Written evidence from the Local Government
Yorkshire & Humber (LGYH)
BACKGROUND
1. LGYH is the partnership of the 22 local
councils, four fire and rescue authorities, four police authorities
and two National Park Authorities in Yorkshire & Humber. One
of our principal objectives as a membership organisation is to
promote the pro-active devolution of decision-making powers and
the associated financial responsibilities to local authorities
and their collaborations in Yorkshire and Humber.
2. We are aware of a number of other submissions
to your Inquiry from or on behalf of local authorities in Yorkshire
and Humber—including that from the Sheffield City Region
and the Core Cities Group (which includes Leeds and Sheffield
City Councils). This response aims to highlight a number of key,
cross cutting issues that are relevant to the local councils and
local economies across Yorkshire and Humber, to help further inform
the evidence base for the Committee's Inquiry.
THE YORKSHIRE
AND HUMBER
CONTEXT
3. Local government in Yorkshire and Humber
has welcomed the new Coalition Government's stated ambitions around
greater localism and devolution to drive economic growth at the
level of economic geographies.[42]
A key part of this process is now the wind-down of the Regional
Development Agencies (RDAs) and establishment of LEPs in their
place.
4. It must also be emphasised, however,
that Yorkshire and Humber faces particular challenges in responding
to the new economic agenda, characterised by private sector-led
growth and public sector spending cuts. The Committee's attention
is particularly drawn, therefore, to a crucial recent research
report produced for LGYH by the Work Foundation—www.lgyh.gov.uk/dnlds/Managing
Change—June 2010.pdf.
5. This report shows how and why the local
economies across Yorkshire and Humber are some of those most dependent
on publicly funded sectors and, as a result, most at risk of economic
decline due to spending cuts. The key lessons are that:
— Publicly funded employment creation in
the economies across Yorkshire and Humber over the last 10 years
has been higher than in any other part of the country, other than
the West Midlands. 77% of new jobs since 1998 have been in publicly
funded sectors.
— There is, therefore, a much greater challenge
for our local economies to take full advantage of private sector-led
growth.
— There are, nevertheless, real strengths
of private sector growth potential that we must be able to capitalise
on—this includes renewables and "green" technologies
(eg the investment in the South Humber Gateway) and real strengths
in financial and legal services, advanced manufacturing, healthcare
technologies, digital and creative industries.
— It is vital that the actions taken to
deal with these issues fully reflect local circumstances, challenges
and opportunities; which demands an entirely "bottom up"
approach to funding and support decisions (eg to tackle worklessness
and economic growth potential simultaneously).
— Responses to the future challenges around
funding cuts need to be joined up across the public sector. Local
councils need to be recognised as the democratic leaders of their
local places in this regard, to work across public service providers,
as well as wider sectors.
6. The LEPs and associated support via the
Regional Growth Fund represent critical mechanisms to support
councils and business in Yorkshire and Humber to work together
on the above issues and rebalance their economies, in favour of
private sector enterprise, innovation and growth.
LOCALISM AND
FLEXIBILITIES
7. Local authorities have welcomed the Coalition
commitments around giving councils and their business partners
complete flexibility in establishing their new LEP arrangements.
It is vital that the Government maintains this stance as LEP propositions
are submitted and the associated White Paper on "Sub National
Growth", expected by the autumn, is finalised.
8. For councils in Yorkshire and Humber
this must include the ability for localities to be in more
than one LEP structure, and a number of our localities look
to more than one economic geography for their employment markets,
commercial relationships and neighbourhood prosperity. This includes,
for example, the local authority areas of Barnsley (linked economically
to both the Sheffield and Leeds City Regions) and York (linked
economically to both Leeds City Region and North Yorkshire).
9. It is vital that the LEPs are locally
owned partnerships between local authorities and business, without
prescription in terms of ideal population size, geographic
coverage, numbers of upper tier authorities involved etc. Each
level of prescription will inevitably limit the levels of innovation
possible in establishing these vital new arrangements.
10. It will be particularly important for
LEPs to define their own functions and, for the LEPs in Yorkshire
and Humber, this will need to include a key role in the skills
agenda. For our economies to grow the labour market will demand
a quality and quantity of skills that enable people to work more
flexibly across a range of activities and growth sectors. Prioritising
skills funding directly in line with economic growth opportunities
will be of paramount importance and the agendas cannot be separated.
The LEPs will therefore need to be clear on their role in the
area of skills.
11. It must also be emphasised that our
local economies need to be supported by a clear focus on SMEs,
which dominate economic activity in many areas. SMEs continue
to be a real driver of economic growth, particularly in advanced
sectors, and they are especially dependent upon the environment
in which they are located to provide them with various "local
collective goods" to grow and flourish. LEPs need, therefore,
to be recognised as having a clear remit in the area of SME and
wider business support in many areas, in a way that can also embraces
the "social enterprise" agenda.
