Written evidence submitted by Kent and Medway Economic Partnership (KMEP) (LRS0043)

 

I am writing on behalf of the Kent and Medway Economic Partnership (the local federated board of the South East Local Enterprise Partnership) to express our views on post pandemic economic growth. Thank you for considering our response.

 

About Us

 

The Kent and Medway Economic Partnership (KMEP) is one of four local federated boards of the South East Local Enterprise Partnership (SELEP). The role of SELEP and KMEP is to support economic growth through strategy formation, allocation of funds, and through using its convening power to bring together local stakeholders to advocate for their area and co-ordinate responses to economic opportunities.

 

KMEP’s membership comprises 17 business leaders, the County Council, the Unitary Authority, all 12 District Councils, a Vice-Chancellor selected by the 4 Universities, a Principal selected by the 3 Further Education College Groups operating in our locality.  As part of the federated model of SELEP, 7 KMEP board members are invited to sit on the SELEP Ltd board as Directors.

 

Economic Base

 

Q. What evidence exists to measure the performance of the various tiers of regional and local government in the delivery of growth?

 

A. SELEP and its federated operation are assessed by the Government on an annual basis through their annual performance review, where a LEP’s strategic impact, governance and delivery are evaluated.

 

As well as assessing the performance of the organisation, each individual investment decision is keenly assessed prior to being made by the SELEP Accountability Board (with a full business case being written and undergoing an Independent Technical Evaluation). Once approved, the project will be closely monitored and evaluated over the course of the next five years, allowing LEP board members and the Government to see the project’s impact on economic growth in terms of job creation, housing delivery, and new student learners.

 

Q. What evidence have regional and local leaders based their local or regional industrial strategies on, and what forms of stakeholder engagement were included in the drafting of priorities?

 

A. In order to make sensible and effective decisions on post pandemic economic recovery, it is imperative that local economic stakeholders have access to high-quality, accurate and up-to-date data.


This economic intelligence generally comes in three forms:

 

This ‘bottom-up’ data is primarily made accessible to KMEP through a variety of communication channels which include:

 

 

 

Furthermore, the sustained reduction in local authority funding has meant resources are scarcer now than a decade ago. The LGA assesses that Council core services continue to be under significant pressure, having lost nearly £15 billion of core government funding over this decade, and nearly a quarter of staff since 2012[2].  Statutory services (such as social care) must be prioritised by councils, thus reducing council resources to acquire economic evidence on which to base strategy. Further detail on how this situation could be improved is given below*.

 

*LEP and local authority access to economic evidence:

The current crisis has arguably placed an even greater premium on data outlets. However, in the current funding environment, local authorities are less likely to be able to access the full extent of the data resources, particularly the private sector held data and analysis. In turn, local authorities can then not share this data as appropriate with the LEP and its federated boards.

 

There are many available data sets that can offer useful insights, perspectives, and analysis on key aspects of the crisis’ economic impact, for example, the Local Data Company (town centre performance comparisons) and EMSI (Regional Response Tool on labour market dynamics).  However, with local resources often strained, and with well evidenced and conceived interventions essential, local authorities and LEPs may struggle to access the important data that is needed to assist in project planning.

 

Vital economic intelligence at the current time includes:


Where the newly formed national Joint Biosecurity Centre (JBC) will seek to analyse data to form a clear picture of changes in COVID-19 infection rates across the country, providing intelligence on both the overall national picture and, critically, potential community level spikes in infection rates, we feel there needs to be a similar emphasis on data relating to economic impacts.

 

We would like to see a similar coordination of quality economic intelligence at a national level to ensure that the best and latest data can be made available to LEPs and local partners as events continue to unfold through the remainder of 2020 into 2021. This might seek to involve the ‘What Works Centre for Local Economic Growth’ which has been a positive influence in assisting local practitioners in identifying and selecting appropriate economic evaluation methods to support their work. It has, for example, some basic online guidance on making informed decisions to support post pandemic economic recovery interventions but this type of approach should be more widely shared, promoted, and disseminated using enhanced coordination of resources and assets at a national level in our view. This also relies on up-to-date, quality economic data which again is not always available to practitioners.

 

Finally, one of the key measurements of growth used locally in recent years has been the Commercial Information Audit, which is used by district planning departments, the County Council and Unitary Authority to demonstrate the loss or gain of various types (use classes) of commercial premises. With the proposed change in Use Classes, such information (at the level of detail currently amassed) will not be feasible. Consideration needs to be given as to what information will be usable instead, so that the understanding of the local economy’s operation remains strong.

 

Q. Considering the cost of institutions, what cost benefit analysis exists to show the value for taxpayers’ money when compared to the delivery of wealth and job creation?

 

A. We do not believe that a cost benefit analysis of LEPs has been undertaken. However, SELEP and KMEP operate a lean, light-touch model. The emphasis is to bring local stakeholders together so they can make joint decisions on economic priorities and share their resources accordingly. The SELEP model allows for informed decision-making due to their inclusive collaborative federated model that it is based upon. This model enables all local public-sector stakeholders in Kent and Medway to have their say, and therefore they have a vested interest in ensuring the success of the interventions.

 

In terms of costs, KMEP employs 1FTE, and the support costs (such as salary, website maintenance, any consultancy costs, etc) are paid for entirely by Kent County Council. The total annual cost of operating KMEP is under £75k.

 

KMEP is one of SELEP’s four federated boards. The other local federated boards are:

 

SELEP is the largest LEP outside of London and plays a critical role in convening a wide range of stakeholders across multiple structures to deliver economic growth, champion our significant economic potential, and support the levelling-up agenda in the South East.

