Written evidence from the Commission for
Rural Communities
1. ABOUT THE
COMMISSION FOR
RURAL COMMUNITIES
1.1 The Commission for Rural Communities
(CRC) was established in April 2005 and became an independent
body in 1 October 2006, following the enactment of the Natural
Environment and Rural Communities Act, 2006.
1.2 The Commission has the following three roles:
1. Listening to and representing the views of
rural communities.
3. Acting as an independent watchdog.
1.3 We have a statutory responsibility to
act as an advocate for rural communities and businesses and provide
independent advice to government and others to help ensure that
policies and programmes reflect the needs of people living, working
and doing business in rural England. We have a particular focus
on tackling disadvantage and economic under-performance.
1.4 On Tuesday, 29 June, the Government
announced its intention to abolish the CRC as an arm's length
body and create a new Rural Communities Policy Unit within Defra.
The CRC remains a statutory body for the time being and is working
closely with Defra officials to shape a new Policy Unit which
retains as much as possible of the CRC's expertise and evidence
base. We and Defra are keen to ensure that work on priority issues,
such as those mentioned in this submission, continues uninterrupted
during the transition period.
1.5 We have demonstrated in various reports
over the last two years the degree of economic contribution made
by the 20% of the national economy that operates in England's
rural areas, and the economic resilience, recovery and growth
they achieved through the credit crunch and recession.[36]
1.6 Throughout 2009 we hosted a series of
Summits, which enabled large numbers of those representing residents,
employees and business owners in rural England to describe key
challenges and solutions to release more of the economic potential
of rural areas. Our Summits explored approaches to Innovation,
Investment, Leadership and Empowerment—and we will be launching
the resultant Agenda for change in early September. We will ensure
that the Committee receives copies.
1.7 Three of the five themes in that Agenda
relate very closely to the subject of your Committee's enquiry:
namely Giving more power and responsibility to businesses; Strengthening
the links between local authorities and their employer community;
and the adoption of better definition and metrics of sustainable
economic growth.
2. SUMMARY OF
OUR KEY
POINTS
2.1 The CRC sees an increase in collaborative
working across local authorities and businesses as being a positive
step for rural communities, provided rural representatives are
engaged fully in the process.
2.2 Government announcements suggest that
Local Enterprise Partnerships (LEPs) will have a significant role
in the delivery of economic development in England. It is therefore
of critical importance that:
— Alternative methods of delivery of services
and activities provided by LEPs are provided to those areas that
are not included within a LEP area.
— Those LEPs that are created take into
account geographic diversity and fully reflect the needs of rural
communities and economies.
2.3 The CRC welcomes the creation of a Regional
Growth Fund, its apparent recognition for smaller bids, including
from rural areas, and the opportunity for bids not developed by
LEPs.
2.4 However, we are concerned that the focus
on bids of more than £1 million, on achieving significant
change and attracting significant leverage of private funds, will
favour bids from urban and city areas. We believe that the metrics
and selection criteria need to be modified to allow bids more
reflective of the nature and scale of investments in small areas
and that the Growth Fund should support investment in broadband
and other communications in rural areas.
2.5 Frustration was expressed last year
by those who attended our Rural Economies Summit on Investment
about the criteria used by many public bodies when making investment
decisions. There is a strong case for the adoption of better indicators
to measure sustainable economic growth. This is particularly pertinent
to the design and operation of the Regional Growth Fund. Current
proposals with their emphasis on large scale bids, significant
growth and private sector leverage show signs of perpetuating
traditional bias towards capital investment and short term measures
of input and outputs, rather than being accommodating of small
scale, ongoing social, environmental and economic investments
that achieve sustainability and economic growth.
3. GEOGRAPHICAL
COVERAGE
3.1 There is currently no requirement for
Local Enterprise Partnerships to cover all areas of England and
there is no indication that this will change as a result of the
publication of the Government's White Paper on Economic Growth.
Anecdotal evidence from those involved in negotiations on LEPs
suggests that it is likely that the proposals that will be submitted
by 6 September will exclude some areas.
