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West of England LEP's response to the Heseltine Review
Is localism primarily about the delivery of national objectives in a way which best recognises and responds to local circumstances, or primarily about the delivery of local objectives and priorities in the context of national circumstances?
General thoughts
The government is ambiguous and contradictory about its approach to localism and devolution, on one hand saying it is for local areas to decide what's best, but on the other hand maintaining control methods to ensure national objectives are met. This leads to confusion, delay and ineffective/inconsistent delivery of either local or national priorities. Heseltine states that "once a LEP has been allocated funds, it should be free to implement its strategy, accountable to its local community but free from central government diktat." We feel that this is right - it involves giving real power and funding to local areas, but expecting that the resultant local priorities and actions contribute to the delivery of national priorities and are carried out in partnership with government. Accountability should be limited to delivering specific agreed outcomes for the freedoms, flexibilities and other inputs (e.g. powers and funding) provided, rather than the current detailed control mechanisms about the methods and outputs. The development of Strategic Plans for Local Growth and eventually the LEP Strategic Plans should set accountability.
Single pot
We suggest a selective approach based on a limited number of funding streams that relate to LEP core activities, rather than a wide range of funding streams that will expand the role of the LEP, add to its bureaucracy and dilute its focus. To keep the bureaucracy around the single pot manageable, the focus should be on the three directly related funding streams (Skills; Local Infrastructure; Business Support). If local authority capital spend is to be included in the single pot, then it should be confined to the "strategic" elements. In relation to Employment Support, where expenditure is clearly related to the skills agenda, it should be devolved and managed locally. Otherwise, it should be retained centrally by DWP.
Innovation and Commercialisation is probably the most difficult funding stream to categorise. What is needed is a much more effective, two way dialogue between LEPs and the Technology Strategy Board to ensure that (as with UKTI) the TSB understands the particular strengths and opportunities of local economies, so that its investment takes place in the areas with greatest economic potential, as well as the business sectors with greatest economic potential. The Housing funding stream should not be included in the single pot devolved to LEPs, although there remains a question of whether it could be devolved to local authorities.
In relation to allocation of the single pot, if, as we believe, funding should be devolved to enable local delivery of national economic priorities in a way which recognises local circumstances, then it should be a competitive process, with a demonstration of how the LEP will contribute to national economic priorities being one of the key criteria used to determine the level of funding allocated.
Roles of partners and relationship with government
Local partners should exercise their roles through the LEP and its relevant governance arrangements. The relationship between the LEP and government should be one of agreeing economic outcomes for the area, agreeing the devolved powers and funding and other government actions required to deliver these outcomes/commitments and the monitoring/reporting arrangements in respect of the outcomes/commitments. Devolved activities should be communicated via a single relationship rather than several as is currently the case. If LEPs are to be accountable for agreed economic outcomes in an area, then it follows that they must have the necessary powers and funding to secure delivery of those outcomes. This does not necessarily mean, however, that they need to become large delivery organisations in their own right, but rather through delivery vehicles and commissioning.
LEP capability, governance, accountability and constitution
As it is unlikely LEP's would become major direct delivery agencies, we believe this would probably be limited to:
* Financial accounting, assurance and probity expertise
* Procurement expertise
* Client side management expertise
* Programme and project management expertise
Some of this expertise would probably need to be retained in-house and some could be bought in on a case by case basis. The West of England LEP already has in place complementary governance arrangements which cover over £1bn of potential investment, and such arrangements could be extended to cover the single pot. Accountability and constitution are potentially related issues and, we believe, very significant going forward. If a LEP is to be held accountable for the outcomes arising from expenditure through the single pot, then it must have the independent ability to determine how and when that money is spent. At present this is not the case as it has to go to a nominated accountable body. We would like to see a commitment to undertaking the various actions that would be required to enable funding through the single pot to be paid directly to LEPs (if they so wished) once it is established in 2015. This would require government to review some of the rules surrounding the mechanisms by which it currently grants expenditure to enable such grants to be made directly to LEPs.
Alignment of national and local priorities in the single pot
We think the LEP's Strategy for Local Growth (ultimately the LEP Strategic Plan) should, amongst other things, demonstrate how local economic growth will contribute to the delivery of national economic priorities, and the relevant outcomes should be agreed and signed off by both the LEP and by government.
