Joint memorandum submitted by the Chief
Economic Development Officers Society (CEDOS) & the Association
Of Directors Of Environment, Economy, Planning & Transportation
(ADEPT)
EXECUTIVE SUMMARY
We welcome the move to Local Enterprise Partnerships
(LEPs) based on "functional" economic areas, with the
prospect of focusing more effectively on distinctive local/sub-regional
needs and requirements rather than one-size-fits-all solutions
being imposed.
Functions—The functions of LEPs
should be determined by the local partners to meet the particular
needs and circumstances of their areas. We are concerned at the
potential implications of the Government statement that some RDA
functions are best led nationally, such as inward investment,
sector leadership, responsibility for business support, innovation
and access to finance. Central Government clearly has an important
role in these and other areas of economic development activity
but where they are seen as local/sub-regional priorities, so too
will Local Enterprise Partnerships.
On some key issues, there will be a need to
distinguish between governance and strategic advice as on planning
and transport where local authorities have legal responsibilities
but might look to the Local Enterprise Partnership for strategic
guidance.
Given that Local Enterprise Partnership delivery
proposals will encompass some or most of the current responsibilities
of the RDAs, additional local authority legislative powers are
likely to be required including compulsory purchase and powers
to use funds as equity in local asset based delivery vehicles.
Resources & value for money—Local
Enterprise Partnerships will offer a real opportunity to increase
value for money in delivering sub-national economic development
by bringing together and devolving the functions and funding streams
currently undertaken by a number of national and regional organisations.
To be successful, the issue of resources for
LEPs will be crucial. At the same time as taking action to tackle
the public sector deficit, there is real potential to achieve
the necessary resources through efficiency savings from simplifying
delivery and taking a place-based approach to economic development
funding. Action by local authorities will be essential to the
success of Local Enterprise Partnerships. This will require the
issue of providing the necessary resources for local authority
economic development and regeneration to be addressed as a matter
of urgency.
Regional Growth Fund—In the context
of its stated objectives, we would wish to emphasise the importance
of the Fund being flexible enough to meet different needs in different
places and for all areas of England being eligible to apply for
funding. To secure sustainable economic recovery and growth, we
need to unlock the potential of all areas and sub-regions to make
the most of this country's economic opportunities. It will be
important that areas whose proposals for creating LEPs do not
find immediate favour with the Departments, are not disadvantaged
in accessing the Regional Growth Fund.
Coordination issues—Given the Government's
commitment to promote decentralisation and democratic engagement,
end the era of top-down government and promote the radical devolution
of power, it must recognise that Local Enterprise Partnerships
will wish to develop their roles and functions to meet different
economic needs and circumstances across the country.
There will continue to be a need to work across
boundaries and for cooperation between Local Enterprise Partnerships
but this should not involve coordination being imposed in any
pre-conceived regional context. It should be a matter of LEPs
working together by mutual agreement on areas of joint interest.
Where action is needed at a broader regional level, this can be
facilitated through a partnership approach between elected central
and local government, although groups of Local Enterprise Partnerships
who wish to cooperate on a regional basis should be able to do
so.
Structure & governance—We support
Local Enterprise Partnerships normally having Boards made up of
equal representation of local authority and business representatives,
with a prominent business leader as Chair. Governance arrangements
need to be sufficiently robust and transparent to provide a sound
basis for long-term investment decisions to underpin economic
recovery and sustainable growth. To ensure LEPs have the confidence
of the local communities they serve, accountability, in particular
local democratic accountability, will be crucial.
INTRODUCTION
1. This Memorandum of evidence is submitted
jointly by the Chief Economic Development Officers Society (CEDOS)
and the Association of Directors of Environment, Economy, Planning
and Transportation (ADEPT).
