Written evidence from the Devon and Cornwall
Business Council
The Devon and Cornwall Business Council (DCBC),
is a private sector led, sub regional economic partnership. Over
80 constituent national, regional and local private and public
sector organisations are represented at quarterly meetings designed
to enhance the competitiveness of the region and facilitate economic
development. These organisations, which include all facets of
business from manufacturing to high value knowledge based innovative
industries, represent some 40,000 businesses- from micro to large
enterprises. Individuals also attend DCBC meetings with relevant
interests who can contribute to the remit of the organisation.
DCBC has significant experience in running European
programs that are geared towards the development of the knowledge
based economy and innovation agendas.
As the most powerful private sector voice for
Devon and Cornwall, DCBC is often the first point of contact for
many regional journalists and programme makers.
Although DCBC is not a membership organisation
it is funded by sponsorship from key organisations in the region.
This submission is made by the Chief Executive
and the Chairman of the council who reports to an advisory board
who are elected by their relevant businesses organisations.
The function of the new LEPs and ensuring good
value for money
The functions should comprise three key targets
being GDP growth, private sector job creation and economic diversity/vitality.
The initial focus should be on overcoming barriers to economic
growth including skills, planning, employment and housing land
and connectivity (specifically including Super-fast Broad-band).
The functions need to be allowed to evolve to
reflect the strengths and weaknesses of each economy and the abilities
of local partners to manage delivery. Each LEP needs to develop
its own priorities and to blend these with central government
functions. For example the far South West might wish to exploit
its environmental assets and nurture the potential of strong rural
manufacturing businesses at small and micro level. In parallel
with this developing sub-regional funding vehicles (business angels
etc).
Good value for money will be measured by job
creation, sustainability and private sector leverage. This should
also be based on simple business principles of obtaining a commercial
return on investment—LEPs should be either run as businesses
or on strict business principles. The question of value for money
is interesting as to date all advice is that there is no core
funding available for LEPS it is therefore assumed that what funding
needed for resourcing these organisations will be provided by
the appropriate local authorities and or private sector, this
in turn may simply make the business membership of the LEP dependant
on ability to contribute, leading to the larger businesses having
undue sway. In a predominately rural and S.M.E. dominated economy
this would not reflect the real growth opportunities that are
perceived to be driven by this sector. It is true to say that
business representative organizations that already collect levies
from their members would not see this as advantageous and indeed
would have difficulty in convincing their membership to contribute
more. This needs to be considered against a background of the
CSR which will, without any doubt constrain L.As further in discretionary
funding.
The Regional Growth Fund and funding arrangements
under the LEP system
The basic concept of the RGF being a matched
funding model is considered sound. The alternative will be a continuation
of a Grant/subsidy culture with enormous efforts directed to bidding
processes rather than concentrating on how best to stimulate private
sector investment and then reverting to subsidy only where market
failure is demonstrated.
The openness of the suggested process of bidding
is considered sound particularly that it is not the preserve of
LEPs (ie not viewed as an exclusive source for Local Authority
projects).However experience shows that expertise in bidding is
vital for success and LEPs would appear not to be able to have
this resource instantly to hand, however there is expertise in
the public sector. The question will be whether this is viewed
as good use of scarce resource.
The current suggestions for a national evaluation
process do not indicate how local priorities can be measured and
judged.
Core funding for the LEPs is currently not defined.
It is difficult to anticipate that LAs will provide pump priming
for even administrative purposes. The private sector will consider
that contributions in kind will be sufficient commitment. This
gap needs to be addressed as stated in our response to the first
question
Government proposals for ensuring co-ordination
of roles between different LEPs
The arrangements for co-ordination between RDAs
were adequate. The difference with LEPs is that Private Sector
engagement will need to be taken into account. Whether it is practical
to incorporate a system of shared best practise across England
is probably a 2nd phase issue. It is likely however that the private
sector will recognise the opportunities for collaborative working
and that functional economic geography may regularly identify
joint opportunities. It is suggested that this should not be proscriptive
but that there is flexibility within the overarching administrative
framework. In addition there appears to be little clarity at the
moment in the government proposals and emerging suggestions would
appear to include specific LEPs looking to provide expertise in
specific sectors this may therefore force a network on co-ordination.