 

SELEP provides value for money in terms of their role and impact, having consistently demonstrated significant scale of delivery and outcomes.  Aligned to its federated model, SELEP operates through a secretariat consisting of 19 staff who focus primarily on strategy and intelligence, communications and engagement, capital programmes, skills, growth hub, and operations.  Since 2015, SELEP has committed over £550m to the delivery of 108 Local Growth Fund projects, as well as sector-based and loan scheme investments. SELEP has developed overarching and sector strategies to steer priorities and decision-making by the SELEP Strategic Board, launched a new SELEP Skills Advisory Panel and Digital Skills Partnership, and facilitated various other working groups focused on key issues such as housing, coastal and rural economies.

 

Local Structures

 

Q. What structures exists across the country and how does this compare across different regions?

 

A.              This table names the partnerships that operate in our area, whose primary function is to help drive forward economic growth:

 

Operational level

Economic Growth Partnership

Geographical remit

Number of residents

Regional

 

South East Local Enterprise Partnership (SELEP)

 

Essex, Thurrock, Southend, Medway, Kent, and East Sussex

4.3 million

Sub-regional

 

Kent and Medway Economic Partnership (KMEP), supported by its two sub-groups:

  • Kent and Medway Business Advisory Board (BAB)
  • Kent and Medway Skills Commission.

KMEP is one of SELEP’s four federated boards.

 

Kent and Medway

1.9 million

Local

(i.e. at multi-district level)

East Kent Regeneration Board

Ashford, Canterbury, Dover, Folkestone & Hythe, Thanet

0.7 million

 

Thames Gateway Kent Partnership

Dartford, Gravesham, Maidstone, Medway, Swale

0.8 million

 

West Kent Partnership

Sevenoaks, Tonbridge & Malling Tunbridge Wells

0.4 million

 

In addition, two sub-national transport bodies (Transport for the South East and Transport for the East) have also been established recently, and they operate at the regional level. Their mission is to grow the economy by delivering a quality, integrated transport system that makes the area more productive and competitive.

 

All these economic growth partnerships would not be able to function effectively without the support of the local authorities. Our federated LEP structure benefits acutely from local authorities sharing their staff resources, skills, and expertise to pursue jointly agreed goals. Indeed, without a local authority funding its secretariat, KMEP would cease to exist. In Kent, a two-tier local authority system exists, with one county council and 12 district councils. Medway operates as a unitary authority.

 

KMEP is also highly indebted to its 17 business leaders that give up their time for free (there is no KMEP renumeration or expenses package), and the education providers.

 

Q. How do these different tiers work together to deliver local growth? What good case studies exist, and can lessons be learnt from poor collaboration or leadership?

 

KMEP asserts that the LEP should remain the forum where local stakeholders convene to discuss and debate economic growth strategies, and the body used by government to channel the allocation of economic growth funds. 

 

The LEPs should act as facilitators and as a key communication conduit to central government, but the local authorities, universities, and further education colleges should retain their key leadership and delivery role.

 

There are certain characteristics that demarcate a successful collaborative partnership focused on economic growth. These characteristics include:

 

At KMEP, we believe the SELEP federated approach is imbued with these characteristics, making it fit-for-purpose over the long term.

 

Inclusivity

The LEP operates successfully in the South East because it is based on the principle of subsidiary and the federated structure.

 

A federated structure is required to ensure that key local stakeholders are included in the LEP’s operation. At KMEP, we believe strongly that involving all local stakeholders leads to a better process, greater support and buy-in, more ideas on the table, a better understanding of the local economic context, more informed decision-making, and, ultimately, a more effective effort.

 

Central and local government cannot produce growth by themselves, rather their job is to set the conditions that are most conducive to economic growth for businesses. The Government’s role is to send clear signals, support businesses to best weather the economic shocks arising from the pandemic through short- to medium-term interventions,  and to set a long-term policy framework, in order to provide businesses with the certainty they need to make investments and emerge productive and resilient. It is also essential that government listens to and works with business, so that policies are designed in a way that avoids unnecessary burdens and removes potential barriers to success.

 

The introduction of LEPs, bringing businesses together with local authorities and education providers, has been a strong positive step in achieving these aims. We would not wish to see this local structure amended or duplicated by the emergence of another body. We feel that LEPs, based on true partnership with local stakeholders, are the best mechanism available to support economic growth.

 

Key partners in the LEPs are the universities and further education colleges. Their academic intelligence and their ability to deliver provision that will upskill the future and current workforce to meet the needs of business make their participation in LEP decision-making invaluable.

 

If there were two changes to be made to the LEP structure, firstly, it would be that we feel that LEPs could be made more inclusive through greater communication and interaction with central government, through senior Whitehall representation at the core LEP board meetings. We are indebted to Ministers for the increased regular dialogue that has taken place recently with the LEP Chairmen, however we would suggest that a Whitehall Director could become a member of the LEP board. This should help foster greater trust, engagement, and communication between the LEPs and Whitehall. Alternatively, an annual Whitehall meeting with the entirety of a LEP’s strategic board could be considered?

 

Secondly, secondary schools provide the greatest influence on the next generation of the workforce (apart from parents). Given the rapid evolution of skills required by businesses to stay competitive in international markets, KMEP would suggest that a headteacher representative could be included in the LEP structure.

 

Operates at the appropriate scale

 

For an economic growth partnership to operate successfully, it should operate at the appropriate scale (in terms of geography and population size).

 

The current SELEP structure is successful because it connects activity occurring across partnerships at the different geographical scales, from the multi-district level up to central government, because of its federated structure. We feel that it is important to have an economic growth partnership at each geographical scale, that has clear lines of communication with the tiers above and below (i.e. a federated board model).

 

We also feel that there is greater ‘buy-in’ from stakeholders if they can establish and run localised governance models that operate most effectively for their unique circumstances, under a nationally consistent LEP model that operates at a regional level. Imposing a one-size-fits-all model at the local granular level would not be appropriate. The principle of subsidiarity is important, and decisions need to be devolved to the most appropriate local level.

