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

Written evidence from the TUC


  The TUC is the voice of Britain at work. We represent 60 affiliated unions and 6.3 million members. The TUC campaigns for a fair deal at work and social justice at home and abroad. Through its six regional offices, the TUC works with employers, government agencies and other civil society partners across the country, promoting economic development, skills, workforce development and the just transition to a low carbon economy.


  1.  The TUC believes that the primary focus of sub-national economic development should be on restoring economic growth and creating good quality and sustainable employment. This should support growth that addresses inequalities both between and within regions of the UK, promotes jobs and supports key sectors of the economy.

  2.  The need for the UK to compete in a global market across a range of sectors, and the transition to a low carbon economy with the development of renewable energy projects, provides potentially huge opportunities for renewing local economies and boosting high value-added sectors such as engineering, construction and manufacturing.

  3.  We welcome the Government's commitment to supporting "sustainable growth and enterprise balanced across all regions and all industries", the promotion of the "green industries that are so essential for our future" and making "the UK the leading hi-tech exporter in Europe", as outlined in "The Coalition: our programme for government".

  4.  However, these potential benefits will only be secured through joined up interventions in support of skills and employment, infrastructure, business support, procurement and supply chain management. This requires strategic co-ordination on a sub-national level, with a critical role for strong, strategic planning and delivery.

  5.  The TUC is not theoretically wedded to any particular spatial configuration or institution for the purposes of supporting economic development. We recognise the benefits that can accrue from a local or "functional economic area" focus in the development and delivery of employment and skills programmes.

  6.  However, it is our view that the establishment of Local Enterprise Partnerships must include measures that retain a balance between local accountability and delivery and the capacity, economies of scale and strategic vision that are derived from larger sub-national structures. In our view there should be scope for retaining some structures of regional planning and governance, either through stand alone institutions or through some form of integration of LEP structures within a larger sub-national dimension.

  7.  Furthermore, elements of good practice developed under the previous Regional Development Agency structures, particularly constructive engagement with social, economic and environmental partners (SEEPs), should not be jettisoned in the process of restructuring.

  8.  We believe that real change in the business environment will come from the workplace, it is essential that economic development and industrial strategy have a workplace focus. As such, trade unions have a key role to play.

  9.  For Local Enterprise Partnerships to meet the needs of local businesses, workforce and communities, it is essential that mechanisms for effective stakeholder engagement are developed and consistently applied across each locality.

  10.  The move away from RDA's to the new LEP's represents a period of extreme uncertainty and insecurity for staff currently working in the RDA's and related bodies. It is essential that during this process staff and their trade unions are properly involved and consulted, and that the government honour existing Protocols and agreements, including the Cabinet Office Protocol for Handling Surplus Staff Situations.


  11.  Functions and responsibilities proposed to be covered by Local Enterprise Partnerships include planning and housing, local transport and infrastructure priorities, employment and enterprise and the transition to the low carbon economy. Previous RDA areas of responsibility to be taken over at a national level will include inward investment, innovation, business support, strategic finance and sector support.

  12.  A crucial element missing from this equation is skills. The TUC believes that investment in skills should be closely aligned with the needs of local economies and have sufficient flexibility to enable providers to meet the current and forecasted needs of both local businesses and the workforce. As such, mechanisms should be put in place to ensure that the LEPs are able to influence the allocation of skills funding and provision.

  13.  The TUC welcomes and supports the Government's pro-active stance in support of manufacturing, green industries and other key sectors and we recognise the need for a national approach to sector support. However, LEPs may have a key role to play in supporting national initiatives in support of sectors that are strategically important to a local economy, particularly in the development of clusters and the delivery of vertical support for key sectors. LEPs should be required to demonstrate a programme of support for such key sectors in partnership with national initiatives.

  14.  In terms of the planning and housing function of LEPs, there is a potential conflict between the alignment of strategic planning and the delivery of affordable housing to meet economic development objectives with the delegation of planning powers to local authorities.

  15.  Where the majority of members within the LEP and other local stakeholders take a view of the need for affordable housing that runs contrary to those expressed by individual local authorities within the LEP, it is unclear which takes priority. In the past, there have been great disparities between local authority "option one" housing figures and those outlined in regional spatial strategies (see table below, published in Inside Housing 19/2/10). "Option one" housing figures are the projected number of homes that local planning authorities believe is needed to meet their requirements by 2026.