Arrangements for co-ordinating regional economic
strategy & structure and accountability of LEPs
The current co-ordination role available through
the Regional Government office network is considered a strong,
tried and tested, mechanism for tackling these issues. The removal
of these offices should be reviewed. A small nucleus of regional
government office advisors would be more than adequate to not
only address these issues but more importantly, ensure longer
term that true partnerships are actively maintained and also that
Local Authorities do ensure that private sector engagement is
a reality. Given the abolishing of RDA's the preparation of regional
economic strategy would appear to be ignored. A proposal of an
under arching partnership of LEPs for the old regions to address
strategic issues such as transport infrastructure may well be
a way forward.
The legislative framework and timetable for converting
RDAs to LEPs, the transitional arrangements and the arrangements
for residual spending and liabilities of RDAs
The transitional management issues regarding
closure of RDAs has been pre-empted by the announcements as to
their future. In our experience each has already started the downsizing
process. It is interesting that the Select Committee wishes to
consider this as policy to date would indicate that RDA's are
not to be converted to LEPs as virtually none of the functions
would be carried out by LEP's.
Three areas are important in terms of RDA legacy—physical
assets, intellectual property rights and human resources particularly
in specialist sectors (aerospace, renewables, composites etc).
Significant investment has been made in these areas and to dissipate
these particularly at a time when the market conditions are not
conducive to maximising returns is considered unwise. There is
no clarity as to the process of what happens to receipts if, for
example RDAs sell their property assets. Each RDA should produce
an audit (stock list) of existing resources before disposals take
place. There is sufficient time for emerging LEPs to then review
these and assess the potential for maintaining initiatives, selling
assets to generate capital and revenue or using the legacy assets
as part of a method for generating matched funding from the private
sector. Legislation to support this will then become clear. Guidance
to RDAs regarding premature disposals should be issued to avoid
losing the benefit of many years of careful investment mostly
in areas of market failure. Existing RDA commitments should be
fully supported.
It is considered that this question makes an
unnecessary assumption that RDAs will be converted into LEPs.
Means of procuring funding from outside bodies
(including EU funding) under the new arrangements
Legislation will be required to enable funding
mechanisms to operate to ensure Private Sector investment can
be maximised. Within broad sectors, public sector assets will
need to be sweated harder. New funding vehicles which could achieve
this will need to be facilitated—transfer a road network,
introduce shadow tolling and maintain, invest and generate surpluses
for new infrastructure could be attractive to the private funding
market. Local hypothecation may also be a strong opportunity for
maintaining a local reinvestment framework which would also be
attractive to local investors. The legislative framework will
need to facilitate this within short timescales.
A development of the successful local BID schemes
to be carried out across sectors of the agreed LEP areas could
be considered, this would bring private sector commitment and
cash to the table.
Careful consideration needs to be given to not
only the practical issues in terms of moving accountable bodies
for EU funding schemes but also the legal implications of doing
so. An urgent discussion needs to take place with European Commission
on these issues. To expect central government departments to carry
out this role is unrealistic and has in past proven to be over
bureaucratic,creates time delays and removes the local influence
necessary to ensure that European schemes can work for the benefit
of the areas. Most European schemes are based around European
regions and the abolishing of the RDA's leaves a gap. If the LEP's
are considered appropriate to carry out this role in the future
capacity has to be considered.
FINAL THOUGHTS
The issue to date that has dominated local discussion
has been around the dichotomy of the localism agenda versus the
economic activity area agenda, it is entirely right and natural
that locally elected leaders would wish to ensure that they achieve
the best for their electorate, however the business community
works across local authority boundaries and there will need to
be a true partnership approach to ensure these issues do not dominate
and a willingness to work across unitary boundaries regardless
of political persuasions.
11 August 2010
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