3.2 We understand that the criteria that
partnerships have to meet in order to become a LEP include having
over one million residents within their boundaries and a prominent
business leader (FTSE 100) as chair. Due to smaller populations
and business bases, even where the functional economic geography
suggests that the creation of a LEP would be beneficial, these
criteria will be difficult for some rural areas to meet. Where
such areas have been unable to join with a neighbouring partnership,
the use of the criteria could mean that they will have no opportunity
to take part in a LEP.
3.3 The Communities and Local Government
website states that:
Local Enterprise Partnerships will be "|key
vehicle(s) in delivering Government objectives for economic growth,
decentralisation and helping to rationalise the regional tier
..."[37]
3.4 The CRC is concerned that those areas
that fall outside LEP boundaries will lose out in terms of the
allocation of resources, the delivery of services and investment
in infrastructure. We will be publishing a call for evidence across
rural local authorities and businesses this week to determine
to what extent our concerns are valid. We would be happy to share
results with the Committee, timescales allowing.
4. ENSURING THAT
LEPS EMBRACE
RURAL AREAS'
CONTRIBUTION AND
CHALLENGES
4.1 England's rural economies contain about:
— 19% of England's population (9.8 million);
— 25% of its businesses (of which over
half million are registered for VAT/ PaYE);
— over 5 million employees, and contribute;
— at least £150 billion Gross Value
Added (GVA); and
— have higher rates of new business formation
and entrepreneurship than most English cities and urban areas.
4.2 As importantly, rural economies are
very diverse, with some sparse and peripheral localities showing
continuing dependency for example on land based, tourism and food
industries and with low waged labour force, whilst others close
to our most dynamic urban centres, host high tech companies with
highly skilled and professional workforce. This diversity will
therefore benefit from attention and resourcing from local public
and private partnerships who are able to identify and prioritise
very different local economic needs. However, most rural economies
have substantial interdependencies with neighbouring urban centres[38]
and distant economies and therefore need partnerships than can
engage with other localities. Many rural areas also exhibit substantial
evidence of disadvantage, with high proportions of low income
households, financial exclusion and debt, and districts with some
of the highest proportions of low-waged employees. Tackling poverty
and disadvantage must be as important a role for economic partnerships
as improving business conditions for supporting economic growth.
4.3 In order to maximise the economic well-being
of their areas, it is vital that LEPs recognise both the potential
of rural economies and the very real social and economic problems
being faced in small towns and rural areas.
4.4 It is key that in drafting, implementing
and monitoring the new LEPs, decision makers consult a broad range
of stakeholders within their respective areas, including those
who represent rural communities.
4.5 It is also important that new LEPs establish
methods by which residents, workers and businesses in smaller
and more rural areas, and those who represent them, can be heard
within their decision making structures.
4.6 It is also essential that LEPs are
informed by a robust evidence base which includes rural areas,
and which recognises and acknowledges that different considerations
need to be applied to different types of rural area.
4.7 With Defra's support, the CRC is carrying
out a project to inform the rural contribution to LEPs. We are
seeking to help these new bodies recognise and embrace both the
potential contribution, and the needs of rural economies and communities.
4.8 Over the next two months we are working
to identify good practice and advice for LEPs. By looking at how
rural economies were recognised and embraced in current and previous
sub-national partnerships, such as City Regions, Multi-Area Agreements
and other sub-national economic partnerships, we will produce
a report which describes good practice and the different ways
of embracing rural participation that new LEPs could take. The
report will also include some general discussion on the impact
of existing sub-national partnerships on rural areas. We hope
that this study will help demonstrate the importance of and approaches
to harnessing the interests and needs of rural areas in any new
arrangements.
4.9 We are using evidence gathered from
a selection of existing sub-national economic partnerships across
all regions (excluding London), which have been chosen using a
range of criteria including: the extent of business involvement;
the level of rurality; and the length of time in which the partnership
has operated. The report will also be informed using information
gained from the call for evidence from rural local authorities
and businesses.
4.10 It is our intention to publish the
report during the first week in October. Again we would be happy
to share the results of our work with the Committee, timescales
allowing.