Synergy between national priorities and Strategic Plans
There are significant incentives for LEPs to maximise alignment with national priorities, in order to secure maximum devolution of funding and powers. There is also a fall back position for government in not signing off the LEP's plans if they do not sufficiently address national priorities.
Evolution of LEP Growth Plans into Strategic Plans
At present, it is unclear what a LEP Strategic Plan should cover. Issues such as skills, are unlikely to be contentious, but if they should include proposals for new housing provision (where this is seen as a barrier to growth) or that its investment plan should include/direct the investment plans of other local public organisations (local authorities, HE, FE, NHS etc), either or both scenarios could prove very contentious with public sector partners. Government will need to be very clear about what is to be included in the Strategic Plans and what is not.
Relationship between Strategic Plans and EU spending
Any LEP plans for EU spending from 2014 should be included in the investment plan making up a part of the Strategic Plan.
Relationship between government and LEPs on skills
There are a number of national sector groups convened between government departments and LEPs already in existence and have varying degrees of success which appears to directly relate to the attitude of the Departmental officials convening the groups. An equivalent grouping, or series of "regional" groupings, could be established for skills issues, involving LEPs; BIS, DfE and DWP officials; HE/FE; and other providers but only if there is genuine partnership and engagement between all groups
Further areas for devolution
There are two areas of activity where greater devolution to LEPs might be helpful. Trade and Inward Investment represent core business for LEPs, so it would therefore, make sense to devolve the regional/local elements of UKTI activities to LEPs. The second relates to the public sector property estate in an area. Business partners in the LEP can bring high quality commercial property expertise bear on this issue - to rationalise uses, release value and make best use of the public estate to drive growth.
Alignment of local growth initiatives with spending devolution
Locally, the West of England City Deal Economic Development Fund already goes a long way towards this. It would be possible to include further capital funding streams, and revenue funding streams within the Economic development fund and its governance arrangements. This could also ensure that programmes are aligned at a strategic level through the Strategy for Local Growth (and ultimately the LEP Strategic Plan) and at a practical level through the programme management arrangements in place for the City Deal.
The government is ambiguous and contradictory about its approach to localism and devolution, on one hand saying it is for local areas to decide what's best, but on the other hand maintaining control methods to ensure national objectives are met. This leads to confusion, delay and ineffective/inconsistent delivery of either local or national priorities. Heseltine states that "once a LEP has been allocated funds, it should be free to implement its strategy, accountable to its local community but free from central government diktat." We feel that this is right - it involves giving real power and funding to local areas, but expecting that the resultant local priorities and actions contribute to the delivery of national priorities and are carried out in partnership with government. Accountability should be limited to delivering specific agreed outcomes for the freedoms, flexibilities and other inputs (e.g. powers and funding) provided, rather than the current detailed control mechanisms about the methods and outputs. The development of Strategic Plans for Local Growth and eventually the LEP Strategic Plans should set accountability.
Single pot
We suggest a selective approach based on a limited number of funding streams that relate to LEP core activities, rather than a wide range of funding streams that will expand the role of the LEP, add to its bureaucracy and dilute its focus. To keep the bureaucracy around the single pot manageable, the focus should be on the three directly related funding streams (Skills; Local Infrastructure; Business Support). If local authority capital spend is to be included in the single pot, then it should be confined to the "strategic" elements. In relation to Employment Support, where expenditure is clearly related to the skills agenda, it should be devolved and managed locally. Otherwise, it should be retained centrally by DWP.
Innovation and Commercialisation is probably the most difficult funding stream to categorise. What is needed is a much more effective, two way dialogue between LEPs and the Technology Strategy Board to ensure that (as with UKTI) the TSB understands the particular strengths and opportunities of local economies, so that its investment takes place in the areas with greatest economic potential, as well as the business sectors with greatest economic potential. The Housing funding stream should not be included in the single pot devolved to LEPs, although there remains a question of whether it could be devolved to local authorities.
