Guiding LEPs

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Toward the end of last month, the Government published its initial guidance to LEPs on the development of Strategic Economic Plans which will inform Local Growth Deals. The guidance also outlines initial top level assessment criteria (although to a large extent this will be bespoke for each LEP) and a timetable outlining the process to completion.

 

This blog post outlines just some of the areas where it will be crucial for the Government to set out far greater clarity and certainty in the supplementary guidance due to be published in October. It covers the need for stronger evidence of business engagement, requirements for collaboration between LEPs, the use of metrics and governance.

Continual business engagement

LEPs derive their authority from many sources, but their primary constituency ought to be the local business community. The rationale for LEPs is bringing in a much-needed local business voice to decisions previously dominated by local and central government.

As we've argued before putting in place a strategy for ‘structured, timely and sustained business engagement' should be the starting point for developing LEP capability.

On this the guidance is presently far too weak. How will LEPs be expected to demonstrate that the private sector is committed to and fully engaged in their business plans? More importantly how will this engagement be verified? Will there be requirement for sustained delivery during the implementation of Local Growth Deals?

From our point of view we would like to see:

A requirement for LEPs to outline plans for and report on continual business engagement and how this has fed through to board or sub group membership, to ensure those making the decisions reflect the local business community. This should form part of the suggested annual report, to ensure this engagement is sustained and not just a snapshot at five year intervals.

Collaboration

If 9 RDAs were too large to be effective, are 39 LEPs similarly too small? What value would 39 new low carbon centres of excellence have? 39 overseas trade missions? Or worse – road schemes that stop at arbitrary borders? Collaboration will be crucial to ensure the best return on investment in certain areas such as access to key ports through a route based approach or initiatives to strengthen comparative advantages in sectors and supply chains (which will often be in non-contiguous LEP areas).

From our point of view we would like to see:

The encouragement for collaboration going further, with incentives included to drive collaboration across LEP boundaries, or evidence to explain why collaboration has been ruled out. At the moment the Guidance makes incentives attached to collaboration an ‘intention' not a firm commitment. Cross-border collaboration must be explicitly incentivised.

Clear Yardsticks

Within the Guidance, the requirement to demonstrate value for money is vague (and on the subject of providing Benefit Cost Ratios for projects, worryingly contradictory). How will LEPs be able to prove that their actions have made a difference? Most LEPs are looking to use generic measures such as higher GVA or more jobs as the basis for their economic intervention – but how can they prove this? The truth is they can't. The Government should apply the same logic used in assessing the success of other local interventions:

  • The Regional Growth Fund requires both the leveraging of private sector funds and a guarantee that against a benchmark jobs will be safeguarded or created for each approved programme
  • The Greater Manchester City Deal has an Earn Back mechanism where the City invests £1.2bn of its own money in growth inducing infrastructure and a formula linked to changes in rateable value would see the City ‘Earn Back' a proportion of the rateable revenue above a baseline for 30 years
  • Growing Places Funds, an area where LEPs have had some early success, are investments (primarily in the form of loans) made by the LEP to unlock local developments which have stalled because of the lack of available funding for physical infrastructure such as roads or other utilities. The loan repayments are then ‘recycled' into other schemes incentivising LEPs to be strategic about their choices

From our point of view we would like to see:

A clearer outline of how Local Growth Deal ‘asks' will be assessed and over what timescale. With measures such as higher GVA, more profitability or more jobs seen as outcomes from rigorously defined outputs.

Governance

While LEPs should remain nimble with their boundaries open to revision, for practical purposes these boundaries should be fixed for each five year allocation period. As part of their development or update to strategic economic plans LEPs are expected to reappraise their functional economic area to ensure it is the right fit. SEPs then dictate priorities for LEPs EU SI Fund programmes, Local Growth Deals and the matching allocation from the SLGF.

From our point of view we would like to see:

Boundaries being fixed to provide some clarity to local stakeholders. The Government should rule out the approval of any requests for changes to LEP boundaries within each allocation period.

All of this begs the question, where can LEPs add value? We'll be blogging our thoughts on this in the coming weeks.

Author

Head of Business Environment Policy

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