Written evidence from Oxfordshire County
Council
EXECUTIVE SUMMARY
1. Oxfordshire County Council is very pleased
to have the opportunity to provide evidence to the Committee on
the development of Local Enterprise Partnerships (LEPs). We welcome
the opportunity to comment in the early stages and to help shape
the national policy, rather than having this imposed upon local
areas. However, we recognise that what works well for us may not
be appropriate in other areas and suggest that the national policy
encourages locally-driven solutions. In summary our key points
are as follows.
2. We believe that a successful and progressive
LEP could direct investment in areas such as skills, infrastructure
and economic development through a place-based budgeting approach.
If done on a broad scale, this could achieve savings through reducing
duplication and result in more effective interventions. It would
also allow local businesses to be involved in the direction of
local investment. We ask the Committee to consider how LEPs could
contribute to a place based budgeting approach.
3. We believe that local areas are better
able than government quangos to respond to the skills requirements
of local businesses and communities. Thus, we propose that LEPs
are given responsibility for setting a local skills strategy that
would influence local provision. We ask the Committee to consider
recommending that LEPs are given the responsibility for setting
a local skills strategy and to consider how LEPs can influence
skills commissioning.
4. There are initiatives established by
the Regional Development Agencies (RDAs) that provide real benefit
to businesses. The Oxfordshire Innovation & Growth Team (currently
funded by SEEDA) has been a great success and has helped local
businesses raise £26 million of investment in the last four
months despite reducing overhead costs by 40%. There is also a
sensible argument for LEPs taking on some of the local elements
of Business Link and becoming the point of contact for Government
and international clients. We ask the Committee to recommend ongoing
central Government funding for these teams where they are proven
to be successful. At the very least such initiatives should be
funded during a transitional phase while they work to develop
other forms of sustainable business model.
5. We would argue that, for LEPs to be effective
and not require significant bureaucracy to run them, they should
concentrate on a modest number of key interventions, appropriate
to the existing strengths of the local economy and where they
have most potential to compete successfully. LEPs should be encouraged
to "learn" as well as "do" while building
on the work of existing bodies and organisations.
6. We absolutely agree with the Secretary
of State for Business, Innovation & Skills and the Secretary
of State for Communities & Local Government that LEPs should
be based around functional economic areas. We would argue that,
in a small number of cases, some administrative boundaries are
analogous to functional economic areas and that these be considered
as viable LEPs. We ask the Committee to support the concept of
single, upper tier (county or unitary) authority LEPs in appropriate
areas.
7. We would suggest that allocations from
the Regional Growth Fund are made through a mechanism through
which ensures all parts of the country have a fair allocation
of the resources available, particularly considering the disproportionately
high contribution of areas such as the South East to the UK economy
and also that approved schemes are those which:
(a) Enable a private sector market to develop
and thrive as a result of public sector investment in infrastructure;
and
(b) Mitigate the impact of public sector job
losses in areas where there are high levels of public sector employment.
8. We ask the Committee to recommend that,
to bring the maximum level of growth for UK plc, it would be prudent
to invest in areas and industries with the greatest potential.
9. We ask the Committee to advise government
that it's role should be to facilitate learning and innovation,
to challenge and make sure that the performance of each Local
Enterprise Partnership is "visible" to enable the electorate
to hold it to account for its performance but not to get in the
way of local energy.
10. Finally, we ask the Committee to consider
the role of LEPs in inward investment and whether there is potential
funding available for a local resource from, for example, residual
RDA funding.
SUBMISSION OF
EVIDENCE FROM
OXFORDSHIRE COUNTY
COUNCIL
11. Oxfordshire County Council is very pleased
to have the opportunity to provide evidence to the Committee on
the development of Local Enterprise Partnerships (LEPs). We welcome
the opportunity to comment in the early stages and to help shape
the national policy, rather than having this imposed upon local
areas. However, we recognise that what works well for us may not
be appropriate in other areas and suggest that the national policy
encourages locally-driven solutions. Our submission of evidence
is as follows.
