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
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
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
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.
POTENTIAL DROP OR RISE IN HOUSING OUTPUT
IF LOCAL DECISION-MAKING SUPERSEDES NATIONAL TARGETS
option one figure
|Yorks and Humber||16,600
|East of England||23,900
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"?
THE LEP SYSTEM
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
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 projectsrequires regional,
or inter-regional, coordination. For example, the connection between
Manchester and Leeds.
Programmes for regionally strategic industriesimpact
beyond the city-regional level, requires significant expertise
eg nuclear industry in the North West
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
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
Using the intelligence function fully: Trade unions
often foresee how a company is performing from a "shop floor"
restructuring works best with active trade
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
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
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
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
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.
EU FUNDING) UNDER
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
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
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
(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