly appointing a Minister
or senior civil servant (or ideally both) to be the primary link
and point of liaison between the LEP and the centre.
15. A real partnership with business must be driving
force for a LEP. There has been considerable interest from local
businesses about the LEPs. They recognise that the world has changed.
We must rebalance the economy and address both long standing economic
challenges and new ones arising from the recession. This must
be done in a new political and economic context and without the
same financial resources as were available in the past. Fresh
thinking is required as business has much to offer alongside council
leaders. We recognise that LEPs are not just another initiative,
they must signal a genuine change in culture about how local economic
growth is supported.
16. We therefore welcome the Government's desire to ensure
local business communities play a full role in LEPs. This should
include both dynamic business leaders selected for the Boards
in an open and transparent way, but it must also include the various
business representative organisations, including Chambers, that
have the experience and infrastructure to support the work of
LEPs. This was one of the weak spots of RDAs. Private sector board
members were appointed without strong enough links to the business
community they were representing. This must not happen with LEPs.
17. We do not believe Ministers should sign off LEPs
unless they are convinced they have been established with the
proper involvement of local business. From our perspective in
Yorkshire and Humber, we will consider "four tests"
before a LEP gains the full support of our members:
(i) Size and scale: Does the LEP cover the right economic
boundaries, reflecting both labour and trade flows and its mission?
Is the LEP large enough to have critical mass but small enough
to be focused?
(ii) Mission and strategy: Has the LEP articulated a clear
mission to grow business? Does it have a clear, evidence-based
and distinctive long term plan for their local economy?
(iii) Resources: Does the LEP have, or the prospect of gaining,
sufficient powers and resources to achieve its mission? Are the
relevant Government departments and agencies buying in to LEPs
and bringing their resources to the table where appropriate?
(iv) Leadership: Can the LEP evidence and demonstrate meaningful
consultation in the development of the proposals and full involvement
in the LEP structure at Board level? Is there an open and transparent
process to select the business leaders for the LEP Board?
18. The Committee invited comments on the following areas:
FUNCTIONS AND
ENSURING VALUE
FOR MONEY
19. Chambers don't want the three to four LEPs in Yorkshire
and the Humber acting as mini-RDAs. This would not be cost effective.
LEPs must not become large organisations directly delivering an
incoherent series of projects, programmes and initiatives. They
must be primarily strategic (outsourcing delivery) and should
seek to take on the functions which they need to achieve their
mission. This will obviously vary from place to place, but we
would worry about a LEP which lists more than four or five priorities
and functions, particularly before they have found their feet.
Not everything needs to be in a LEP, they must be focused, dynamic
and creative partnerships if they are to be effective.
20. It will be difficult for LEPs to achieve their aims
unless they have real decision making and funding powers. This
doesn't necessarily mean significant central funding (which we
know simply isn't there) but LEPs must have some tools to achieve
their aims. Otherwise they risk talking about the skills, transport
or planning issues which are barriers to business growth without
being able to do anything serious to address the barriers. The
risk is they are merely "big LSPs" or grandly titled
multi-area agreements. "Talking shops" will not sustain
the interest of serious business leaders.
21. We do recognise that LEPs offer the potential for
savings to be made by local authorities collaborating and sharing
resources, expertise and back office costs in their economic development
functions. This type of collaboration should be on the agenda
for LEPs to ensure that businesses get the best service possible
on areas such as planning in a time of declining resources. However,
local authority service delivery collaboration is a secondary
objective. LEPs must primarily be about removing the local barriers
to business success, not the reorganisation or management of local
government economic development functions.
22. As noted earlier, Yorkshire is a county in its own
right and we think there are a small number of functions to be
done at a Yorkshire-wide level. There are two reasons. Firstly
it is the right geographical level for issues such as the promotion
of the Yorkshire brand. Secondly, there is the potential to use
limited resources in the most efficient way by allowing the LEPs
to share some services eg research and economic intelligence and
possibly back office costs.
23. If properly established and supported, LEPs do have
real potential for localities across Yorkshire and the Humber.
In summary our view is that LEPs must be:
(a) Strategic—with a clear, distinctive long term vision
for their economy based on key business priorities, growth and
jobs;
(b) Local—Allowed to set their own local priorities
and targets;
(c) Focused—on a narrow set of core tasks and functions;
(d) Business-led—a genuine partnership between local
authorities and business with private sector board members appointed
in an open and transparent way;
(e) Creative—and imaginative in solving long-standing
problems in a totally different way; and
(f) Have teeth—with the powers and funding necessary
to make an impact.
24. To be effective the new LEPs must learn the lessons,
good and bad, from our previous experience of local partnership
working in some parts of Yorkshire and the Humber. Stripping away
some of the quangos and publicly funded delivery bodies from economic
development leaves our localities with their core institutions—the
council, the chamber, university and college to shape their own
future.
25. We agree that local government and their partners
have not been encouraged, or frankly trusted, to lead this activity
over many years. There was a reason for this and localities must
quickly adapt to this different culture needed for LEPs to work.
Rolling over existing strategies and structures into a LEP will
not be good enough to make a real difference to business. Thinking
they can only achieve something if central government passes down
some funding will waste the opportunity with LEPs.
26. It will not happen overnight. Local partnerships
will not move from bureaucratic, supressed and under powered bodies
to the enterprising and dynamic organisations we need just because
Government has said they are free to come up with their own proposals.