Local Authority
option one figure
Regional Spatial
Strategy figure
Potential drop
or rise
North East7,8007,425 +4.8%
North West22,84423,111 -1.1%
Yorks and Humber16,600 22,260-25.4%
East Midlands20,400 21,515-5.1%
West Midlands18,280 19,895-8.1%
East of England23,900 26,830-10.9%
London27,59630,500 -9.5%
South East28,90032,700 -11.6%
South West23,06029,623 ¸22.1%

  16.  Echoing the views of the House Builders Federation, the Royal Town Planning Institute and eighty per cent of the planning consultants responding to a survey run by "Planning Resource" (Planning Resource 12/3/10), the TUC believes that devolving housing targets and planning to local authorities will lead to a fall in housing completions.

  17.  We believe that this has the potential to hinder renewal in the crucial housing sector and associated supply chains, as well as failing to meet the needs of the 1.7 million households on social housing waiting lists.

  18.  We believe greater clarity is required about the mechanisms to balance the alignment of delivery of housing (and other infrastructure) with the delegation of planning powers to local authorities. It is our view that where LEPs identify strategic needs, local authorities should conform to those targets and objectives. To adopt a colloquialism, what safeguards will be put in place to prevent the development of a "NIMBY's charter"?


  19.  The TUC welcomes the £1 billion set aside for the Regional Growth Fund, although this figure is dwarfed by the £73 billion of cuts to public spending that will weaken local economies. There is also a need for additional clarity about its management and allocation.

  20.  The £1 billion is a scaling back of the £1.4 billion RDA budget and the fund will be open to competition between LEPs and other private sector-led partnerships. Possible outcomes from this would be that either LEPs absorb the majority of this funding, leaving areas without LEPs potentially excluded from its benefits or that funding will be shared and LEPs will therefore take an even further hit in terms of funding in comparison to the RDAs they are replacing, hampering their ability to function effectively. Neither outcome is particularly desirable. What businesses and other partners need is a degree of certainty in terms of funding and capacity within and outside of LEPs. This is unlikely to be derived from this process. A more prescriptive approach to funding allocations might be useful.

  21.  A further concern is that the caveat that funding will be prioritised for areas with an over-reliance on public sector employment may exclude parts of London and the South East, where need is often greatest. For example, eight out of the top 10 local authorities with the highest claimant to vacancy ratios in the UK are in London and the South East (TUC June 2010).


  22.  As previously stated, there are huge opportunities for growth in regional economies through the low carbon economy. For example, there are a number of inter-related renewable energy projects, with overlapping timescales that are dispersed across the south west of England. These potentially include two new nuclear power stations, major offshore wind farms such as the Atlantic Array, the Severn Barrage and the Wave Hub off the Cornish coast. Combined these projects could deliver approximately 25,000 jobs, with additional jobs coming through the multiplier effect in supply chains.

  23.  The TUC believes that to harness the opportunities afforded in this case, there needs to be effective intervention in a way that co-ordinates support for skills, infrastructure, business support and supply chain management across a broad area of the south west. We have reservations that the scale of LEPs in the south west will be insufficient to meet the planning and delivery challenges posed by these large-scale projects.

  24.  Furthermore, as outlined in the Eddington Review, an already multi-tiered and fragmented transport system necessitates "strategic sub-national governance" particularly in light of the "economic importance of the UK's cities and regions and the role that transport can play in supporting that economic success". There may well be inter-regional transport investment decisions that impact more greatly on local economies than those within a LEP area, for example, cross-Pennine links.

  25.  In its January 2010 report on the future of RDAs, the Centre for Cities suggested a re-allocation of RDA programmes based on a spatial assessment of each programme, taking into account economies of scale and the extent to which interventions are generic or need to be tailored to local need. In their view, two policy areas required a wider regional dimension, as follows:

    — Regional transport projects—requires regional, or inter-regional, coordination. For example, the connection between Manchester and Leeds.