Functions of new Local Enterprise Partnerships
and ensuring value for money
General
12. We expect LEPs to provide strategic
leadership, acting on the voice of business; to deliver a step
change in shared ambition between business, local government and
further/higher education; and to have an oversight of the following
areas:
(a) Supporting innovation and growth, including
facilitating access to investment;
(b) Infrastructure investment;
(c) Addressing skills deficiencies;
(d) Business support provision;
(e) Tackling specific barriers to business growth
(for example, broadband provision), identified by business while
building on successful existing initiatives; and
(f) Holding the public sector to account, particularly
in terms of its policies in support of economic growth.
13. Further detail of the proposed Oxfordshire
LEP structure is set out in the "structure" section.
Place based budgeting
14. Given the localist agenda of the new
coalition government, we believe that successful LEPs would wish
to advocate for place-based budgeting in which public spending
is devolved by Parliament directly to a locally accountable body
with the aim of achieving better value for money locally than
by micro-management from Whitehall.
15. For example, if additional funding were
devolved by the Department for Transport for local spending decisions,
it would be appropriate to channel this through one or more county
councils in shire areas and groups of unitary councils in unitary
areas. Another area where this could work would be around Skills
and Worklessness where interventions both from local and national
Government could be brought together as a single entity, to enable
more integrated provision and better local commissioning reflecting
local needs. The goal being to provide training in demand by employers
and to move those not in education, employment or training through
education and training into work.
16. The added value of doing this through
the LEP is that it provides the leadership and oversight of how
the available funding is being used to deliver a common vision
and with ownership from the business and academic communities.
We ask the Committee to consider how LEPs could contribute to
a place-based budgeting approach.
Skills
17. We believe that local areas are better
able than government quangos to respond to the skills requirements
of local businesses and communities. We therefore propose that
LEPs be given the responsibility to set a local skills strategy
that would influence local provision. This would enable us to
ensure:
— That we are providing the training to
develop a workforce capable of supporting local growth industries,
where there are gaps in provision, taking into account the needs
of current and future employers; and
— That there is adequate provision to help
narrow the gap between the highest achievers and the most disadvantaged,
such as ensuring adequate Level 1 and Level 2 provision in the
most deprived areas.
18. We ask the Committee to consider recommending
that LEPs are given responsibility for setting a local skills
strategy and consider how they can influence commissioning.
SEEDA Initiatives
19. There are initiatives established by
the Regional Development Agencies (RDAs) that provide real benefit
to businesses and it is imperative that these are not lost with
the demise of the RDAs. We argue strongly that the best of these
initiatives should continue to be funded by Government because
the benefit to the local and national economy is tangible and
significant.
20. In Oxfordshire, our local Innovation
& Growth Team (IGT) (currently funded by SEEDA) has been a
great success and has helped local businesses raise £26 million
of investment in the last four months despite reducing overhead
costs by 40%. It focuses on exactly the sectors that are required
for national economic recovery and has successfully brought together
all the organisations involved in supporting innovative and high
growth businesses in the county. It is seen as a significant resource
by local businesses and has made a major contribution towards
the developing vision behind innovation and growth in Oxfordshire.
The LEP would greatly benefit from building on the work of the
team and working together in achieving our mutual benefits. It
would be huge mistake to cease funding IGTs at this stage. We
ask the Committee to recommend ongoing central Government funding
for these teams where they are proven to be successful. At the
very least such initiatives should be funded during a transitional
phase while they work to develop other forms of sustainable business
model.
21. There is also a sensible argument for
LEPs taking on some of the local elements of Business Link; while
the Government plans to run Business Link at a national level,
we believe there is still a need for a local contact to manage
detailed enquiries from civil servants and interested international
clients. Whoever is the local link will also need an understanding
of local businesses. We therefore suggest that the LEP becomes
the point of contact. Oxfordshire has already developed a self
sustaining business model for business-to-business mentoring.
Such low cost solutions need only a small level of pubic funding.