2. The Association of Directors of Environment,
Economy, Planning & Transport (ADEPT) represents local authority
Strategic Directors who manage some of the most pressing issues
facing the UK today. ADEPT membership is drawn from all four corners
of the United Kingdom. The expertise of ADEPT members and their
vision and drive is fundamental in the handling of issues that
affect all our lives. Operating at the strategic tier of local
government they are responsible for delivering public services
that relate to the physical environment and the economy.
3. The Chief Economic Development Officers
Society (CEDOS) provides a forum for Heads of Economic Development
in upper tier local authorities throughout England. Membership
includes county, city and unitary Councils in non-metropolitan
areas, which together represent over 47% of the population of
England and provide services across over 84% of its land area.
The Society carries out research, develops and disseminates best
practice, and publishes reports on key issues for economic development
policy and practice. Through its collective expertise, it seeks
to play its full part in helping to inform and shape national
and regional policies and initiatives.
4. CEDOS and ADEPT welcome the opportunity
to submit evidence to the Business, Innovation & Skills Committee's
Inquiry into the new Local Enterprise Partnerships. Our joint
evidence focuses in particular on the key topics identified in
the Inquiry announcement.
OUR OVERALL
POSITION
5. Our research shows that below the national
level, the sub-region is the key economic layer. In this context,
we welcome the move to Local Enterprise Partnerships focused on
"functional" economic areas at the sub-regional level.
In contrast to the present regional system with Regional Development
Agencies whose Boards are appointed by and responsible to Central
Government, the move to Local Enterprise Partnerships offers the
prospect of focusing more effectively on distinctive local/sub-regional
needs and requirements rather than one-size-fits-all solutions
being imposed. With a devolved approach to which the Government
has stated its commitment, it is important that Local Enterprise
Partnerships, their functions and the areas they cover are locally
determined and agreed.
6. For Local Enterprise Partnerships to
be successful and to play their full part in securing national
economic recovery and sustainable growth, the issue of resources
for LEPs and local authorities will be crucial. At the same time
as taking action to tackle the public sector deficit, there is
real potential to achieve the necessary resources through efficiency
savings from simplifying delivery and taking a place-based approach
to economic development funding.
THE FUNCTIONS
OF THE
NEW LOCAL
ENTERPRISE PARTNERSHIPS
AND ENSURING
VALUE FOR
MONEY
CEDOS/ADEPT views:
Functions
7. If there is to be genuine devolution
of responsibility, the functions of the new partnerships should
be determined by the local partners to meet their particular local/sub-regional
needs and circumstances. It is, of course, likely that a number
of key activity areas will be common to many Local Enterprise
Partnerships and we broadly support the statement in the letter
of 29 June 2010 from the Secretaries of State[17]
that Local Enterprise Partnerships will want to create the right
environment for business and growth in their areas, by addressing
issues such as planning and housing, local transport and infrastructure
priorities, employment and enterprise and the transition to a
low carbon economy. On some key issues, there will be a need to
distinguish between governance and strategic advice as on planning
and transport where local authorities have legal responsibilities
but might look to the Local Enterprise Partnership for strategic
guidance.
8. However, Government must guard against
any temptation to re-impose a one-size-fits-all approach. In this
context, we are concerned at the potential implications of the
statement in the letter of 29 June that some of the functions
of the RDAs "are best led nationally, such as inward investment,
sector leadership, responsibility for business support, innovation
and access to finance". Central Government clearly has an
important role in these and other areas of economic development
activity but where they are seen as local/sub-regional priorities,
so too will Local Enterprise Partnerships.
9. Inward investment is a case in point.
To be successful, it must rely on a detailed knowledge of the
local economies, gaps in supply chains, key growth sectors, property
and land availability, labour supply and key local contacts. This
will only be possible if inward investment has an important element
of local ownership. Worklessness and the level and availability
of skills are other important examples. Tackling worklessness
will be a major issue for Local Enterprise Partnerships across
the country if they are to achieve sustainable economic growth
and employment opportunities spread throughout their communities.
Skills are a critical component of economic growth. Ensuring local
skills and training delivery match both the needs of local employers
and of local residents will be essential in driving economic prosperity.