12. Similarly, enterprise and innovation
is the engine of structural change and is fundamental to sustainable
economic growth. Despite the array of enterprise support schemes
over recent years, enterprise formation and survival is still
weak in many localities across Yorkshire and Humber and, as such,
LEPs must have a key role if we are to turn this situation around.
13. The Coalition has stated that enterprise,
innovation, inward investment, tourism and skills may all be areas
where leadership at the national level is required. Whilst
we would not question the need for a national focus, it is critical
that the LEPs shape and be able to deliver on these agendas.
The LEPs will need to create structures that provide local venture
capital as well as business and enterprise support based on very
precise local needs, and there are some fears that any re-centralisation
of these activities, in the light of the RDAs' wind-down, may
not deliver the strong LEPs that are required.
HISTORY OF
WORKING AT
THE LEVEL
OF "FUNCTIONAL
ECONOMIES" IN
YORKSHIRE & HUMBER
14. Local authorities in Yorkshire and Humber
want the LEP agenda to bring positive benefits to localities and
build on the principles of "subsidiarity"—with
activity taking place at the most local level, closest to communities
unless there is a clear and evidenced case for better outcomes
or enhanced efficiencies through working at larger spatial levels.
15. These principles are well established
in Yorkshire and Humber, as authorities and businesses have been
working together for some time, including through Functional
Sub Region (FSR) economic partnerships. It is important to emphasise
that businesses do not operate at the same level as local authority
administrative boundaries; hence the importance of councils working
together in the ways that make most sense for the private sector.
In addition, as some parts of the business community will continue
to work at levels across LEPs, authorities in Yorkshire and Humber
are exploring where there may be a need for collaboration at a
"pan-LEP" level.
16. The FSRs—namely the Leeds, Sheffield,
Hull & Humber Ports City Regions and York & North Yorkshire—have
well established public-private partnerships have formed the basis
of the LEP discussions in Yorkshire and Humber to date. These
debates are testing and clarifying the "real" economic
geographies that LEPs need to be based upon, but there is a view
that our sub-regional approach has helped our councils and businesses
"hit the ground running" on the LEP agenda.
17. Precise proposals for the desired LEP
arrangements will be finalised and presented to Government by
the 6 September deadline; and it will be important for the Government's
decisions to reflect the significant momentum around this agenda
already generated across Yorkshire and Humber.
TRANSFER OF
RDA ASSETS
18. RDAs, including Yorkshire Forward, currently
hold a considerable portfolio of economic assets and, where appropriate,
these should be transferred to the local level of local authorities
or LEPs—and this should be a local decision.
19. Yorkshire and Humber authorities are
already working with our RDA, Yorkshire Forward, to manage this
transition of assets to the local level. This will ensure that
the assets and any associated funds are directed to support initiatives
that will unlock economic growth and support the development of
our most deprived areas with entrenched problems. It is vital
that Government at national level continue to support this process
of local decision-making.
20. LEPs need a comprehensive understanding
of the economic assets within their area, as not all will have
a high or immediate market/development value. LEPs also need to
understand fully the liabilities associated with any potential
assets to be transferred and decisions about their long-term
management need to be taken locally.
21. The transfer of these assets to the
local level would underpin the LEPs' abilities to leaver-in further
investment and plan more effectively for long-term, sustainable
economic growth, with greater certainty for private sector investors.
In Yorkshire and Humber we are also exploring (with PricewaterhouseCoopers)
"Total Capital and Asset Management" approaches,
so that local authorities and/or LEPs can generate the maximum
economic benefits by pooling such assets and joining up their
management in a more strategic way.[43]
Keeping these key RDA assets out of local control would undermine
LEPs' abilities to really drive and deliver private sector led
growth.
22. As noted above, LEP submissions are
still being finalised across Yorkshire and Humber, but it is expected
that their proposed structures and roles will be predicated on
Government transferring the relevant RDA assets in their areas
to the local level and managed on the basis of local decisions.
In addition to the actual assets, associated support funding related
to them also needs to be transferred.
23. Where any assets span more than one
LEP, Government needs to allow for local arrangements to be made
between LEPs and/or local authorities so that they can be harnessed
for its originally intended use and/or managed to secure our future
economic prosperity. Collectively, local authorities are committed
to working collaboratively to ensure that assets are used to develop
the economy in the most effective way.
CO -ORDINATION
BETWEEN AND
ACROSS LEPS
24. Yorkshire and Humber contains some of
the most significant economic opportunities in the UK and unlocking
this is of crucial importance to National economic growth and
prosperity. Across the emerging LEPs there are a host of nationally
recognised economic growth areas, such as creative and digital
industries, carbon capture and renewables and connections to economic
hubs across the UK and internationally. It also has brands that
are recognised nationally and internationally.
