Centralisation has for too long been choking off growth. There is a clear consensus across the political spectrum that power and decision-making need to be devolved, and that local people are best placed to drive local economic growth.
While there is broad agreement on the overall direction of travel, it is not yet clear how the momentum of devolution can be harnessed to achieve the right conditions for growth. Ever more devolution deals, the creation of more combined authorities and the formation of new subnational bodies are all exciting developments, but they also mean that the local landscape is becoming ever more complex. Nowhere is this more the case than for Local Enterprise Partnerships (LEPs).
In bringing together the private and public sectors LEPs are uniquely positioned to play a pivotal role. And it was clear at the recent LEP Network annual conference that there have been some significant achievements. To date a total of £5bn of private sector funding has been secured by LEPs. Direct impact of the work of LEPs includes 115,000 new jobs, 71,000 new businesses and 16,000 new homes.
However, there remain significant challenges. According to the National Audit Office the approach taken by the Department for Communities and Local Government to overseeing Growth Deals puts value for money at risk. LEPs themselves have expressed reservations about their capacity to succeed. Only 5% of LEPs feel that the resources available to them are sufficient to meet the expectations placed on them by the Government. The estimated underspend for 2015/16 is £85m, over a third of the total budget for the year.
Speaking at the conference, communities and local government minister James Wharton acknowledged that the role of LEPs will need to change as devolution progresses. But it was absolutely clear, in both his and secretary of state Greg Clark's comments, that LEPs remain integral to this process. The ministers announced at the conference that £20m core funding for LEPs has been secured for the next financial year, and the next phase of Local Growth Fund (£1.8bn) is now open for LEPs to bid.
The key question is what is needed to make possible investments which will bring about economic growth. It is understood that transport is central to unlocking growth, which is why transport infrastructure investment accounts for more than half allocated Local Growth Fund spending so far. But transport needs to be understood as part of a wider growth strategy.
Michael Heseltine's report No Stone Unturned has greatly influenced the Government's thinking. Chancellor George Osborne purportedly supported 81 of the 89 recommendations
at the time. The Local Growth Fund arose directly from it. One recommendation which the chancellor didn't support, however, was for the formation of a National Growth Council. Perhaps this felt too much like 1970s state planning. There was more support for a national growth strategy, but without a body of some kind with responsibility for developing and monitoring that strategy it is difficult to imagine how such a strategy would have any real influence.
What was clear in Lord Heseltine's report was that the Government needs a single compelling vision of how wealth will be created in the UK, and that all parts of the Government need to work in support of that plan. He advocated a significant devolution of funding to LEPs, but crucially this needed to be accompanied by a clear statement of the Government's priorities to guide LEPs in preparation of their strategic economic plans.
In the event, significant capital funds are being devolved to LEPs but without the necessary guidance and without a national growth strategy. And there are also troubling issues concerning accountability and transparency. According to the National Audit Office, and less than half feel that that there are clear lines of accountability to the electorate.
All this is against the backdrop of massive cuts to local authority budgets, to the point that in some areas all but statutory services are at risk of being axed. The result is that local government expenditure on pro-growth measures such as housing, planning and economic development has decreased disproportionately.
So LEPs have been given a hugely challenging brief. In the absence of a national growth strategy, they should at the very least have access to the tools and information they need to make investments which will encourage growth. For its part Greener Journeys has built up an extensive evidence base on the excellent returns that can be achieved from investment in bus infrastructure – up to £7 of net economic benefit for every £1 invested – and we continue to share our findings with LEPs. But much more needs to be done.
Reference: Transport Times, May 2016 Issue