Thus, Local Economic Partnerships ought to be able to take overall
responsibility for the development and delivery of a local skills
strategy covering all age ranges.
Value for money
10. The approach to delivering economic
development in this country has become too complex with national,
regional, sub-regional and local layers and a large number of
organizations and funding streams involved. There has been too
much filtering of funding through too many layers of bureaucracy;
of having to "jump through too many different hoops"
to gain access to different funding streams with different application
processes, criteria and performance monitoring arrangements. There
is considerable scope for achieving efficiency savings by simplifying
delivery, de-layering and reducing burdens.
11. The introduction of Local Enterprise
Partnerships will offer a real opportunity to increase value for
money in the delivery of sub-national economic development providing
a place-based approach is taken by bringing together and devolving
the functions and funding streams currently undertaken by a number
of national and regional organisations. In doing this, it is important
to emphasise that value for money is not just about making savings.
It is about cost-effectiveness and a devolved approach to economic
development will only be effective if there are sufficient resources
to support it. For this, it is vital that a sufficient proportion
of the savings from de-layering is made available to Local Enterprise
Partnerships to enable them to perform their essential role in
leading and supporting the economic recovery of their areas. It
is also important that they have the security to enable local
authorities and their partners to commit to the necessary long-term
investment.
12. The pursuit of value for money must
not result in any unnecessary burdens being imposed by a re-introduction
of centrally imposed targets and reporting/inspection regimes.
The best way of ensuring value for money is to have effective
local accountability and in particular accountability through
the local government democratic process.
THE REGIONAL
GROWTH FUND,
AND FUNDING
ARRANGEMENTS UNDER
THE LEP SYSTEM
CEDOS/ADEPT views:
Regional Growth Fund
13. The Government's consultation paper
on the Regional Growth Fund (RGF) states that it will be important
in providing access to the investment needed to make the priorities
of Local Enterprise Partnerships happen. In the context of its
stated objectives, we would wish to emphasise the importance of
the Fund "being flexible enough to meet different needs in
different places"[18]
and for all areas of England being eligible to apply for funding.
To secure sustainable economic recovery and growth, we need to
unlock the potential of all areas and sub-regions to make the
most of this country's economic opportunities and recognise this
in the distribution of resources and in making and prioritising
investment decisions. In this context, the RGF consultation suggests
the Fund will support projects with significant potential
economic growth. The judgement on what constitutes "significant"
growth will be crucial and it is important to recognise that
in some areas comparatively small projects can have a significant
impact on their economic future.
Overall funding arrangements
14. Whilst we welcome the announcement of
the Regional Growth Fund, on its own the Fund will not provide
Local Enterprise Partnerships (LEPs) across the country with the
resources necessary to play their full part in helping to secure
economic growth. The current intention is for £1 billion
to be spread over the two years 2011-12 and 2012-13. Moreover,
whilst the RGF Consultation Paper refers to Local Enterprise Partnerships
being tasked with a lead role in coordinating funding through
the RGF and that "proposals that have the backing of the
local enterprise partnership will be looked upon favourably",
access to the fund will not be restricted to LEPs.
15. A devolved approach to economic development
will only be effective if there are sufficient resources to support
it. The importance of a sufficient proportion of the savings from
de-layering being made available to Local Enterprise Partnerships
has been referred to above. It also needs to be recognised that
action by local authorities will be crucial to the success of
Local Enterprise Partnerships. The importance of the local authority
economic development role has been underlined in the CEDOS/ADEPT
report "Recession & Post-Recession—Taking Forward
Economic Development & Regeneration" (July 2010). In
the report we emphasise that, as an "unprotected area",
the scale of the public sector spending cuts ahead could seriously
put at risk the ability of local authorities to continue to take
a leading role in supporting the economic recovery and regeneration
of their areas and sub-regions. Ensuring the success of Local
Enterprise Partnerships will, therefore, require the issue of
providing the necessary resources for local authority economic
development and regeneration to be addressed as a matter of urgency.
