Today we submitted our response to an inquiry on LEPs and their ability to deliver local growth strategies. For us poor business engagement is still a serious concern.
LEPs have come a long way since 2010 when they were set up as successors to RDAs as nimble business-led organisations. Our recent blog post gives an overview of this expanded role, including the new requirement for Local Growth Plans based on strategic economic assessments.
There are two broad thrusts to our response:
- Effective business engagement underpins everything
- Place based policy is a natural fit and a good starting point
The starting point in developing LEP capability should be structured, timely and sustained business engagement. This is important to avoid a downward spiral where:
- Poor engagement leads to unrepresentative LEP boards and groups
- This leads to the development of plans which don't meet the needs of local businesses
- Which further entrenches business disengagement
- Resulting in limited, if any, private sector funding
- Leading to an overreliance on the public purse for funding
- Resulting in objectives being set on a funding by funding basis not the LEP strategic plan
- Further undermining an already ineffective plan
- Leading to more business disengagement
Our recommendations to improve this include:
- Using multiple channels for business engagement, rather than relying on one source to fulfil this need
- Requiring LEP Boards to be representative of local business demographics, in terms of company turnover and sector
- Exploring new models to get ‘buy-in' from businesses, Liverpool City Region LEP has a membership based model which provides credibility, although this carries some risks and may not be suitable for all LEPs
The second approach should be place based strategy.
LEPs were set up to have a focus on place. Policy areas which fit within this spatial dimension include issues such as planning and local infrastructure such as roads construction and maintenance.
LEPs have proven their effectiveness through Growing Places Funds. The alignment of Local Transport Boards to the LEP boundaries and the inclusion of transport capital funding in the first tranche of the Single Local Growth Fund shows that the Government has come to a similar assessment. This focus on transport infrastructure at the LEP level is something we welcome.
Where we disagree is on skills. We support models where skills funding is routed directly through the employer. Just as with the Regional Growth Fund, such models leverage greater private sector investment. LEPs can play a role in helping to strengthen the market in training by bringing together local employers to aggregate demand and in signposting information on courses and funding, breaking down the information asymmetry which exists between employer and skills provider.
Our recommendation in this area is simple: Focus on spatial issues such as infrastructure (of which information sharing structures forms part); avoid getting directly involved in functional issues such as skills and innovation.
Who should hold LEPs to account?
Many have suggested a single Minister should be responsible for LEPs. We see little evidence that this would add value and in the long run it could also be damaging. Our recommendation is for the Cabinet Committee for Local Growth to be allowed to demonstrate its effectiveness in holding LEPs to account, especially as it brings together Minister's from across departments to talk about growth.
A cross government approach is needed, not a single Minister. This follows our Route to Growth recommendation for coordination across Government – everyone needs to be responsible for delivering growth, local and national.
How should they be held to account?
But we do need some clear metrics. The business plans we have seen disproportionally place an emphasis on business Gross Value Added (GVA) and employment growth. These are too broad and it would be impossible to demonstrate how LEPs have proactively added value. Our Route to Growth ambitions demonstrates how this could be done – setting out clear, simple and bold metrics.
Finally, collaboration between LEPs will be crucial. RDAs were ridiculed for duplicating functional activities in areas such as innovation, inward investment and skills. This was partly down to the criteria on which they were judged which prioritised what they did within their region regardless of whether or not it added genuine value to overall growth.
Collaboration between LEPs should form part of the assessment criteria, but not just collaboration with neighbours. Supply chains exist across the country, not just in clusters, for a local growth agenda to work it should recognise this.