We ask the Committee to consider that this is an important function
and could be funded from the residue of the RDA budgets.
Sector Focus
22. We argue that, for LEPs to be effective
and not require significant bureaucracy to run them, they should
concentrate on a modest number of key interventions, appropriate
to the existing strengths of the local economy and where they
have most potential to compete successfully. LEPs should be encouraged
to "learn" as well as "do" while building
on existing bodies and organisations. In Oxfordshire, the suggested
focus might be low carbon/green technology, advanced materials
& engineering and healthcare technologies. However, guidance
should not be overly prescriptive on areas of focus.
Functional Economic Areas
23. We argue that in some cases, administrative
boundaries covered by a large upper tier authority (county or
unitary) are analogous to functional economic areas. We have noted
an expectation in the invitation letter that local enterprise
partnerships will comprise groups of such upper tier authorities.
However, the bid which Oxfordshire County Council is supporting
is based on a single upper tier authority area and we firmly believe
that Oxfordshire is a functional economic area in its own right.
24. In February 2007, the Local Government
Association published a research study entitled Prosperous
communities II—vive la devolution! (link). It analysed
various measures of economic functionality based on travel to
work patterns, economic performance, markets and infrastructure.
The proposed best fit areas are shown in Annex 1, evidencing Oxfordshire
is such an area.
25. There are, of course, other benefits
to building on existing boundaries, such as reducing duplication;
avoiding the complexity of working across multiple upper-tier
authorities where there are not similar challenges and ambitions;
making best use of existing structures; and being able to engage
businesses on a local level. These benefits mean that a LEP can
be developed more quickly, with a clearer focus and greater momentum
towards its vision.
26. However, we acknowledge the need for
some permeability at the edge of the LEPs and multiple LEPs will
need to work together on areas of crossover. We discuss this in
more detail in the section on co-ordination below.
27. Both the LGA research and Oxfordshire's
2010 Economic Assessment consistently demonstrate that Oxfordshire
is a classic economic city-region—a functional economic
area in its own right. Oxfordshire therefore is unusual as an
administrative area in having local authority boundaries that
are a reasonable approximation to a functional economic area.
However, it may not be the only case and we ask the Committee
to support the concept of single, upper tier (county or unitary)
authority LEPs in appropriate areas.
Value for Money
28. The introduction of LEPs offers the
opportunity for a fundamental change in the relationship between
business and the public sector. We would expect that businesses
and academic leaders would contribute their time and expertise,
which might add significantly more than any monetary input. However,
businesses may contribute financially where the work of the LEP
and its related delivery activities are of direct benefit to them.
For example, in Oxfordshire, businesses have demonstrated that
they will contribute financially to projects that are directly
relevant to their success. Key hotel and heritage sites are leading
the newly established Destination Management Organisation for
Oxford & Oxfordshire and are investing their own time and
funds to match contributions from the public sector. In groupings
like Bicester Vision and Science Vale UK, businesses
are contributing time, money and leadership because they see the
direct relevance of the work to their success.
29. The cost effectiveness of the LEP will
therefore come from relatively small amounts of funding being
used to support its supervisory and executive boards brokering
and facilitation that levers in the investment of time, expertise
and, in some cases, funds from the business sector for work on
more specific projects of direct relevance to their success. Funding
the core operation of the LEP will be essential to lever in the
project funding for the delivery work, particularly in Oxfordshire
where the majority of businesses are SMEs with less capacity for
such funding than the larger and more corporate businesses found
in some other areas.
The Regional Growth Fund and funding arrangements
under the LEP system
30. The Regional Growth Fund paper is ambiguous
in terms of what it is seeking to achieve. "Re-balancing"
is used variously to refer to re-balancing geographically from
the South to the North of the country; re-balancing from the finance
sector to manufacturing; re-balancing from the public to the private
sector and re-balancing from growth-based on UK consumption to
growth based on exports.
