So it’s Fare Ye Well to functional economic areas, economies of scale and regional or sub-regional bodies for promoting economic growth and regeneration and it’s hello (or welcome back?) to historic feudal boundaries and localised, more democratic oversight of smaller economic development teams.
Overshadowed in much of the media by the improved economic forecasts and more eye catching announcements in his Budget speech yesterday, one of the Chancellor’s lesser observed announcements was to hold a consultation on transferring the current responsibilities of the LEPs (Local Enterprise Partnerships) to local authorities by April 2024. The supporting documents were even more explicit about this government’s intention to withdraw central government support for LEPs. Barring any big changes in government in the next few months it therefore feels inevitable that, whatever the results of the consultation, LEPs will soon join their predecessors the Regional Development Agencies (RDAs) in the dustbin of history.
The RDAs were a New Labour creation designed to promote economic growth across England while the devolved administrations assumed the responsibilities in Scotland, Wales and Northern Ireland. Sitting alongside the Regional Assemblies and Government Offices for the regions the RDAs were well funded bodies that in turn provided the core funding to a raft of other bodies including Business Link and the regional tourism boards. Upon assuming power in 2010 the coalition government, focussed on deficit reduction and unconvinced by the success of the regional approach to economic development, quickly abolished the RDAs and replaced them with the LEPs. Regions were out and functional economic areas were in.
Thirty-eight LEPs were established across the country covering smaller areas than the regional bodies and cutting across local authority boundaries in an effort by the government to reflect economic areas. The boards of the LEPs were comprised of representatives from business, further and higher education and local government. The funding available and the powers of the LEPs were much reduced as compared to the RDAs and arguably their biggest role was as the disburser of government grant funding for regeneration projects.
For three years I was a board member of the Coast to Capital LEP that covered East Surrey, West Sussex, Brighton and Hove and initially Croydon and Lewes before they were removed following a review of the LEPs. To say that the LEPs never gained universal popularity among local government leaders would be an understatement. Many council leaders felt completely excluded from decision making and even among those who sat on the boards of the LEPs there was a large cohort who made no attempt to disguise their outrage at having to share equal footing with unelected appointees from the business and education sectors. As with the current bidding system for national funding pots there were winners and losers from the annual round of grant funding from the LEPs. This created resentment from councillors towards LEP chief executives who had failed to secure funding (or in some cases from councillors whose councils had secured funding).
Since 2016 the LEPs have been allowed to wither away with reduced funding settlements and no role in the allocation of funding streams like the Levelling Up Fund. The end had looked inevitable and now that appears to have been confirmed. But many questions remain, and it is yet to be seen how the empowerment of democratically elected local leaders will translate into a programme to help with the government’s pledge to grow the economy.
No sooner had the announcement been made than local government leaders were out of the starting blocks welcoming the move and putting forward the case for councils in their tier to be in the driving seat. The District Councils’ Network are right to point out that they are closest to their local economies and it is they who control levers like planning and licensing. But the County Councils’ Network is correct when pointing out that it is they who have the financial clout that would enable them to employ larger teams and that economic areas cover much wider geographies than those covered by smaller district and borough councils. As ever the two bodies would be much better off agreeing to a form of collaboration. If they can’t reach an agreement between themselves the government will decide for them.
The role of business and education leaders outside the LEPs will also need to be considered. Despite my belief that we need more local democratic input into quangos and other agencies, in my time as a council leader and LEP board member, I never succumbed to the argument of the democracy purists that having unelected appointees serving on the boards of LEPs was an abomination. Maybe the balance was a bit out of kilter but there was a clear and sensible role for business leaders and skills providers in the decision making process when it came to designing and delivering sub-regional economic development programmes. If councils or directly elected mayors are to assume the responsibilities of LEPs, consideration will have to be given to how those voices are heard in future.
While the demise of the LEPs was not unexpected and follows half a decade of decline in support, the announcement yesterday marks a decisive shift in government thinking about the structures around economic growth. Functional economic areas have held sway for the past quarter of a century. The jury is out on whether that approach has helped to drive economic growth. National GDP and productivity figures since the banking crisis in 2007/08 would suggest not. Equally there is little evidence that a more localised approach, that may ignore those economic areas, would result in more growth. In all too many areas, with local democratic resistance to the changes (house building, road building, construction of new employment sites, etc) that would spur economic growth, one would have to assume that there would be little or no improvement.
We know that the government is minded to support directly elected mayors or leaders in the areas in which it is devolving powers. We would expect to see more such deals with the powers being passed over from the LEPs as bait on the hook. There could be one last sting in the tail from the leaders of the LEPs. Each of the thirty eight LEPs is a company limited by guarantee with legally constituted boards of directors. They are not government agencies or quangos that can be dissolved at the flick of minister’s pen. If the business community aren’t happy with the proposed changes don’t be surprised if in some parts of the country, the LEPs, without government funding morph into bodies that provide a voice for disgruntled and side-lined business leaders.
The changes announced yesterday were too vague to let us know exactly what the future structures for economic development will be in England. The consultation will be interesting and the government now have a number of circles to square as the shift in thinking heralds a new framework.