The New Local Enterprise Partnerships: An Initial Assessment - Business, Innovation and Skills Committee Contents


Written evidence from Cambridgeshire County Council

  Evidence submitted on behalf of:

    Cambridgeshire County Council

    Cambridge City Council

    South Cambridgeshire District Council

    East Cambridgeshire District Council

    Fenland District Council

    Huntingdonshire District Council

    Greater Cambridge Partnership; local economic partnership; www.gcp.uk.net

    Cambridgeshire Horizons; local delivery vehicle for coordinating sustainable growth; www.cambridgeshirehorizons.co.uk

1.  EXECUTIVE SUMMARY

  1.1  This submission seeks to present a case for continued investment in economic growth in Cambridgeshire, identify best practice from Cambridgeshire in managing funding and delivering growth and provide evidence of key issues in determining effective, efficient and accountable Local Enterprise Partnerships. Local Enterprise Partnerships should be supported to reflect and be able to respond to local issues in order to then be able to support business to establish and grow.

2.  INTRODUCTION TO CAMBRIDGESHIRE

  2.1  Cambridgeshire is a major engine for growth. The area has a diverse knowledge based economy, and is one of the few truly international brands (not least through Cambridge University) that the UK has. The characteristics of the Cambridgeshire economy mean that it is well placed to attract investment that might otherwise locate elsewhere internationally.

  2.2  However, the continuation of Cambridgeshire's success, which is also critical to the performance of the wider UK economy, depends in large part on the delivery of new homes and low carbon infrastructure, so that growth is not hampered by unaffordable housing and unacceptable congestion and the area continues to attract the best talent and companies from around the world. Without such investment the growth potential of Cambridgeshire is at real risk.

  2.3  Local Enterprise Partnerships offer a unique opportunity to tackle the barriers that are already limiting the growth of our economy, but only if they are truly empowered to take on that role. Cambridgeshire has a track-record of innovation and flexibility in managing funding to support economic growth and deliver sustainable infrastructure, when we are empowered to do so.

3.  THE FUNCTIONS OF THE NEW LOCAL ENTERPRISE PARTNERSHIPS AND ENSURING VALUE FOR MONEY

  3.1  The primary function of Local Enterprise Partnerships should be to identify and tackle, through investment, obstacles to economic growth. Supporting Local Enterprise Partnerships in areas that have the greatest potential to grow and have politically committed to growth will achieve the greatest value for money.

3.2  Drive the localism agenda

  In order for Local Enterprise Partnerships to meet the needs of local economies they must reflect the nature of the functional economic area. It must be recognised that mid size cities and market towns play a vitally important role in the national economy, balancing quality of life with economic growth and connecting the rural economy with core economic hubs. The State of the Countryside Report 2008 found that rural areas supported more than their national share of workplaces in energy and utilities, construction, transport and communications and manufacturing.

  Functional economic geographies in the north of the country, away from the influence of London, are very different from those in the south of the country where economic linkages and commuting patterns are much more complex. Local Enterprise partnerships covering a number of towns and smaller cities should therefore not be disadvantaged on account of their size and nature and it must not be assumed that a larger Local Enterprise Partnership covering a single large city will achieve greater value for money. Unless a Local Enterprise Partnership represents a realistic economic geography, it will not represent local needs, agreement of joint priorities will be harder to achieve and this will risk spreading the resources of the Local Enterprise Partnership too thinly across too many issues.

3.3  Long term, flexible forms of investment

  Enabling Local Enterprise Partnerships to make long term investments and allowing them to be flexible in how they spend money will generate the greatest return on investment. Cambridgeshire has a track-record of innovation and flexibility in managing funding to support economic growth and deliver sustainable infrastructure, when we are empowered to do so.

3.4  Critical role in Inward Investment

  Local Enterprise Partnerships have an important part to play in inward investment. Successful inward investment relies on a detailed knowledge of; the local economy, gaps in supply chains, key sectors of growth, property and land availability, labour supply and key contacts within local authorities, the business community and the academic community. This kind of knowledge and networking is only realistic if inward investment is owned and driven locally. The importance of local knowledge is recognised in the coalition governments localism agenda—this agenda needs to be driven forward through enabling Local Enterprise Partnerships to have a real impact in their local economies.

3.5  Business Support informed by local intelligence

  The delivery of business support services should be a function of Local Enterprise. Business support is only effective if it responds to the particular issues of local businesses. These issues will vary significantly based on the sector, size, growth potential, location and employees of the business. The Local Enterprise Partnership should provide a mechanism for local business intelligence to inform economic development and business support functions, ensuring that those services delivered are effective and achieve the greatest value for money.

3.6  Local authority responsibility for statutory policy-making responsibilities

  Local Enterprise Partnerships should provide a mechanism for businesses to help inform local authority decision making, with local authorities continuing to exercise their statutory policy-making responsibilities for planning and housing. In addition, Local Enterprise Partnerships could have an important role in helping local authorities overcome barriers in the implementation of policy and coordinating delivery.