 

When we surveyed our 50+ KMEP and BAB members, the majority of stakeholders identified first and foremost with the Kent and Medway geography, or at a more local level (such as West Kent). At this sub-regional and local level, there is more uniformity in terms of economic conditions, sectors, and business characteristics than at a regional level. Also, a greater number of organisations operate at the sub-regional level (such as the Kent and Medway Growth Hub, KMEP, etc), or have their primary catchment area at this sub-regional level (such as Universities, Colleges, Transport Providers (e.g. Southeastern), etc).

 

What helps to make SELEP unique and successful is its federated structure. Operating a federated sub-regional structure enables KMEP to advise SELEP on whether project proposals seeking funding have strategic fit within our own locality. Using local federated board members’ intelligence and views allows the LEP to fund interventions that best match the economic conditions, sectors, and business characteristics of an area. It is the principle of subsidiarity in action.

 

Also, by having localised partnerships at a multi-district level, there can be greater willingness from each partner to contribute their own funds to support initiatives. For example, by the three West Kent district councils pooling resources through the West Kent Partnership, the West Kent Enterprise Adviser Network and West Kent Business Support Programme were established

 

However, there are certain issues that straddle the whole region, for example, the need to improve skills, particularly digital skills. Some KMEP board members have commented that ‘where sector skills are concerned, leadership needs to be separate from delivery, and of a regional rather than local basis’. By SELEP operating at the regional level, it has enabled the establishment of a Digital Skills Partnership that is now gaining traction and momentum. More than 150 organisations from business, education, charity, and local government are involved in shaping and sharing activity. Five sub-groups are working towards an agreed strategy of improving digital skills for individuals and businesses across the South East. This is a good example of the LEP using it convening and co-ordinating power at a regional level to remove shared economic barriers.

 

In addition, SELEP’s operation at a regional level can facilitate greater communication and interaction with Ministers and senior civil servants, as there are fewer LEPs (38) compared to the unitary, county and district councils (over 400), universities (over 100) and further education colleges (244).  The LEPs should act as a communication conduit for the key economic growth messages from Whitehall to local stakeholders, and vice-versa.

 

In summary, we wish to retain our local growth partnership structures at the regional, sub-regional, and multi-district levels. Through clear communication up and down the chain, it is possible to have each partnership focused on economic growth without there being inefficiency or duplication.

 

Clearly defined, long-term, remit that does not duplicate

The Strengthened Local Enterprise Partnerships report of 2018 clearly defining the role of LEPs as:

 

KMEP feels this remit should remain with the Local Enterprise Partnerships. This remit provides a clear separation of responsibilities, with the LEP facilitating discussion, being a communication conduit with central government, and securing funding for distribution. This leaves the public-sector LEP board members (such as local authorities, universities, and further education colleges) to lead and deliver the economic interventions on the ground.

 

We would advise caution over the creation of other bodies with similar remits, as this can lead to confusion (particularly for the business sector) on whom to approach. If new bodies are created, clear lines of communication must be established to prevent duplication and inefficiency. For example, sub-national transport bodies are a welcome addition to the economic growth landscape, however, LEPs have historically led on allocating Local Growth Funds (much of which was invested in the strategic transport network), and some confusion could arise over the organisation that should lead transport infrastructure investment. However, through the LEPs having a seat on the TfSE and TfE boards, and close officer interaction, this should be avoided.

 

We welcome the Chancellor’s announcement of the Project Speed Taskforce, and the allocation of £900m via the LEPs to shovel-ready initiatives. However, we would welcome clarification over the remit of the Project Speed Taskforce: will it solely focus on the nationally important infrastructure (such as the proposed Lower Thames Crossing between Gravesham and Tilbury), or will it focus on allocating funding to regional and local infrastructure that currents falls into the LEP bailiwick? We feel Project Speed should ideally concentrate on the former, with LEPs focusing on the latter task.

 

We also wish to offer one further note of caution. The demands placed on public-sector resources are significant, particularly at this time of change with the COVID-19 pandemic and the transition out of the EU occurring nearly simultaneously. The ability of civil servants, local stakeholders, and council officers to deliver any new initiatives or potential structure must be carefully considered to prevent fatigue, and gaps developing in service delivery.

 

Is transparent and communicates well

For economic growth partnerships to gain maximum traction, businesses need to know where they can seek advice and support, and to whom to provide feedback. Transparency and communication are vital, with all local stakeholders knowing which organisation to consult with, and there being a clear demarcation in terms of remit and responsibilities.

 

Uses evidence to lead informed, tailored, decision-making

As aforementioned, it is critical that LEPs and Government use appropriate evidence bases to inform policy and investment decisions. We would echo our earlier ask for BEIS to follow its own recommendation to provide a slight increase in LEP funding, so in-house analytical staff can be employed (to be shared by the LEP and local authorities).

 

Also, how national data is shared to show the real-time impacts of the pandemic (rather than annual releases) requires consideration.

 

Is future-focused

The late 20th century and early 21st century were periods of rapid adoption of new technologies. Using US data[4], the telephone was invented in 1876, but it wasn’t until a century later that landlines reached a saturation point in households. In contrast, the tablet computer went from nearly 0% adoption in c.2010 to 50% adoption in five years or so.

 

This rapid adoption, coupled with the rise of global corporations that dominate international markets (e.g. Apple, Amazon, Huawei, etc), means that continuing with business as usual is not appropriate as a medium to long term strategy. Economic recovery ought to be supplemented with economic renewal, so the UK economy emerges better placed for the future.

 

Any good economic growth collaboration must have a focus on the new technologies emerging, and the changing shift in business activities by the large multi-nationals, to ensure the UK benefits in a timely manner from innovation and new business methods and models. There is a role for such collaborations, such as LEPs, to help spearhead the adoption of these new technologies.

 

The UK Government operates the ‘Government Office for Science’ that works to identify pioneering technology. We commend this good work, and would ask the Select Committee to consider if there was a way of better linking their work with the LEPs’ activities.

 

Appropriately funded with apt freedoms and flexibilities

 

For a growth partnership to operate effectively and produce results, it must be appropriately funded and have the necessary freedoms and flexibilities to select the interventions and investment opportunities that are most tailored to local economic need.