It will take some time to find and to build the strong and confident
partnerships we need, especially in view of the changing face
of the public sector over the next few years and the need to grow
the economy in a totally different way than in the past. The Government
must not therefore rush in too quickly. A clear timetable and
planned transition from the old/existing structures to the "new
world" is needed.
27. LEPs must avoid some of the problems we've experienced
with previous partnership working:
(i) Statutory. A discussion when public and private bodies
come together because they share the mission and drive to improve
their local area is a partnership. A discussion when public and
private bodies come together because they are told to by Government
is just a meeting.
(ii) Run like local authority committees. LEPs must be run
in an enterprising way. They should consider ways in which the
secretariat can operate in a business-like way, eg joint secretariat,
co-location with business or business organisations, not in a
town hall.
(iii) Lack of strategy—writing a plethora of strategy
documents is not the same as actually having a coherent strategy.
A clear ambition, single concise strategy supported by a clear
action plan is needed.
(iv) Funding distractions—LEPs will be successful if
they can influence core functions and existing spending to generate
business growth. LEPs must not be distracted by Regional Growth
Fund in the way LSPs often were by NRF and WNF. This model is
not "about the money".
REGIONAL GROWTH
FUND AND
FUNDING
28. We share the comments made in the evidence by British
Chambers of Commerce that the Regional Growth Fund should be used
to support the key LEP priorities around business growth and jobs;
must be long term; and focused on capital projects such as transport
and premises. It must not be used to offset revenue spending or
allow projects from RDAs or local government to limp along for
another two years.
CO -ORDINATION
OF ROLES
BETWEEN DIFFERENT
LEPS
29. Ministers want LEPs to cover natural economic boundaries.
We agree with this aspiration but recognise that boundaries will
be imperfect. No boundary can ever reflect all but the most obvious
labour and trade flows. Different businesses and different sectors
have very different geographic footprints. Some local economies
are very local, others might operate at LEP level, others regional,
many national and some global—we need a policy framework
to accommodate this. The key point is that not everything needs
to be done in or via a LEP and the forthcoming White Paper must
ensure the right functions are done at the right levels.
30. LEPs should be encouraged to work together on common
issues, for example transport lobbying or skills issues for major
growth sectors. We expect LEPs to look outside the old "regional"
boundaries for such collaboration. For example the Leeds and Manchester
city-regions would want to work together on trans-pennine transport
issues. If separate LEPs form on the two banks of the Humber,
they should be collaborating sensibly on port and related developments.
This collaboration should be for LEPs themselves to initiate.
CO -ORDINATING
REGIONAL ECONOMIC
STRATEGY
31. We assume the RES will continue to shape priorities
for European funding and inform decision making as RDA programmes
taper off over the next 18 months.
32. The preparation of the Regional Economic Strategy
(RES) was one of the main achievements of Yorkshire Forward and
we hope the new LEPs develop strategies of similar quality in
terms of evidence and business engagement. We are looking for
new LEP plans which are locally distinctive; ambitious yet practical;
and most importantly with a coherent mission for business growth.
33. We have expressed our support for some form of Yorkshire-wide
body to continue in concert with the LEPs. However, we do not
believe this would be an organisation developing strategy and
allocating resources in the way the RDAs did. This must be a function
that rests with national government and LEPs respectively. Any
new regional body would therefore be responsive to what BIS Ministers
and/or LEPs respectively wanted to achieve.
STRUCTURE AND
ACCOUNTABILITY OF
LEPS
34. One of the advantages of LEPs should be to transfer
accountability from national to local. We support this but there
needs to be full transparency about what the LEPs are doing. From
a business perspective, we believe accountability could be improved
in the following ways:
(i) Open and transparent process of appointing private sector
members to any LEP board. The balance should be 50:50. Ideally,
the business leaders should be selected by a panel of business
people, not hand picked by local authority leaders.
(ii) There must be a mechanism for the LEPs, and board members,
to have an engagement with the wider business community. This
will vary from place to place but should include a strong link
with recognised business organisations such as the local chamber,
the FSB, IoD or other perhaps a dedicated "business forum"
of which there are already examples in Yorkshire.
(iii) Communication of the work of the LEPs must be regular
and open. They should publish regular information about their
meetings, decisions and performance online. The pressure on RDAs
to be accountable pushed them to publish their board papers online
in advance of meetings. We believe LEPs should do the same.
LEGISLATIVE FRAMEWORK
AND TRANSITIONAL
ARRANGEMENTS
PROCURING EXTERNAL
FUNDING (E.G.
EUROPEAN)
35. European funding is a major resource available to
support business at a time when other budgets are disappearing.
Whatever mechanism the Government decides to use for European
funding, it is essential that the money is available and ring-fenced
for projects in Yorkshire and Humber, and that decisions on where
that money goes are made here as well.
36. The Regional Growth Fund is small in relation to
the scale of the challenges it seeks to address, but we welcome
it in principle. It must not be allowed to become a "parachute"
for the significant number of unsustainable projects tapering
off as the RDAs wind down and local government resources for economic
development are squeezed. It must be used as growth fund for business,
not a transitional fund for the public sector.
13 August 2010
135
Progress in the Region 2010, Yorkshire Futures Back
136
Calculated from ONS figures on local GVA, December 2009 Back
137
Public Expenditure Statistical analysis, HM Treasury Back
138
ONS regional profiles, June 2010 Back
139
Centre for Cities, Public Sector Cities 2009 Back
140
Centre for Cities, Private Sector Cities 2010 Back
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