4.  THE REGIONAL GROWTH FUND, AND FUNDING ARRANGEMENTS UNDER THE LEP SYSTEM

4.1  Invest in areas with the greatest potential to grow

  The emphasis of the Regional Growth Fund should be on supporting areas with significant potential for economic growth and creating sustainable private sector employment. Oxford Economics have demonstrated that the East of England is one of only three regions making a net contribution to UK plc, yet the Cambridge area, the key driver of economic growth within the region, faces increasing constraints in terms of housing affordability, transport infrastructure and skills. GVA-based capital allocation of the proposed grant proportion of funding would lead to a much fairer distribution than a formula based on outdated population estimates and would ensure that those areas with the most potential to grow, receive the support they require to fulfil their potential.

4.2  Growth of the economy and growth of sustainable communities

  It should be recognised that sustainable new homes and communities will be a vital element in support economic growth, alongside a direct support for innovation, commercialisation and enterprise.

  The Cambridgeshire Integrated Development Programme (2009) identifies and costs the interventions required to deliver our vision for long term, sustainable, high quality growth and forges a connection between housing and economic ambitions. Within the programme is an evidence base on sub-regional infrastructure needs. £3.9 billion of infrastructure investment in transport, education, community facilities, health, open space, waste and utilities is needed to deliver our vision for sustainable economic and housing growth. Without investment from the Regional Growth Fund and through the Homes and Communities Agency, Cambridgeshire and the wider region will no longer continue to perform, particularly in light of increasing competition from abroad. The high value nature of Cambridgeshire's economy means that it competes with locations across the globe to attract and retain the best quality people and businesses. Growth in Cambridgeshire must therefore be high quality across homes, places, connectivity, communities and culture. For this reason, we developed the Quality Charter for Growth. The Charter aims to ensure the area remains an international leader in architecture, design, community development and low-carbon growth for years to come.

4.3  Supporting private sector jobs growth

  The county and district councils of Cambridgeshire, along with district councils outside of the Cambridgeshire administrative area, already work together with businesses through the structure of the Greater Cambridge Partnership, a local economic partnership. Private sector jobs growth has already been recognised as a key priority across that partnership given that 43% of Cambridge's workforce is employed by the public sector and a significant number of residents in the districts surrounding Cambridge, commute into Cambridge to work. Funding from the Regional Growth Fund will be vital in ensuring that the future Local Enterprise Partnership is able to address the barriers currently restricting private sector jobs growth in the local area, both in terms of "hard" physical infrastructure and "soft" infrastructure such as skills development and training.

4.4  Enable flexible investment and local retention of funds

  Cambridgeshire has a track-record of innovation and flexibility in managing funding to support economic growth and deliver sustainable infrastructure, when we are empowered to do so. Allowing local areas with a proven track record of delivery to take more risks will generate greater returns on investment.

  The Regional Growth Fund should provide the opportunity for the area to capitalise on and increase its existing strengths and assets and gain greater freedoms and flexibilities, allowing it to potentially re-profile and vire funds won via the Regional Growth Funds to more achieve the best possible outcomes for the local area and the wider UK economy.

  Cambridgeshire Horizons have used progressively more ambitious models of investment and have progressively achieved more with this investment. Two examples of recent investments follow:

Trumpington Meadows and Clay Farm

  Working closely with developers, Cambridgeshire Horizons put in place funding mechanisms that kick started development in areas critical for the sustainable growth of Cambridgeshire.

  A £4.5 million loan (paid into an escrow account) was agreed with the Trumpington Meadows land company in exchange for the delivery of 100 houses by Sept 2012, 200 by 2013 and 300 by Sept 2014. If the developer fails to hit the housing targets, the rate of interest on the loan increases. As a result of this agreement, development will start on the site this year that may otherwise not have happened.

  A development at Clay Farm has now been agreed in principle as a result of an equity investment model with associated delivery targets for housing and infrastructure. Subject to negotiations Cambridgeshire Horizons plan to make an £8 million investment in Clay Farm and are seeking to obtain a 20% internal rate of return on the investment taken from the surplus profits that developers make on the scheme. Thereafter, Cambridgeshire Horizons will take a 20% share of ongoing surplus profits until the end of the project. Again, as a result of this agreement, development will soon begin on the site that otherwise is unlikely to have happened. Furthermore Cambridgeshire Horizons could see at least a £15 million return on the initial £8 million investment.

  These examples show that the more the locality is able to share in the risks of the investment, the more the locality stands to benefit from the investment.

  We therefore request that central government allow localities to retain more of and take responsibility for the money that is generated by the local economy and be empowered to achieve more with the limited funding available, for example through Tax Increment Financing, the Community Infrastructure Levy and a sub-regional business rate supplement

Tax increment financing

  Tax Increment Finance is a method of borrowing funds to pay for infrastructure, on the basis that additional housing requiring that infrastructure will increase tax revenues. Although this system is widely used in America, it has not been tried yet in England, in part because the US has a wider range of local tax instruments, such as property tax, whereas the English tax system is more centralised. Cambridgeshire Horizons has written to the Department of Communities and Local Government suggesting that a pilot project could be taken forward in Cambridgeshire, using the increments in business rate income, which could be returned to local control.