 

Investments should be made as locally as possible in order to ensure that there is greater accountability and because local decision makers have a greater sense of what investment is required within their area,  albeit there must be clear reporting to government.

 

KMEP would urge the Government to consider announcing the award of UK Shared Prosperity Funds through the LEPs. (More detail on this suggestion is covered later in our response to the targeted regional funding question).

 

Acts swiftly to rapidly intervene as necessary

 

Rapid timely intervention is required if the UK is to emerge positively from the pandemic. KMEP applauds the Government for its swift announcement of the Getting Building Fund (GBF), and the call for £900m of shovel-ready schemes.

 

KMEP feels that SELEP and its federated boards were able to demonstrate through the GBF process that they can respond well to swift rapid calls for proposals, and this collaborative local growth structure is fit-for-purposeWell-considered evidence-led project investment proposals were submitted by SELEP and its partners within the seven working days requested.

 

The announcement made by the Government on 4th August detailing which shovel-ready projects would be funded was warmly welcomed. The grant offer letter from the Government and the GBF funds however remain outstanding (nineteen working days later). The shovel-ready projects that are meant to commence shortly to stimulate post pandemic economic recovery cannot commence until this administration is completed by central government.

 

Having local bodies (such as LEPs and Local Authorities) running the selection, administration, and monitoring of economic growth schemes (based on the principle of subsidiarity), allows for swifter implementation of actions.

 

Good collaboration case studies

 

Finally, in answer to this question, here are a few examples of good collaboration and service delivery:

 

Local authorities as delivery mechanisms: Direct financial support to businesses was a core element of the Government’s initial economic response to the crisis. The support was delivered at scale and included a combination of rates relief, VAT deferrals, and an extensive programme of loan and grant support, as well as the Coronavirus Job Retention Scheme. Most businesses have benefitted from the support package, which has played a crucial role in helping firms (and their staff) to weather the storm. The Kent and Medway local authorities have been central to the delivery of this: by the start of July, the Kent district councils and Medway Council had allocated some £373 million in grants to small businesses[5], around 87% of their original Government allocation. The local FSB has commended our local authorities saying they ‘have worked exceptionally well under difficult circumstances in getting small business grants out to thousands of local businesses during lockdown. Additionally, the councils have increased the frequency of communications to businesses which has helped’.

 

Kent and Medway Growth Hub: The Kent and Medway Growth Hub (part of the wider SELEP Growth Hub) has acted quickly in response to the COVID-19 pandemic and established a COVID-19 business recovery helpline, where businesses can receive one-to-one support from trained advisors[6]The money has been well invested and welcomed across the local business community. We recommend this being extended for as long as possible, but it will be dependent on future government funding for Growth Hubs.

 

The Kent and Medway Business Summit is an annual conference managed in collaboration by the FSB, University of Kent, Locate in Kent, and Institute of Directors, with the support of KMEP and SELEP. Over the past three years, this annual conference has brought together over 1,500 government representatives, business owners, and academics to share knowledge, hear from keynote speakers, build relationships, and learn about major schemes and local plans. During lockdown, the summit team arranged a webinar attracting 200 attendees from the private and public sectors to hear local authority leaders present their local recovery plans. The working group is now planning to move the conference online for 2021.

 

SELEP: Businesses report that the regular SELEP communications published during lockdown have been exceptionally clear and concise. Summaries of government actions have been issued in a timely manner and illustrate the strength of SELEP.

 

Q. How should local structures support delivery of regional growth across England?

 

As aforementioned, KMEP asserts that the LEP should remain the forum where local stakeholders convene to discuss and debate economic growth strategies, and the body used by government to channel the allocation of economic growth funds. 

 

The LEPs should act as facilitators and as a key communication conduit to central government, but the local authorities, universities, and further education colleges should retain their key leadership and delivery role.

 

Q. Do regional or local structures act in the best interests of local priorities and stakeholders or act more as a delivery arm of central Government?

 

The LEP and its federated structure judiciously balance the interests of central government and the locality. The LEP acts in accordance with the policy direction and funding criteria set by central government, and responds by bringing together all the key organisations at a local level (except schools) to make collective decisions within the confines of the Government’s parameters.

 

The LEP is not viewed as a delivery arm of central government, rather it facilitates communication between locally delivery partners with central Government, and vice-versa. The delivery of services and provision remains squarely with the local authorities, universities, and further education providers, and this division between collective decision-making and delivery should be retained in KMEP’s view.

 

Q. What should local authorities do more or less of to achieve these aims?

 

We feel local authorities are best placed to answer this question and defer to their views (submitted separately by them).

 

Q. Where should government focus its post-Covid-19 levelling up policy to best support regional growth: English regions, core-cities, towns, Growth Hubs and LEPs?

 

KMEP warmly welcomes the Government’s focus on regional growth and investment. However, we would echo the LEP Network’s statement that it is critical to understand that disparities across different parts of the UK are complex and not simply a north vs south issue. Disparities occur within southern regions, as they do in northern regions and so levelling-up must be a holistic agenda applied across the north, east, south, and west.

 

Within the SELEP area, we have some of the most deprived communities in the UK but, despite this, the level of investment in our region has fallen behind other areas. For example, Jaywick (Essex) is a village in SELEP’s geography. It is England’s most deprived neighbourhood according to the 2019 indices of multiple deprivation, and the village was visited in 2018 by the UN special rapporteur for extreme poverty during a fact-finding mission to the UK. In Kent and Medway, the districts of Swale and Thanet are amongst the most deprived nationally. Likewise, Hastings (East Sussex) in SELEP features in this category.

 

Partly the perception that investment in the wider South and South East is higher than in the North is often a result of data that is skewed by the considerable level of investment in London. Whilst this can benefit the South, this is mostly in the areas adjacent to the capital, rather than felt throughout the south and east, reinforcing the inequality within the area.