    — Programmes for regionally strategic industries—impact beyond the city-regional level, requires significant expertise eg nuclear industry in the North West

    Larkin, January 2010

  26.  The TUC would support this view. As such, it is necessary to ensure that mechanisms are put in place to provide joined up delivery between individual LEPs and other parts of a region that may fall outside of LEP areas, as outlined in paragraph 6 above.


  27.  The TUC has some concern in regard to the governance arrangements outlined for LEPs. It is our view that a narrow focus on partnerships between business representatives and local authority leaders may lead to the exclusion of other social, economic and environmental partners (SEEPs).

  28.  This echoes concerns raised by other SEEPs in relation to the restructuring of regional governance arrangements under the previous administration's Sub-National Review. For example, the South West Stakeholders group, formed in the aftermath of the disbandment of the Regional Assembly, expressed the view that "stakeholders feel increasingly alienated from regional governance and marginalized in decision-making". It is essential that SEEPs from a range of communities and civil society organisations maintain a voice both in terms of articulating demand side need but also as a partner in facilitating and delivering programmes.

  29.  Trade unions have a key role to play in embedding and supporting work-based interventions around skills, carbon reduction, productivity and high performance workplaces. In its report "Recession, Recovery and Reinvestment: the role of local economic leadership in a global crisis" the OECD asserts that "trade unions have a key role to play in both identifying where companies and whole industries are in trouble and in considering how they best be supported". The report goes on to identify three key areas where trade union partnership is particularly effective:

    — Job pacts: Trade unions have a crucial role to play in supporting local jobs pacts which bring Government, Business and Trade Unions together at the local level to ensure that jobs are retained in the local economy wherever possible through flexible collaboration.

    — Using the intelligence function fully: Trade unions often foresee how a company is performing from a "shop floor" perspective … restructuring works best with active trade union support.

    — Supporting displaced workers: Trade unions can play key roles in supporting people who lose jobs and are often well placed to run advisory services and advocate re-training. They are also in a good position to help with temporary and intermediate employment programmes.

    Clark, OECD, 2009

  30.  The TUC's "Skills, Recession and Recovery" project, delivered through project workers in each TUC regional office, is a good illustrative example of the third element identified above.

  31.  Trade unions also have a productive role to play in boosting the economy. In 2007, a government report, "Workplace Representatives: A review of their facilities and facility time", estimated that "workplace reps were worth up to £1.13 billion in direct benefits to the economy and that their impact on productivity could be worth anywhere between £3.2 billion and £10.2 billion" (BERR 2007). This is particularly true in the area of learning and skills, where it is estimated that Union Learning Reps are, "worth £94 million-£156 million in enhanced productivity" (BERR 2007).

  32.  LEP structures must ensure that full and effective consultation with trade unions and other SEEPs is built into the design and delivery of interventions in support of local economies.

  33.  There is also a need for greater clarity about the process for appointment to the board of LEPs. There is a need to ensure that business representatives on the boards of LEPs are genuinely representative and can speak on behalf of the diversity of business interests across an LEP area.


  34.  The combined challenges of supporting a weak recovery from recession, rebalancing the economy and moving to a low carbon economy mean that the need for certainty, stability and leadership is required now more than ever.

  35.  We share the concerns expressed by the EEF over the current lack of clarity and the need for a clear blueprint to be laid out by the Government in the autumn. We echo the views of Terry Scouler, Chief Executive of EEF, when he says "if there is insufficient clarity about (LEPs') remit there is a real risk that government will have to apply sticking plaster in 12 months time and business will fail to engage" (Daily Telegraph 11/8/10).

  36.  Evidence from discussions on-going in the regions suggests that consensus has yet to be reached on a number of fundamental issues related to spatial dimensions as well as functions and governance arrangements of LEPs. There is conflict between local authorities and between business organisations. It is important that restructuring is not introduced prematurely and that transitional arrangements are contingent on genuine consensus being reached about the scale and remit of LEPs and their relationship with national Government.

  37.  Dependent on the nature of allocations made through the Regional Growth Fund, indicated in paragraph 18, it is possible that the uneven distribution of LEPs in the early stages of transition might see LEP areas gaining early advantage, producing inequalities and imbalances that could persist, for example between city regions and rural areas.

  38.  We would also advocate a full assessment, including equalities impact assessments, on the impacts of restructuring on the residual funding and liabilities held by RDAs, prior to final decisions being made on the scheduling of transition arrangements.