The Variable rate Tariff or Community Infrastructure Levy

  Cambridgeshire Horizons and LPAs in Cambridgeshire have been leading work to examine the potential for a countywide system of standard charging on new development, in order to fund infrastructure. This charge could take the form of the currently proposed Community Infrastructure Levy or a Variable Rate Tariff based in existing Section 106 legislation. Either of these innovative funding methods could provide contributions towards subregional projects. Such a charge would need to have varied rates to take account of differing development economics across Cambridgeshire.

4.5  Revenue Funding for Local Enterprise Partnerships

  Cambridgeshire has been working hard to achieve efficiencies yet still deliver high quality results and services. Through the umbrella of "Cambridgeshire Together", public service leaders across the county have come together to explore new ways of working, improve services and offer better value for money. Each of the eight projects developed have associated outcomes that will benefit the people of Cambridgeshire. As a result of the work taking place within the programme, Cambridgeshire has been named as a national Total Capital and Assets Pathfinder as well as being shortlisted for the MJ Total Place Achievement of the Year 2010. However, this work would not be taking place without revenue funding received from Improvement East. The same principle is true of the innovative funding models developed by Cambridgeshire Horizons. Without having received some revenue funding from the Housing Growth Fund, Cambridgeshire Horizons would not have been able to achieve the same return on investment from the capital element of the funding programme. It is therefore vital that Local Enterprise Partnerships are provided with some revenue support if they are to fulfil the ambitious role that Government intends for them.

5.  GOVERNMENT PROPOSALS FOR ENSURING CO-ORDINATION OF ROLES BETWEEN DIFFERENT LEPS

5.1  LEPs should be supported to coordinate themselves

  We fully recognise that to work on issues such as key transport corridors requires Local Authorities and Local Enterprise Partnerships to work beyond their borders. Cambridgeshire's authorities have a track record of creating strategic alliances with neighbouring areas to address key areas of work as and when necessary.

  Examples of this are the A428, the A47 and East West Rail.

A47 Alliance

  Cambridgeshire County Council works with Norfolk County Council, Peterborough, District Councils and local business in the A47 Alliance to press for improvements to capacity and address safety issues. Some improvements have come forward to the route during the life of the Alliance and is an effective voice for the joint aspirations. The route is a key link to and from the fenland area of Cambridgeshire and Norfolk.

A428

  Cambridgeshire County Council with the Highways Agency, Bedfordshire Authorities, District Councils and Local Development Bodies such as Cambridgeshire Horizons and Renaissance Bedford to promote/study improvements to the A428 length of the regional route. The A421/A428 and A14 between Cambridge and Ipswich will shortly form a new east west dual carriageway route between Felixstowe and Milton Keynes/M1, but one length Caxton common to Black Cat Roundabout on the A1 still exists as a single carriageway road and is much in need of improvement. Co-ordinated action between local authorities and development interests appears to be the only way forward.

East-West Rail

  Working with many other authorities on the promotion of an east—west rail route between Ipswich and Oxford. Significant progress has been made in developing services between Oxford and Bedford a link which requires extra trackwork. Improved services have been achieved between Cambridge and Norwich and Cambridge and Ipswich through this joint working.

  Currently, there are few cross boundary schemes which are being promoted due to the lack of funding, but Local Authorities are well versed in cross border co-operation. Various powers exist to facilitate this and this is usually effected through one authority becoming the lead authority, but both contribute proportionately. (An example of this is the nearby A1073 new road scheme from Peterborough to Crowland, jointly promoted and implemented by Lincolnshire County and Peterborough City, with Lincolnshire leading ).

6.  STRUCTURE AND ACCOUNTABILITY OF LEPS

6.1  Governance

  Business led Local Enterprise Partnerships still need proper governance arrangements so that residents can have their say on key issues that affect them and can have confidence that LEP decisions are made in an open and transparent way.

6.2  Importance of Universities on the Local Enterprise Partnership Board

  Currently government suggests that business and civic leaders will have equal representation on the boards. We are concerned that this does not take into account the valuable role that others (eg universities) can play in the local economy.

6.3  Meaningful consultation

  Given that proposals for LEPs are being developed over the summer months government should consider that businesses, residents and local authorities are given further opportunity to develop the proposals, once submitted, after 6 September.

7.  MEANS OF PROCURING FUNDING FROM OUTSIDE BODIES (INCLUDING EU FUNDING) UNDER THE NEW ARRANGEMENTS

7.1  Delegation to a consortia of local authorities across a region or to LEPs

  Local Enterprise Partnerships needs the ability to be legally constituted in order to be able to access and manage European Funds and either it or one of its key partners enabled to administer programmes previously delivered at a regional level. Some local authorities have the capacity to administer EU funding, as is evidenced through Cambridgeshire's successful participation in the Territorial Cooperation programmes Interreg IIIB and IIIC, which are funded through ERDF, however many will struggle to provide the required match funding. Central government should ensure that Regional Growth Funds are eligible as match for European Funding programmes.





 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2010
Prepared 9 December 2010