25. These assets and opportunities are a
strong platform on which to build the LEPs and future growth;
and are dependent on increasing the skills base, enhancing infrastructure,
boosting research and intelligence investment, building the confidence
of more people to start businesses and marketing inward investment
and business expansion opportunities. On many of these issues
the LEPs need to take their own leads and we believe that the
LEPs represent the "default" level where economic strategy
and priorities need to be decided. Nevertheless, on some issues
they will also wish to collaborate, to maximise the economic outcomes,
benefits and efficiencies.
26. It will be crucial for the LEPs themselves
to decide how they need to work together. In some cases this
could be collaboration on the basis of a pan-Yorkshire and Humber
approach; or could just as likely be on the bases of more local
collaborations; or, indeed, joint working across the "old"
boundaries (eg with the emerging Greater Manchester, Tees Valley
and Derbyshire/ Nottinghamshire LEPs). In the same way as for
LEP functions, LEP collaboration needs to be a local decision,
informed by evidence of added value and/or greater efficiencies
by doing so.
27. It could also be, for example, that
some LEPs provide a hosting or specialism for others in
particular themes—eg support to small business, tourism,
development of market towns, rural economies, research and development,
or take the lead in development of particular industries/sectors.
Such a thematic approach might prove particularly advantageous
in terms of ensuring such collaborative arrangements are both
affordable (given the clear position that the running costs of
LEPs will not be supported by Government in the way that RDAs
were) and able to deliver, without bureaucratic and costly structures.
These opportunities are being proactively explored in Yorkshire
and Humber.
28. As highlighted in the Core Cities Group
submission to this Inquiry, these issues around LEP co-operation
and scrutiny will need to evolve over the coming months. But it
worth emphasising that local authority scrutiny systems already
provide arrangements for ensuring democratic accountability in
the LEP arrangements. Over time, as they become established, it
is also expected that LEPs will be able to challenge and support
each other, on a peer-to-peer, sector-led basis.
CONCLUSIONS: THE
KEY CHALLENGES
AND OPPORTUNITIES
FOR LEPS
29. The policy context is fast changing
as the Coalition Government is seeking to rebalance the economy
away from public sector growth towards a low carbon economy, a
high growth private sector and export-led growth. The local economic
development policy landscape is also changing as the planning
system is to be reformed by creating a national planning framework
covering all forms of development and the decision-making powers
on housing and planning given back to local authorities.
30. LEPs need to be acknowledged in this
context as the new forums/mechanisms to make strategic economic
decisions, based on the national imperatives around rebalancing
economies from over reliance on the public sector employment to
develop new sectors of growth. But local flexibility is key. As
already noted above, the new economic agenda presents particular
challenges in Yorkshire and Humber and whilst the forthcoming
Sub National Growth White Paper is expected clarify some of the
policy issues, LEPs must have the ability to agree the tailored
arrangements that tackle the particular priorities across their
localities.
31. It may not be the case across the UK,
but local authorities in Yorkshire and Humber have a long track
record in taking action to generate and enhance local economic
growth. Whilst a "discretionary" local authority function,
until the recent Local Economic Assessment Duty was introduced
in 2009, councils in Yorkshire and Humber have regarded economic
development and sustainable growth as a core activity over many
years. This has been, in part, due to the very different economic
experience in our local economies compared to those in the south
and south east of the country over the last decade, with many
of our localities continuing to suffer from high levels of deprivation
and worklessness, despite the economic "boom" across
the country as a whole.
32. The recent recession and its impact
on local economies, as well as the new Government's focus on rebalancing
the economy away from a reliance on the public sector towards
export-led and advanced manufacturing, present significant challenges,
therefore, for Yorkshire and Humber, which has been restructuring
its economy to overcome the effects of the industrial decline
since the 1980s.
33. But local authorities have also shown
they can deliver robust economic development strategies in partnership
with business through their immediate and continued response to
the recent recession. They are confident that they can build on
their track record of collaborative working at the level of local
economies to maximise growth, but recognise there must be much
more debate—eg in the areas of governance, scrutiny, collaboration,
mutuality, funding, functions and powers—to ensure LEPs
can work effectively. LEPs will need to be at the heart of forging
a new set of local economic development priorities and, to do
this correctly, they will need to freedom to set their own agendas.
23 August 2010
42 See LGYH's "Core Principles of Localism"
statement, www.lgyh.gov.uk/dnlds/Localism%20Statement.pdf Back
43
In a similar regard, the call in the `Core Cities Group' evidence
to this Inquiry for action on Accelerated Development Zones to
unlock local investment, is supported strongly by councils in
Yorkshire and Humber. Back
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