RDAs to LEPs: More Powers needed, and the clock is ticking for business.
The scrapping of RDAs was "chaotic and Maoist" admitted the hapless BIS Secretary Vince Cable last year in Birmingham. Perhaps he meant that a "thousand flowers could bloom" a la Mao Zedong's famous 1957 mis-quote. Not the best historical reference that, Vince.
Well while some LEP flowers may be about to bloom, others look distinctly stunted in their growth. Despite being handed a supposed 'toolkit' by central government containing Enterprise Zones (EZs), easier planning, the chance to bid into the Regional Growth Fund, the localism bill and a presumption of competence for local authorities, I'm still left wondering what real levers of economic growth the LEPs have to press.
Enterprise Zones may offer 21 LEPs some scope to raise finance, but there remains a questions as to whether this is enough and what the other LEPs will do. And I've stressed in earlier articles, EZs aren't all they're cracked up to be, if 1980s' experience is anything to go by. Add in the confusion over responsibility for skills - which has been handed to the Skills Funding Agency and Colleges rather than LEPs, and the sense of a "missed opportunity" is mounting.
Perhaps on a more positive note, a new report entitled 'Sink or Swim' by the Centre for Cities has just highlighted six key roles that LEPs do need to take on over the next year if they are to gain much-needed credibility with businesses and the government. The Centre for Cities suggests that these six key 'levers' comprise:
1. Ensuring that local businesses are involved in the preparation and planning of enterprise zone strategies and the future use of proceeds from business rate discounts in enterprise zones.
2. Preparing joint, strategic spatial plans for the area, including the need to identify and prioritise housing, employment and infrastructure needs.
3. Becoming designated consultees for local plans.
4. Developing a LEP-wide transport strategy across local authority boundaries.
5. Mediating between Work Programme prime and sub-contractors to ensure that unemployed people across the LEP area benefit from the programme.
6. Taking formal responsibility for signing off second round Regional Growth Fund bids.
In one sense this is a timely contribution from the Think Tank. The first point seems especially pertinent in Birmingham where the EZ covers the city centre and not an obvious site for regeneration such as Longbridge.
The claim by the LEP is that this will generate the cash (presumably by borrowing against the value of the extra business rate revenue retained?) for reinvestment in other locations but clearly local authorities and businesses need a say on how this is spent, and the outer-lying areas of the LEP will want to see that the cash actually reaches them at some point.
In addition, I'd still like to see how the cash generated is used to genuinely help rebalance the LEP's economic trajectory such that we have a wider range of growth drivers rather than just relying on retail and finance.
And points 2 and 4 make absolute sense - where LEP configurations don't reflect underlying 'real' economic geographies there will be a need for cooperation across fragmented LEPs to get the job done.
What seems clear is that the LEPs do need a mix of real powers to do this - some formal and some informal. So far it's not clear to me that they have them, especially on the ability to raise finance.
We'll hear more on such financing powers later in the year from the government in the Local Government Resource Review. That review needs to make it absolutely clear that local authorities and LEPs have very genuine finance raising powers to get things done locally.
This latter point is critical - as delegates at yesterday's 2nd National Conference on LEPs in Manchester made clear to me in discussions over coffee. Real revenue raising powers for LEPs, fully using existing local authorities' prudential borrowing powers - and more - are needed.
But the clock is ticking. Business in particular needs to see that LEPs have real powers with real resources, and I fear that unless this is made clear soon then they will start to walk away.
The possibilities for positive outcomes have been illustrated in Manchester where one LEP covers the Greater Manchester area, where businesses are engaging with Local Authorities in a "creative tension" and where the LEP has a clear plan of where it wants to go through the research and intelligence gathered for the Manchester Economic Strategy.
But Manchester has clout, benign political borders and local authorities willing to work together in way that reflects functional economic space. That clearly isn't the case everywhere, including here in the West Midlands.
That means that local LEPs will have to work harder to ovecome local rivalries and boundaries, to join things up in a meaningful sense, and to use increasingly scarce public resources for maximum economic benefit - something that the RDA used to be well placed to do.
Professor David Bailey works at Coventry University Business School