16. The Government has announced the intention
to provide incentives for local authorities to deliver sustainable
development, including for new homes and businesses. There is
a strong case for these to include an incentive linked to business
growth. In addition and not least because of the urgency for local
authorities and Local Enterprise Partnerships to address local
infrastructure requirements, other steps need to be taken and
funding options explored. The standard and resilience of our infrastructure
has a direct relationship to the growth and competitiveness of
our economy and it is important we continue to invest in infrastructure
to support the recovery and stimulate sustainable long-term growth.
17. Looking beyond the immediate term, a
truly devolved approach to economic development needs to be underpinned
by more locally derived resources. There is a strong case for
more radical action by re-localising business rates and for local
government to have more flexibility and freedom to explore and
use new and innovative means of raising finance. These resource
issues are considered in more detail in our joint report.[19]
GOVERNMENT PROPOSALS
FOR ENSURING
CO -ORDINATION
OF ROLES
BETWEEN DIFFERENT
LEPS
CEDOS/ADEPT views:
18. So far there is no clarity on Government
proposals for co-ordinating the roles between different Local
Enterprise Partnerships, for which presumably we must await the
forthcoming White Paper. Given the Government's commitment to
promote decentralisation and democratic engagement, end the era
of top-down government and promote the radical devolution of power,[20]
it must recognise that Local Enterprise Partnerships will wish
to develop their roles and functions in different ways to meet
different economic needs and circumstances across the country.
ARRANGEMENTS FOR
CO -ORDINATING
REGIONAL ECONOMIC
STRATEGY
CEDOS/ADEPT views:
19. Our research and that of the Local Government
Association has shown that immediately below the national level,
the sub-region is the key economic layer.[21]
The Government refers to Local Enterprise Partnerships covering
"functional" economic areas. In our view, these should
normally be at the sub-regional scale. Nevertheless, "functional"
economic areas, however well defined, can never be self-contained.
There will continue to be a need to work across boundaries and
for cooperation between Local Enterprise Partnerships, particularly
neighbouring ones.
20. However, if there is to be genuine devolution
of power and responsibility, the key principle is that coordination
should not be imposed in any pre-conceived regional context. It
should be a matter of Local Enterprise Partnerships working together
as appropriate and by mutual agreement on areas of joint interest.
Where action is needed at a broader regional level, this can be
facilitated through a partnership approach between elected central
and local government, although where groups of Local Enterprise
Partnerships wish to cooperate on a regional basis, they should
be able to do so.
STRUCTURE AND
ACCOUNTABILITY OF
LOCAL ENTERPRISE
PARTNERSHIPS
CEDOS/ADEPT views:
21. As regards structure, we support the
approach of Local Enterprise Partnerships normally having Boards
made up of equal representation of local authority and business
representatives, with a prominent business leader as Chair. We
welcome the Government's willingness to "consider variants
from this"[22]
but consider that with a devolutionary approach, this should be
a matter for the local partners themselves. The essential thing
is for the governance arrangements to be sufficiently robust and
transparent to provide a sound basis for long-term investment
decisions necessary to underpin sound economic recovery and sustainable
growth. It will be important to ensure Local Enterprise Partnerships
have the confidence of the local communities they serve. For this
accountability, in particular local democratic accountability,
will be crucial.
THE LEGISLATIVE
FRAMEWORK AND
TIMETABLE FOR
CONVERTING RDAS
TO LEPS,
THE TRANSITIONAL
ARRANGEMENTS, AND
THE ARRANGEMENTS
FOR RESIDUAL
SPENDING AND
LIABILITY OF
RDAS
CEDOS/ADEPT views:
22. A plan published by the Department for
Communities & Local Government[23]
states that it will facilitate the establishment of Local Enterprise
Partnerships between Sept 2010-Sept 2011, with Partnerships in
place, RDAs dissolved and their powers transferred in full by
April 2012. The Localism Bill, which will include the creation
of Local Enterprise Partnerships to replace Regional Development
Agencies is to be introduced in November 2010, with the expectation
of enactment in November 2011. Meantime it has been reported that
the Department for Business, Innovation & Skills anticipates
that some LEPs will be in place before the end of this year to
shadow the RDAs, an arrangement that could enable bids for the
Regional Growth Fund to be submitted to meet the first deadline
proposed for the end of December 2010.