 

As these two maps of deprivation dating from 2019 and 2015 show below, it is the south-central core of England which benefits predominately from higher affluence. Deprivation in the true ‘south east’ of England is more akin to the north of England, suggesting coastal and peripheral counties require consideration for future government investment.

 

2019 indices of multiple deprivation (MHCLG & BBC)

 

2015 indices of multiple deprivation (MHCLG & NLP)

 

 

However, while investment should be partly focused on levelling up and reducing inequality, this agenda should not rein in or stifle the other areas of the UK that are most productive; they need investment too. No country can act in isolation, and to maintain an internationally competitive advantage, the UK ought to play to its strengths (by investing in successful firms and areas), while concurrently focusing on reducing inequality (particularly in the coastal and peripheral regions across England).

 

The potential advancement and propagation of the core-cities as the best regional growth mechanism is likely to disenfranchise and disappoint our local stakeholders and residents. Focusing on core cities or major towns would exclude large swathes of England (including all of Kent and Medway), which we expect to be unacceptable to the wider English public. At present, city councils already benefit through a more preferential funding settlement (In 2019-20, inner London councils receive £437 per head; Met Boroughs £319 per head; Unitary Councils £225 per head; and County Councils £153 per head)[7]. We believe using LEPs is a fairer growth mechanism, as all areas of the county have access to one. Consistency at a regional level is important.

 

Also, as the LEP network has said, in order to genuinely address levelling-up and as a tool to guide investment and policy decisions, there needs to be a proper debate (with LEPs and local authorities) leading to a clear definition of what successful levelling-up would look like.

 

In summary, KMEP asserts that the Government should focus on local enterprise partnerships as the key mechanism to support economic growth and post pandemic recovery, working closely with businesses, local authorities, and educators as the delivery mechanisms.

 

Stakeholder Engagement

 

Q. How does each tier of regional or local government engage with delivery stakeholders (such as businesses, education providers, etc)? Do different tiers engage in different ways? Where are there examples of good practice? Do stakeholders believe the different tiers are effective and worthwhile to engage with? Do stakeholders consider certain tiers to be more of a constraint on growth as opposed to a delivery partner for growth?

 

KMEP brings together the leaders of all 14 local authorities within the region to have an informed discussion with business leaders and education providers over economic growth. This is the primary forum for such conversations in our area. Each local authority has an equal say in decision-making.

 

As the number of businesses and educators that can attend KMEP is limited, KMEP runs a Business Advisory Board, where 50-60 business leaders, including representatives of the business membership organisations (e.g. Chamber of Commerce, FSB, IOD, etc), can meet to share economic commentaries and their views on the regional growth agenda.

 

All information, arising from this KMEP and BAB engagement, is shared with SELEP. We believe this SELEP federated model is an example of best practice.

 

At an operational level, the Kent and Medway Growth Hub steering group is a useful board where information is shared between the Growth Hub managers, local council economic and regeneration managers and business organisations. It has recently moved online, which has made it more accessible to a wider group of stakeholders.

 

Supplementing the KMEP/SELEP structure, individual local authorities may choose to run their own more localised topic-specific groups, and then share that information with KMEP and BAB.

 

An example of good stakeholder engagement is the Medway Skills Board. It comprises more than 15 private and public organisations all with a vested interest in the skills arena in the Medway area. It shows great promise for sharing information and supporting organisations in improving skills within Medway.

 

In answer to the question on the effectiveness of local authorities, KMEP has undoubtedly benefited from the positive contribution of all 14 local authorities, and we have engaged with each tier in a similar way. KMEP business partners do not feel that local authorities have acted as a constraint on growth, but rather are proactive and helpful delivery partners. However, the sustained reduction in local authority funding by central government has been a unhelpful constraint on their capacity, and we would urge the Government to appropriately fund local authorities going forward so they can continue to provide a high level of service.

 

Sustainable Local Economies

 

Q. How could a green economic recovery stimulate local economies and embed upskilling at a regional level?

 

The COVID-19 pandemic is likely to lead to some permanent economic changes, as markets change, new technologies, ways of working, and pattern of consumer behaviour become embedded; the future will not simply be about ‘recovery’ to the position that the economy was in before March. Hence, as well as mitigating the negative impacts of the crisis, our response must support adaption, innovation, and new ideas, renewing the economic environment and driving the growth of a cleaner, greener, fairer, and more productive economy.

 

While the immediate priority is to respond to the current crisis, the actions that we take in the short to medium term must support our economic capabilities in the longer term. This means building in resilience to longer-term change: taking action now to respond to the climate emergency, and ensuring that our businesses and workforces are resilient and responsive to changing markets (especially following Brexit transition) and technologies (especially by increasing digital skills levels and connectivity).

 

In Kent and Medway, KMEP has decided that our actions will be guided by the principle of a ‘greener future’. We will develop an economy which is more sustainable in the long term, contributing to the vision set out in the Kent and Medway Energy and Low Emission Strategy of net-zero emissions by 2050 and the broader goals of the Kent Environment Strategy. This means:

 

Furthermore, we need to build on the move away from the ‘metropolis’ that we have seen under lockdown. Many large firms such as banks and tech firms are unwilling to see a mass return of workers to the office and are unlikely to require this before the end of the year.

 

The focus should be on creating ‘aspirational’ live/workspaces in our region’s towns. Infrastructure is a key deliverable in terms of the door-to-door roll-out of superfast fibre broadband to facilitate easier remote working. Outdoor space is also key in terms of investment in parks/green spaces for people to meet (e.g. install a new coffee shop with covered seating areas and broadband), easy access to and from via improved cycle lanes, and green public transport.

 

We can also take this opportunity to promote smaller workspaces in the local community – e.g. co-working, rent a room/meeting space etc. Not all businesses, particularly smaller ones, can work remotely all of the time, if at all, and we need to take this into account. For instance, new large housing developments could automatically make provision for serviced workspace, perhaps working in partnership with firms such as Regus. By ‘retaining’ more workers in the local community, we will feed the local economy. There could be a task force set up to work with larger businesses in London for example to develop initiatives here in the local Kent and Medway economy to help facilitate this and potentially part fund.

