Localised Industrial Strategy: Do you know your LEP from your LA?

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Before the launch of the Government’s Industrial Strategy White Paper earlier this week, No.10’s infamous Comms Grid would have been meticulously studied to ensure the strongest positioning for Business Secretary Greg Clark’s big announcement. In July, there had been a nod to place-based leadership and the role local government could play when the Secretary of State spoke to the LGA’s Councillors’ Forum. What could the White Paper deliver for local government that July’s Green Paper had not?

At Cratus, we like to dabble in a certain degree of political speculation and media hype. Not much takes us by surprise. We had not, however, expected the spotlight to swivel so fast from place-making to Prince Harry. The announcement of a Royal Wedding certainly caused a brief distraction at Cratus HQ but those amongst us eager to understand the government’s industrial intentions soon got back on track.

It took us a while to find references to local government in the 255 pages of the Industrial Strategy White Paper, there being only 12, and when we put it all together, the main thrust of the argument is captured in one, some might consider somewhat obvious, vision for the development of localised industrial strategy:

“The people best placed to drive forward local economies are those who live, work and do business in them.”

In short, industrial strategies will establish new ways of working between national and local leaders across both the public and private sectors with local industrial strategies to be agreed by March 2019. This timeline is politically and logistically questionable. New locally led industrial strategies are to be agreed up to and in the same month the country exits the European Union. Another opportunity for the Government’s Industrial Strategy to be overshadowed? Always the bridesmaid, never the bride for Greg Clark it would seem.

Areas with the potential to drive wider regional growth, areas with clusters of expertise and centres of economic activity will be prioritised. For those places in England with a directly elected mayor (there are six Metro Mayors when London is discounted), the White Paper’s instruction is for a single strategy to be led by the Mayor and supported by Local Enterprise Partnerships (LEPs). Where local authorities are without a Mayor and Cabinet structure, the local industrial strategy will be developed under the leaders of the relevant LEP. The local government sector met this revelation with as much enthusiasm as a rogue wedding crasher.

 

Local Enterprise Partnerships 

There are 38 LEPs across the country with a combined responsibility of £12bn. One governance model and legal structure does not fit all. Some quite literally operate as partnerships, others as common interest companies. Key influencers include the Board of the LEP and the Relationships Manager who is the LEP’s assigned civil servant acting as the link between the LEP and central government. LEPs are business-led partnerships between the private sector and local authorities established with the purpose of steering growth strategically in local communities. Every LEP has its own process for decision-making based on the needs of the Place to ensure value of money, local engagement and democratic accountability.

 

LEPs don’t get a great rep in some parts of the country so it’s no surprise the White Paper contains a loose caveat that the LEPs roles and responsibilities are to be reformed with a review of leadership, governance and accountability. Will this take place prior to the locally led strategies being agreed by March 2019? Busy times ahead for DBEIS and DCLG.

The reform position will in no short part have been influenced by the Government’s review of LEP governance and transparency led earlier this year by DCLG Non Executive Director and Cratus Associate Mary Ney.

Earlier this year, some LEPs were found not to be fully-compliant with the government’s expectations set out in the National Assurance Framework. DCLG required LEPs to review their arrangements and publish their own local assurance framework on their websites by 28 February 2017. Since then, all LEPs have published their local assurance frameworks and Section 151 officers have certified compliance of the framework.

LEPs operate quite differently to LAs. For example, only 36% of LEP Board meetings are held in public with 79% of their agendas published. 42% of LEPs do not publish a register of interests. As recently as last year, the National Audit Office (NAO) was unable to obtain information on LEP senior staff remuneration from 87% of publicly available accounts. The NAO is currently investigating specific allegations related to LEPs.

 

What does the Industrial Strategy White Paper mean for those in the private sector driving forward local economies?  

Businesses must be ready to balance central government expectations, understand local government positioning, engage key influencers, and navigate Local Enterprise Partnerships governance structures if they are to be part of the industrial strategy revolution. Working with LEPs and garnering the support of local government leaders will require substantial political manoeuvring. While county lines are clearly established within the local government sphere, some LEPs have overlapping boundaries. In combined authorities, the key influencer will be the Metro Mayor but the overlapping contours of some LEPs will require expert navigation.

The private sector must too be mindful of the overarching view of the Counties; County Councils should be in the driving seat to lead local industrial strategies alongside LEPs. Businesses should also appreciate the reluctance of some local government leaders to recognise their LEPs are democratically accountable bodies. Four out of five council leaders believe this to be the case. And in a recent CCN survey, 50% of their surveyed leaders believed LEPs shouldn’t lead local strategies. Cratus exists to navigate these complexities, using our extensive local government network and understanding of England’s Local Enterprise Partnerships to place your business interests at the heart of localised industrial strategy.

Through Mary Ney’s work with DCLG, the review of LEPs also threw up some concerns from private sector LEP board members who were worried that their association with weak practice in governance and transparency could have reputational implications for their businesses. The dual dimensions of LEP Boards must be carefully navigated. Some LEPs currently employ the Nolan Principles, while others frame their requirements in a code of conduct similar to a company board of directors. Association with public / private contract failure can, and frequently does, result in intense media scrutiny and extraordinary share price drops for the private sector actor. Cratus Strategic exists to prevent this.

These political power shifts mean there has never been a more important time or greater opportunity for the private and public sectors to look at building genuine, meaningful and long-term partnerships that can develop and strengthen localised industrial strategies and the communities they serve.

The public sector market is a risky one, but also one full of rewards. We know, we’ve lived it. Between us we have over 50 years’ direct experience within local government. To discuss our bespoke political research reports of Local Enterprise Partnerships and local government relationships in geographical locations of your choosing, contact our Executive Director for Strategy, Katharine Marriott at [email protected].

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