31. Oxfordshire's high-tech manufacturing
sector is already demonstrating its capacity to compete (and export)
to world markets and can play a key role in re-balancing our economy
in that sense. The strong presence of public sector employment—particularly
in Oxford City itself which has the highest proportion of its
work force in the public sector of any city in England—makes
a re-balancing from the public to the private sectors an imperative.
32. If, however, this Regional Growth Fund
is to be about growth, it has to be considered as an investment
in areas and projects that have the potential to deliver the growth
that will create the jobs and bring in the tax receipts that have
the potential to re-balance the economy. The South East contributes
£18 billion net to the Treasury. London and the East contribute
another £18 billion between them. All other regions are takers
from the Treasury.
33. As a result, we recommend a mechanism
through which all parts of the country have a fair allocation
of the resources available for investment in wealth creation infrastructure
and activities and that a competitive process for accessing those
resources is used to drive the quality of the submissions and
their level of aspiration. We ask the Committee to recommend that,
to bring the maximum level of growth for UK plc, it would be prudent
to invest in areas and industries with the greatest potential.
34. We also ask the Committee to recommend
that schemes for approval should be those which:
(i) Enable a private sector market to develop
and thrive as a result of public sector investment in infrastructure;
and
(ii) Mitigate the impact of public sector job
losses in areas where there are high levels of public sector employment.
Government proposals to ensure coordination of
roles between different LEPs
35. The term "coordination" conceals
two competing meanings: the first being coordination as control;
the second being coordination as ensuring everyone is aware of
what others are doing, learning from each other and working together
where possible. Unfortunately, under the last government, it all
too often meant coordination as control.
36. We suggest that, if localism is to drive
our agenda, local areas need to be able to learn how best to improve
the future wealth creation capacity of the areas for which they
are accountable. This may involve failure but we think that the
intention of government is to release the creative energies of
particular localities so that new ways of working are developed
which, we believe, will be better than anything that can be designed
and disseminated from Whitehall.
37. Not only would government coordination-as-control
turn the accountability upwards to the centre rather than downwards
to the electorate; it also creates exactly the process-based bureaucracy
that will send the time-pressured "prominent business leaders"
back to their own businesses.
38. If the Local Enterprise Partnerships
are to bring added value then they need to be innovative, not
coordinated to a lowest common denominator of bland conformity.
We ask the Committee to advise government that it's role should
be to facilitate learning and innovation, to challenge and make
sure that the performance of each Local Enterprise Partnership
is "visible" to enable the electorate to hold it to
account for its performance but not to get in the way of local
energy.
Arrangements for co-ordinating regional economic
strategy
39. The reality is that the UK is part of
a global economy and that our shared strategy is to compete successfully
in that economy to the benefit of everyone. Whatever boundaries
are drawn for a LEP, the key issue will be how we work across
the boundaries with other LEPs and not just how we work internally.
40. While Oxfordshire itself makes sense
as a self-contained, functional economic area, its location means
that any fixed set of economic boundaries impedes rather than
helps it. Instead we need to develop a capacity for "variable
geometry" that will allow us to work on different "functional"
geographies for different issues and sectors. Each will be appropriate
for its particular purpose but it will not be constrained by a
single set of administrative boundaries.
41. The challenge in terms of economic strategy
will be to develop arrangements across these variable geometeries
that enable LEPs to exploit their complementarities rather than
competing. The evidence in terms of economic development theory
is that there is "path dependency", meaning that you
have to build on what you have rather than think you can create
a new economy out of nothing.[69]
To that end we need to understand the strengths of neighbouring
economies that could complement our weaknesses. Oxfordshire is
good at spinning out new businesses from the knowledge created
in the public sector by the universities and research centres.
When they grow and want to go to scale they often presume they
need to look to Asia for cost-effective manufacturing whereas
it is possible that the Midlands could have spare manufacturing
capacity that could compete on the basis of high quality, flexibility
and short supply chains.
Structure and accountability of LEPs
Proposed structure of the Oxfordshire City-Region
LEP
42. While we suggest that the detail of
the structure is left to local areas to decide, a light-touch
structure is likely to be most effective and least bureaucratic.