 

Furthermore, we need to know that green vouchers and incentives will be extended to small business premises as well households. These green initiatives could focus on energy efficiency and building fabric retrofitting, as well as funds to stimulate green enterprise creation. This could be managed by local authorities, which have proved that they can distribute such funds quickly and effectively.

 

Business leaders on KMEP report that ‘there is strong evidence that Borough Councils supported by the County Council has been effective in encouraging adoption of best practice techniques in energy saving, pollution reduction and workplace health & safety improvements. The local engagement with commerce brings more effective adoption and adds impact through improved identification with successful outcomes. In several respects, this example of local delivery of green initiatives could also be used to encourage local generic upskilling / retraining and geographically clustered R&D environmental projects.

 

However, it is not only green infrastructure that should be a priority investment area. There also needs to be a focus on digital infrastructure investment, particularly within the rural areas to facilitate rural economic recovery. This will support the diversification of rural economies, which is another critical economic recovery theme particularly in light of the transition out of the EU.

 

Q. Which tiers are best placed to provide the leadership of local net zero and skills-based priorities? Should leadership responsibilities be separate from delivery responsibilities?

 

To date, the County Council and Unitary Authorities in Kent and Medway have effectively led and delivered on net zero carbon and environmental responsibilities. They have been supported and facilitated in their endeavour by the South East LEP, which produced the South2East local energy strategy with Coast to Capital LEP and Enterprise M3 LEP to enable their areas to achieve clean growth from now until 2050 in energy across the power, heat and transport sectors.

 

A Strategic Energy Delivery Group has been established that is composed of LEP staff and Local Authority officers who have a background in energy and a good understanding of the tri-LEP Energy Strategy and Action Plan. The role of the group is to coordinate delivery of the local energy strategy’s action plan, to pursue and coordinate opportunities to deliver the project models, and to ensure that opportunities for cooperation and upscaling are identified and actioned.

 

Once again, KMEP’s s preference is for the LEP to be the forum where local stakeholders convene to discuss and debate economic growth strategies, and the body used by government to channel the allocation of economic growth funds. 

 

LEPs should act as facilitators and as a key communication conduit to central government, but the local authorities should retain their key leadership and delivery role with respect to the green initiatives.

 

In respect to skills-based priorities, there is a strong role for the LEP, through its Skills Advisory Panel, to bring partners together at a regional level to agree policy, and allocate funds to implement the policy. Currently, there is a plethora of different skills-based programmes open to businesses, which can make the skills landscape difficult to navigate, and, if the LEPs were appropriately funded, there could be a role for them to provide a light-touch navigation service. We wish to specifically ask the Government to consider devolving more skills funding and policy decisions to a regional level from Whitehall, as there is a need to better tailor skills supply to business and sector demands.

 

Targeted Regional Investment

 

Q. How could ‘shovel ready’ growth projects in England drive local growth and jobs?

 

As stated before, for a growth partnership to operate effectively and produce results, it must be appropriately funded and have the necessary freedoms and flexibilities to select the interventions and investment opportunities that are most tailored to local economic need.

 

Investments should be made as locally as possible in order to ensure that there is greater accountability and because local decision makers have a greater sense of what investment is required within their area,  albeit there must be clear reporting to government.

 

The Government, back in the mid-2010s, provided the LEPs with various funding streams, some of which have produced more tangible and long-lasting outcomes and outputs.

 

The Local Growth Fund (LGF) and Growing Places Fund are examples of funding streams which are viewed by local stakeholders as well-administered schemes that deliver jobs, homes, and new students in line with forecast projections. The aspects of LGF which were well-received are that:

 

The Government has an important role to set the overall direction of travel and outline some high-level priorities for funding streams. However, there should be freedom to set the funding criteria locally.

Less prescriptive criteria results in more potential business investment proposals coming forward from businesses and public-sector organisations. The greater competition for funding allows the best of the very best proposals to be funded.

Also, the Government using lighter-touch criteria for LGF and GPF has permitted the LEP to seek to strengthen its competitive advantage by reinforcing the cluster effect of sector specialisms.

For example, the South East is world-renowned for its beer and wine production, such as ChapelDown. KMEP has sought, in partnership with SELEP, to select investment proposals that play to the local area’s strengths, and is shortly to loan £600k to NIAB EMR (an excellent research and development organisation) to build a wine innovation centre containing state-of-the-art fermentation equipment. This investment, coupled with the UK’s only research vineyard at NIAB EMR, will benefit the business community, as NIAB EMR will share their research with the East Malling Viticulture Consortium that includes key producers, such as Gusbourne etc.

This will not be the only UK first in Kent. KMEP, via SELEP, is also in the process of awarding a loan of £3.47m to establish a Green Hydrogen Generation Facility in Herne Bay. The facility will be zero carbon, as the electrolysers that split the water into hydrogen and oxygen are powered by offshore windfarms; the hydrogen product will be used by TfL and other companies to fuel buses. This is the only installation of its type in the UK. A potential second hydrogen facility is being considered in Kent, which will help Kent and Medway become the UK home to this sector.

If the government does not overly prescribe the criteria for future funding (such as the UK Shared Prosperity Fund), the LEP may decide to ring-fence a proportion of the funding according to each sector as is appropriate for its geography. Supporting clustering has been shown to be beneficial by Harvard University.

An investment decision example to describe this is the new Kent and Medway Medical School. Local stakeholders knew there was an acute shortage of GPs across the area, with wards within Kent in the top ten wards nationally for patient to GP ratios. Using this evidence, the KMEP board, in partnership with SELEP, chose to work with the universities to establish a brand new medical school, as research from other university medical schools showed approximately half of graduates would remain in the area.