23. On the issue of legislation, given that
Local Enterprise Partnership delivery proposals will encompass
some or most of the current responsibilities of the RDAs, additional
local authority powers are likely to be required including compulsory
purchase and powers to use housing and regeneration funds as equity
in local asset based delivery vehicles. The loss of the compulsory
purchase powers of RDAs, which are much more extensive than local
authorities currently have, would be a retrograde step.
24. Whilst we consider that RDAs should
be wound down as quickly as possible, the immediate timetable
for getting LEPs underway in advance of the White Paper and the
October Spending Review is extremely challenging particularly
for areas that do not have existing well established sub-regional
arrangements. It will be important that areas whose proposals
for creating Local Enterprise Partnerships do not find immediate
favour with the Departments are not disadvantaged in accessing
the Regional Growth Fund.
25. As regards residual projects and their
associated spending, with their agreement, these should be transferred
to the strategic (upper-tier) local authorities, except for high
risk or broad regional projects which, with the agreement of the
local authority(ies), should be transferred to Central Government.
Similarly the assets of the RDAs should be transferred to the
upper-tier authority in which they are located (providing the
authority agrees), although there may be some "toxic"
assets eg large, high-risk regeneration schemes, which would need
to transfer to Central Government.
MEANS OF
PROCURING FUNDING
FROM OUTSIDE
BODIES (INCLUDING
EU FUNDING) UNDER
THE NEW
ARRANGEMENTS
CEDOS/ADEPT views:
26. The Local Enterprise Partnership structure
with strong, visible partnerships between the public and private
sector should generally be well placed to procure external funding.
The key issue will be the transfer of European funding arrangements
that are currently managed by the RDAs. Much will depend on the
outcome of discussions, which are no doubt going on between the
Government and the European Commission and on the availability
of match funding following the October Spending Review.
27. It will be important that the flow of
funds through European programmes is not disrupted, and that within
each region partners consider possible transition arrangements
for the remainder of the current programme. Providing match funding
is made available, a possible approach could be an arrangement
whereby accountability, funding and staff are transferred to one
of the LEPs or local authorities operating in each applicable
region and for that LEP to manage the funds on behalf of local
partners.
28. Looking to the future, bids for EU funding
and negotiations with the European Commission work most effectively
at the regional level which would require LEPs to work together
to achieve a strong collective relationship with the Commission.
An alternative could be national management with consortia of
LEPS/local authorities with common interests bidding to run elements
of programmes. Whatever approach is taken, it will be important
that local areas are able to access available EU funding programmes.
Given match funding requirements, the extent to which they are
able to do so will very much depend on the resources available
to local authorities and LEPs.
12 August 2010
17 Letter from the Secretary of State for Business,
innovation & Skills and the Secretary of State for Communities
& Local Government to Local Authority Leaders and Business
Leaders 29 June 2010. Back
18
Consultation on the Regional Growth Fund HM Government
July 2010 Back
19
Recession & Post-Recession-Taking Forward Economic Development
& Regeneration CEDOS/ADEPT July 2010 Back
20
The Coalition Our Programme for Government May 2010 Back
21
Making the Most of Our Economic Potential-Looking Beyond the
Core Cities ADEPT/CEDOS 2007 Back
22
Letter from the Secretary of State for Business, innovation &
Skills and the Secretary of State for Communities & Local
Government to Local Authority Leaders and Business Leaders 29
June 2010 Back
23
Draft Structural Reform Plan Department for Communities
& Local government July 2010 Back
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