In relation to allocation of the single pot, if, as we believe, funding should be devolved to enable local delivery of national economic priorities in a way which recognises local circumstances, then it should be a competitive process, with a demonstration of how the LEP will contribute to national economic priorities being one of the key criteria used to determine the level of funding allocated.
Roles of partners and relationship with government
Local partners should exercise their roles through the LEP and its relevant governance arrangements. The relationship between the LEP and government should be one of agreeing economic outcomes for the area, agreeing the devolved powers and funding and other government actions required to deliver these outcomes/commitments and the monitoring/reporting arrangements in respect of the outcomes/commitments. Devolved activities should be communicated via a single relationship rather than several as is currently the case. If LEPs are to be accountable for agreed economic outcomes in an area, then it follows that they must have the necessary powers and funding to secure delivery of those outcomes. This does not necessarily mean, however, that they need to become large delivery organisations in their own right, but rather through delivery vehicles and commissioning.
LEP capability, governance, accountability and constitution
As it is unlikely LEP's would become major direct delivery agencies, we believe this would probably be limited to:
* Financial accounting, assurance and probity expertise
* Procurement expertise
* Client side management expertise
* Programme and project management expertise
Some of this expertise would probably need to be retained in-house and some could be bought in on a case by case basis. The West of England LEP already has in place complementary governance arrangements which cover over £1bn of potential investment, and such arrangements could be extended to cover the single pot. Accountability and constitution are potentially related issues and, we believe, very significant going forward. If a LEP is to be held accountable for the outcomes arising from expenditure through the single pot, then it must have the independent ability to determine how and when that money is spent. At present this is not the case as it has to go to a nominated accountable body. We would like to see a commitment to undertaking the various actions that would be required to enable funding through the single pot to be paid directly to LEPs (if they so wished) once it is established in 2015. This would require government to review some of the rules surrounding the mechanisms by which it currently grants expenditure to enable such grants to be made directly to LEPs.
Alignment of national and local priorities in the single pot
We think the LEP's Strategy for Local Growth (ultimately the LEP Strategic Plan) should, amongst other things, demonstrate how local economic growth will contribute to the delivery of national economic priorities, and the relevant outcomes should be agreed and signed off by both the LEP and by government.
Synergy between national priorities and Strategic Plans
There are significant incentives for LEPs to maximise alignment with national priorities, in order to secure maximum devolution of funding and powers. There is also a fall back position for government in not signing off the LEP's plans if they do not sufficiently address national priorities.
Evolution of LEP Growth Plans into Strategic Plans
At present, it is unclear what a LEP Strategic Plan should cover. Issues such as skills, are unlikely to be contentious, but if they should include proposals for new housing provision (where this is seen as a barrier to growth) or that its investment plan should include/direct the investment plans of other local public organisations (local authorities, HE, FE, NHS etc), either or both scenarios could prove very contentious with public sector partners. Government will need to be very clear about what is to be included in the Strategic Plans and what is not.
Relationship between Strategic Plans and EU spending
Any LEP plans for EU spending from 2014 should be included in the investment plan making up a part of the Strategic Plan.
Relationship between government and LEPs on skills
There are a number of national sector groups convened between government departments and LEPs already in existence and have varying degrees of success which appears to directly relate to the attitude of the Departmental officials convening the groups. An equivalent grouping, or series of "regional" groupings, could be established for skills issues, involving LEPs; BIS, DfE and DWP officials; HE/FE; and other providers but only if there is genuine partnership and engagement between all groups
Further areas for devolution
There are two areas of activity where greater devolution to LEPs might be helpful. Trade and Inward Investment represent core business for LEPs, so it would therefore, make sense to devolve the regional/local elements of UKTI activities to LEPs. The second relates to the public sector property estate in an area. Business partners in the LEP can bring high quality commercial property expertise bear on this issue - to rationalise uses, release value and make best use of the public estate to drive growth.
Alignment of local growth initiatives with spending devolution
Locally, the West of England City Deal Economic Development Fund already goes a long way towards this. It would be possible to include further capital funding streams, and revenue funding streams within the Economic development fund and its governance arrangements. This could also ensure that programmes are aligned at a strategic level through the Strategy for Local Growth (and ultimately the LEP Strategic Plan) and at a practical level through the programme management arrangements in place for the City Deal.