In Oxfordshire it is proposed to have three levels of engagement
for local government, the local economy and academic partners:
(a) Oxfordshire City-Region Forum: meeting
as a "supervisory board" of "shareholders"
that engages and holds the Board to account. The forum will help
to articulate the opportunities, ambitions and challenges in a
way that drives improvements among those responsible for its delivery,
engages Oxfordshire residents in debate about the challenges they
face and promotes the county to the wider world. The size of this
forum/supervisory board is not fixed but it is imperative that
its members include the senior business, academic and local government
leaders who have not all been sufficiently involved as corporate
citizens of Oxfordshire to-date. This is a key part of the added
value that the LEP will deliver.
(b) Oxfordshire City-Region Board: an
executive board, accountable to the Forum and responsible for
delivery of various areas of work. The size will be limited to
keep it effective but will contain representatives of different
parts of the private, academic and public sectors. The board will
fulfil a role equivalent to the directors of a private sector
business.
(c) Oxfordshire City-Region Special Purpose
Vehicles: Sector Groups, Area Strategy Groups, the public
sector Spatial Planning & Infrastructure Group and Delivery
Groups as necessary where particular areas of work are undertaken
and where businesses are involved because of their very direct
relevance in shaping the strategic direction of the county.
43. While the question has not been raised
elsewhere, we would assume that the LEP would be accountable to
its "shareholders"—the Forum. This could be through
a Company Limited by Guarantee arrangement.
The legislative framework and timetable for converting
RDAs to LEPs, the transitional arrangements, and the arrangements
for residual spending and liability of RDAs
44. The letter of 29 June about the creation
of Location Enterprise Partnerships stated that there would be
an orderly transition from RDAs to LEPs. We have already mentioned
retaining some of the RDA initiatives, such as the Innovation
& Growth Teams.
45. We would like to see as early a transition
as is feasible and we believe there is an opportunity for dialogue
with SEEDA to discuss how this might happen in the South East.
46. The area of skills is, in contrast,
one where there remains confusion about leadership, strategy,
funding and delivery despite the priority that it is given by
business. In Oxfordshire, it is probably the area most urgently
in need of attention—alongside housing affordability—if
our economic performance is to be improved. We have set out our
view in the section above on funding but we urge the Committee
to recommend early clarification on roles and responsibilities
around skills.
Means of procuring funding from outside bodies
(including EU funding)
47. While the Oxfordshire City-Region Forum
would help to articulate the county's economic and wealth creation
ambitions, it would fall to its executive to provide the skills
and local knowledge necessary to bid for funds from outside bodies.
48. There is a clear need for local input
to attract inward investment. While government has suggested that
this is to be a role for Whitehall, we are conscious of the need
to compete with other regions within the United Kingdom and globally,
hence our strong belief that areas such as Oxfordshire must develop
their own capacity to compete for inward investment if we are
not to lose out.
49. There is a need for some coordination
of European funding. This coordination role could initially be
held nationally although, again, there needs to be a mechanism
for ensuring that investment is spread across the country rather
than focused on one or two individual areas. Groups of councils
could come together to perform this function. The requirement
of applicant projects to work across boundaries could be one of
the incentives to encourage LEPs to adopt the "variable geometry"
approach outlined above in which different geographies are used
for work on different issues. In any event, coordination of bids
will need to be done at a level higher than an individual LEP.
50. Finally, we ask the Committee to consider
the role of LEPs in inward investment and whether there is potential
funding available for a local resource from, for example, residual
RDA funding.
13 August 2010
Annex 1
LGA PROSPEROUS COMMUNITIES II
Click here for a larger rendition of the map (PDF)
69 "History matters" James Simmie, Juliet
Carpenter, Andrew Chadwick and Ron Martin, Nesta 2008 http://www.brookes.ac.uk/schools/be/staff/resources/simmie/History%20Matters%20Path%20dependence%20and%20
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