  39.  There are two sets of issues in relation to European Funding and the establishment of Local Enterprise Partnerships. First is to ensure that the opportunities offered in the remainder of the current programming period up to the end of 2013 are realised. Second is the potential for LEPs to be able to attract and deploy funds in the future.

  40.  Currently the two main funds focused on local economic development are the European Regional Development Fund and the European Social Fund. The ERDF is focused on business support and regeneration and the ESF is a labour market programme that helps people back into work and supports up-skilling of the current workforce.

  41.  The ERDF will invest £3.2 billion in the period 2007-13. DCLG is the national managing authority for England, with RDAs currently charged with managing and monitoring the ten Operational Programmes. The England ESF programme is investing £2.5 billion, with virtually all the funds allocated to regions and invested through co-financing against priorities determined by a Regional Framework. ESF is currently administered by Government Offices in the region and RDAs are responsible for leading on the production of Regional Frameworks. RDAs also play a key role in managing agricultural support programmes, R&D funding such as Framework 7 and the Rural Development Programme.

  42.  Whilst in most programmes the majority of the resources are already committed, there is still the need to secure the investment of the reminder of the funds and to manage and monitor the existing programmes many of which could continue to spend into 2014.

  43.  With LEPs not due to replace RDAs until 2012, it will be very difficult to maintain the momentum of programmes and ensure that all available resources are invested and accounted for if, at the same time, those bodies responsible are going through major structural change and in most cases abolition.

  44.  Even if LEPs were to be established earlier there are still significant risks. In all regions it is expected that there will be more than one LEP. For example in the North West it is possible that there will be seven LEPs and it is suggested that to try to formally agree and transfer the responsibility and accountability for the remainder of the various current programmes to them would be very difficult to achieve practically and would exacerbate the risk of losing momentum and opportunity. Moreover it is understood that the Government has indicated that there could be areas of the country that are not covered by LEPs and in those cases then by definition alternative arrangements would be necessary to administer funds in their areas.

  45.  The debate on the future of Structural Funds post 2013 has already begun but will be unlikely to be concluded before 2012. However the current debate suggests that the overall EU Budget will be more constrained and more focused. It is expected that there will be EU-wide programmes aimed at supporting the ambitions of Europe 2020 and the UK could still be able to access funds to support work on competiveness, labour market change and the knowledge economy.

  46.  Experience of the current funds suggests that to develop successful programmes, part-funded from EU sources, there is a need for sufficient capacity to develop, deliver and manage the complex requirements for evaluation and auditing. Smaller LEPs may lack the geographical reach and the practical capacity to successfully bid for and manage programmes and may need to partner neighbouring LEPs to achieve results.

  47.  It is also likely that, with reduced volumes of main programme funding available to the UK, specialised horizontal programmes may become more significant. Successful bids to funds for R&D, for example, tend to require collaboration between regional structures and Higher Education institutions which may require further cross-LEP collaboration to help develop appropriate bids.


  48.  As stated earlier, the TUC is not theoretically wedded to any particular spatial configuration or institution for the purposes of supporting economic development. We recognise the benefits that can accrue from a local or "functional economic area" focus in terms of delivering labour market interventions.

  49.  However, we believe that the new arrangements for LEPs should:

    (a) Ensure sufficient capacity, economies of scale, vision and strategic leadership to meet the considerable challenges ahead.

    (b) Promote the role of social, economic and environmental partners, including trade unions, in the development and delivery of LEP strategies.

    (c) Co-ordinate LEP activity with broader strategic goals, particularly in the areas of sector support, skills, affordable housing and the just transition to a low carbon economy.

    (d) Provide effective arrangements for LEPs to work together to meet wider spatial needs and objectives and to effectively access EU funding.

  50.  It is our view that the Government should set out a clear set of guidelines through its White Paper, providing reassurance and certainty to the transition process and seeking a broad consensus around the future role, scale, remit and relationships of LEPs.

  51.  As part of this process of building consensus it is essential that RDA staff and their trade unions are properly involved and consulted, and that the government honour existing Protocols and agreements, including the Cabinet Office Protocol for Handling Surplus Staff Situations.

13 August 2010

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