4.11 The CRC would also like to highlight
to the committee the Joint CEDOS/CSS report on Making the most
of our economic potential—looking beyond core cities,
which has helped inform some of the content of this submission.
5. REGIONAL GROWTH
FUND
5.1 We welcome the current proposals for
a Regional Growth Fund. We will be responding fully to the BIS
consultation on this Fund, after taking advice from business organisations
representing rural firms, including members of our Rural Business
Finance Forum who have an interest in many aspects of your Committee's
current inquiry. We do however, have concerns that the emphasis
on significant scale and impact in the BIS consultation paper
(eg "significant potential for economic growth| significant
private sector leverage, significant economic weight etc) will
make the Growth Fund a less meaningful source to resource business
and job growth in rural and small areas.
5.2 The aspirations of business owners to
grow in most rural areas are as high as in most urban areas, levels
of new enterprises are higher and the level of exporting firms
is also often higher. However, many rural areas display lower
dependency to achieve growth on larger scale physical capital,
such as local innovation and incubation centres, or on formal
research institutions, to achieve this growth, Whilst short term
increases in the numbers of businesses or jobs in rural places
are not as sizeable as those seen in urban centres, and by some
measures their growth rates are lower, the levels of business
"deaths" are also lower, thus assuring more steady and
yet impressive improvements in economic drivers over a medium
term.
5.3 We would not wish to see this Government
continue the bias of previous public sector investment funds towards
achieving short term outcomes in business growth, through larger
capital-driven physical investment. We believe that the criteria
for bids, and the selection processes including membership of
the Independent Advisory Panel, and treatment of bids received
from non-LEP sources, need to be designed and operated to ensure
equality in appraisal between two very different forms of investment
plans.
5.4 One form of capital investment that
we would suggest LEPs and the Government departments should examine
and apply the Growth Fund to, is that of enhanced Broadband and
other communication infrastructure. This is recognised by both
government and business owners as being non-existent or particularly
limited in some rural areas and in need of urgent investment.
5.5 We welcome the intention to allow private
sector companies and public -private partnerships to be able to
bid to the Growth Fund, whilst recognising the important role
of LEPs. We come to this view because of our concerns (described
above) that LEPs may not emerge to cover all areas and may not
have the experience, capacity nor evidence from the outset to
be able to describe priorities for intervention in their rural
economies, and therefore may be less able to make successful bids
to the Growth Fund to address these needs.
5.6 Within rural England some functional
economies operate across local authority borders as in our National
Parks. Rural England's economies also have substantial territory
that borders Scotland and Wales, across which considerable commuting,
business supply and customer movements, service provision including
training activities happen ignorant of these administrative borders.
If too much emphasis is placed on LEP as the source or approver
of bids for the Growth Fund, and insufficient recognition that
economic growth is being sought across the UK, investing in these
cross border interdependencies may be marginalised compared with
investment priorities more clearly contained within the territories
of large LEPs.
6. CONCLUSION
6.1 We would ask the Committee to:
(a) Consider examining what the impacts on support
for local economic growth will be if the bids for LEPs do not
offer meaningful coverage, either of territory or of economic
components, and consider alternative solutions.
(b) Help the business departments to identify, encourage
and support business leaders and business-led partnerships in
areas that do not have substantial depth of large or international
companies to lead Growth Fund bids.
(c) Explore the application of these proposals
for LEPS and Growth Fund on cross- border economies, a territorial
characteristic of greater relevance for rural than urban communities,
which previous area targeted investment schemes have ignored.
6.2 The CRC commends this submission to
the BIS Committee inquiry into New Local Enterprise Partnerships
and hopes that it provides helpful assistance to informing the
Government's thinking on LEPs.
12 August 2010
36 From credit crunch to recovery: The impact of the
recession in England's rural economies. CRC 2010 England's
rural areas: steps to release their economic potential, CRC
2009 and http://ruralcommunities.gov.uk/category/our-work/impact3/creditcrunch/ Back
37
http://www.communities.gov.uk/localgovernment/local/localenterprisepartnerships/?view=Standard Back
38
England's rural areas: steps to release their economic potential,
CRC 2009. Back
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