 

In contrast to LGF and GPF, EU funding initiatives were administered centrally with the LEP ESIF Committee asked to provide its views on strategic fit only. While there were notable ESIF project successes, this administration method and decision-making process were less favoured locally than LGF and GPF. There was less opportunity for ESIF committee members to scrutinise the proposals in depth; there was little to no engagement and consultation with the wider LEP board members and local stakeholders on their views on a proposal; there was more limited communication with the wider business community about the opportunities to bid for funding; and the forms and process were viewed as more bureaucratic by the applicants, and this reduced the pool of businesses and public-sector organisations that would submit expressions of interest.

 

With LGF and GPF schemes, project promoters were asked to state how their project would produce jobs, houses, and learners, and thus drive economic growth. This information was closely monitored at a local level. In contrast, the monitoring data for ESIF projects was not shared with the LEP board, so it is much harder to know how successful these projects were. Without having oversight of all stages of a project’s lifecycle (from assess, plan, do, to review), it is much harder to use past projects to inform best practice and future decision-making.

 

KMEP urges the Government to consider awarding the UK Shared Prosperity Funds through the LEP, and for the allocation process to be similar to the LGF and GPF methods, rather than the ESIF approach. We echo our call to have a senior Whitehall representative on the LEP board, enhancing Government involvement in the allocation of funds at a local level.

 

Q. How could clustered R&D investment support local growth?

 

We suspect clustering R&D investment could support local growth.

 

Kent and Medway have a competitive advantage in the horticultural sector, partly due to the fertility of the soil, but also due to the presence of leading centres of applied research, in the form of NIAB EMR. This organisation has recently secured £18 million of Strength in Places funding, and the LEP has concurrently funded new state-of-the-art glasshouses for its advanced horticultural zone (through LGF), and is about to fund a wine innovation centre (through GPF). The research and development arising from this work will be shared with the various viticulture and soft fruit grower consortiums to increase yields and productivity across the wider business community. With SELEP, we will be closely monitoring the impact of our investment to see how it influences the local economy and supply chains.

 

Furthermore, we are pursuing this sector-cluster approach locally by investing in the relatively small, but high-value, life-sciences sector in Kent and Medway. We are increasing our investment in the health economy (for example through the new Kent and Medway Medical School, and backing the development of an Innovation Centre at Kent Medical Campus in Maidstone by contributing to the design work). KMEP, with SELEP, has also secured £2.5m from the Getting Building Fund to refurbish the ground floor of Building 500 at the Discovery Park to create world-class research and development space, with individual biology and chemistry laboratories, associated write-up space, and new plant-room equipment to attract the companies to this world-class and world-leading science park.

 

Q. How should priorities be agreed across the regions?

 

To achieve maximum impact, local growth priorities and funding criteria should be agreed by the LEP with its federated structure, rather than selected nationally. Naturally the Government Ministers may wish to highlight a few priority ambitions and areas for investment to help guide local decision-making.

 

Regional Funding

 

Q. How should the UK Shared Prosperity Fund be specifically targeted to replace EU Funding and address regional inequality?

 

Please see our earlier answers. Regional inequalities occur within southern regions, as they do in northern regions and so levelling-up must be a holistic agenda applied across the north, east, south, and west.

 

We believe the UK Shared Prosperity Fund should therefore be accessible across the UK. It may wish to have two core attributes:

 

As mentioned, the process for selecting investments to fund needs to differ from the old ESIF Committee model. The allocation model of LGF and GPF is much preferred. KMEP asserts that investment decisions regarding the UK Shared Prosperity Funding ought to be made locally by local stakeholders coming together through the LEP forums.

 

By adopting the principle of subsidiarity, local areas can play to their strengths, sector specialisms, and deal with specific localised barriers and economic shocks. For example, the visitor economy is critical to Kent and Medway, and the pandemic’s impact will be felt for at least the next two years and we need to locally focus on this sector’s resilience.

 

Also, we may choose locally to focus on what the level of support our rural economy requires and what sort of follow-on funding is likely to be available after the current LEADER programmes have closed. It is essential that continued support for our rural areas is maintained, perhaps with a renewed focus on R&D and green technologies.

 

Finally, KMEP would ask that a small revenue sum from the UK Shared Prosperity Fund is given to create an enhanced pooled resource at the local authority and LEP level to provide additional technical skills in business case formation and assessment.

 

Q. What role should local structures play in allocating funding to best achieve regional growth?

 

As said previously, Government Ministers may wish to highlight a few priority ambitions and areas for investment to help guide local decision making. However, LEPs should remain the forum where local stakeholders convene to discuss and debate economic growth strategies, and the body used by government to channel the allocation of economic growth funds (such as UK Shared Prosperity Funding).

 

LEPs, working with local partners, should be supported to decide on investment criteria that match the demand within the local economy.

 

The LEPs should act as facilitators and as a key communication conduit to central government, but the local authorities, universities, and further education colleges should retain their key leadership and delivery role.

 

Q. What role could the British Business Bank have in the post-Covid-19 levelling up of regional economies?

 

The British Business Bank could prioritise lending in the regional economies where they are lagging economically behind and the risks are greater. Normal commercial lending will occur where the risk is less.

 

Project Speed

 

Q. Project Speed will bring forward proposals to deliver government’s public investment projects. How should Project Speed identify and distribute growth opportunities into communities across the country to best achieve its levelling up agenda?

 

We welcome the Chancellor’s announcement of the Project Speed Taskforce, and the allocation of £900m via the LEPs to shovel-funded initiatives. However, we would welcome clarification over the remit of the Project Speed Taskforce: will it solely focus on the nationally important infrastructure (such as the proposed Lower Thames Crossing between Gravesham and Tilbury), or will it focus on allocating funding to regional and local infrastructure that currently falls into the LEP’s bailiwick? We feel Project Speed should ideally concentrate on the former, with LEPs focusing on the latter task.

 

As one business owner suggested, ‘Projects must be locally/regionally driven dependent on the nature of the project. Anything centrally run will be a one size fits all approach rather than targeted on real needs at the local level.’ 

 

In relation to Project Speed identifying the growth opportunities of national importance, we believe the Project Speed taskforce should have dialogue with the LEPs. Each LEP ought to be able to identify one investment within its boundary that is of national significance and the arguments for investment in it. The Project Speed taskforce could then consider the 38 suggestions and evidence-based arguments before deciding on their prioritisation.

 

We would encourage the Project Speed taskforce to include a representative from all political parties to ensure crossbench support. Nationally significant investment (such as HS2, Heathrow Airport expansion, and the Lower Thames Crossing) are multi-year projects by their nature, and hence need support from across the political spectrum.

 

Finally, the LEP would welcome the opportunity to share information with the Project Speed taskforce on bottlenecks experienced in infrastructure delivery as well.

 

Q. What should the balance be between Whitehall decision making and local decision making?

 

Certain policy decisions and interventions should only be made by Whitehall. The scale of the problem, and the clarity of communication are two factors that may indicate a Whitehall-led approach is warranted. To explain by example, the Government’s Coronavirus Job Retention (furlough) Scheme required Whitehall-led decision-making, as the scale of the problem meant it impacted residents across the nation, and there needed to be clear and universal communication with businesses so they knew about the support on offer.

 

However, as last year’s IPPR report[8] made clear, the UK is among the most fiscally-centralised countries in the developed world, and far more so than similar sized countries such as France, Italy, Germany, Japan, and Spain.

 

According to IPPR, 95p in every £1 paid in tax is taken by Whitehall; in Germany it is 69p in every £1 raised by central Government. Only 1% of the UK’s GDP is spent by local government on economic affairs, whereas Spain, Germany and the USA spend approx. 2.5% of their GDP.

 

Decentralising and devolving more funding to local authorities and LEPs could produce many benefits:

 

The LEPs have a strong track-record of delivery against the local growth agenda, and we would ask that Whitehall considers devolving the administration of the UK Shared Prosperity Fund to LEPs. To ensure the dialogue between the centre and local regions, Whitehall could consider placing a senior civil servant on the LEP board if they felt this was warranted.

 

We specifically feel that there is a need to devolve additional funding from the centre to support the skills agenda. One proposal is that the unused apprenticeship levy is allocated to LEPs to support upskilling in their area.

 

Q. Do we have the capacity and capabilities at local and/or regional level to do this work on behalf of central government?

 

The Local Enterprise Partnership and its local partners have the capacity and capability needed to set strategy, develop and deliver programmes, and to ensure robust governance of their activities. However, we would respectfully ask that the Committee consider the current funding arrangements and reflect on whether additional funding could be made available for LEPs and the local authorities, as part of the forthcoming devolution deal.

 

We wish to draw the recent BEIS Research Paper ‘Local Enterprise Partnership Capacity and Capabilities Assessment’ to the Committee’s attention, and echo the recommendations within that report. Specifically, we urge the Government to provide LEPs with a guarantee of longer-term, multi-annual revenue funding. In addition, we would second the recommendation for a slight increase in LEP revenue funding. This could allow greater investment in in-house analytical support and in local policy making eco-systems.

 

Furthermore, we would ask that proportionality is considered when setting each LEP’s funding. The South East LEP’s area contains 4.3 million residents according to Nomisweb. Its population is larger than the combined populations of the seven smallest LEPs (Cumbria, Buckinghamshire Thames Valley, Cornwall and IOS, Worcestershire, Gloucestershire, Tees Valley, and Oxfordshire). We understand that each LEP receives an annual flat-rate core funding grant of £500k from central government, irrespective of their geographical size. We ask that this be reviewed, as LEPs with larger geographical areas will have more businesses to support, more enquiries and funding requests to respond to, etc.

 

Also, we wish to take this opportunity to request an increase in funding for local authorities, which are integral partners to the LEP. Devolving funding, freedoms and flexibilities to local authorities can support national ambitions and lead to better local public services. It can bring the decisions that matter closer to local people and help councils to build sustainable and inclusive local economies, while working with their LEPs.

 

To maximise the value of taxpayers’ money, long-term certainty over funding is crucial for councils to set new long-term strategies. We echo the call of the LGA that ambitious investment and public service reform must be built on a stable financial foundation. Despite the welcome certainty and additional funding announced for 2020/21, council core services continue to be under significant pressure, having lost nearly £15 billion of core government funding over this decade, and nearly a quarter of staff since 2012. Future Spending Reviews must provide sufficient funding and certainty for councils in the long term, including a long-term solution for funding adult social care, and unaccompanied asylum seekers, which is a particularly acute issue in our region at the present time.

 

Final comment

 

We wish to take this opportunity to thank the Select Committee for launching this helpful inquiry and requesting our views. We hope that this response - setting out how a federated LEP structure supported by strengthened local authorities, the education sector, and informed by business leaders, can be the most appropriate mechanism to deliver economic growth – is helpful to your work.

 

Yours sincerely

 

Geoff Miles

Chairman of the Kent & Medway Economic Partnership

South East Local Enterprise Partnership Federated Board Chairman

Chairman of the Kent & Medway Business Advisory Board

Chairman of Maidstone Studios

 

September 2020

 

 


[1] https://www.kent.gov.uk/about-the-council/information-and-data/Facts-and-figures-about-Kent/economy-and-employment

[2] https://www.local.gov.uk/topics/finance-and-business-rates/lga-2020-budget-submission

[3] https://www.southeastlep.com/our-strategy/economic-data-and-intelligence/

[4] https://www.visualcapitalist.com/rising-speed-technological-adoption/

[5] http://kmep.org.uk/documents/Renewal_and_Resilience_Plan_-_August_2020.pdf

[6] https://www.askphil.biz/

[7] https://www.countycouncilsnetwork.org.uk/fairer-funding/

[8] https://www.placenorthwest.co.uk/news/ippr-uk-power-more-centralised-than-any-other-country/