Written evidence submitted by the Leader of Surrey County Council (LRS0049)

 

We welcome this opportunity to submit evidence to the BEIS Committee sub-enquiry into the structures needed to support local growth and achieve ‘levelling up’ across and between places in the UK. At this critical point in the transition out of COVID19 shut down, we must rigorously challenge ourselves to deliver the best possible recovery – in Surrey, we are focused on capturing opportunities to build a more resilient local economy, delivering good and sustainable growth for the benefit of our residents and our natural environment.

But current local structures to support growth are not fit for purpose. Two-tier government dilutes efforts to deliver and at this point in time we need decisive action to create the conditions for sustainable growth. For almost a decade Surrey has been split between two LEPs, with neither having the whole-county strategic vision to drive growth in Surrey – as a result, Surrey businesses are losing out on investment and vital support and our potential to grow is being stifled. Too often, existing structures mean that action is focused on narrow, reactive outputs rather than a comprehensive long-term approach that brings people and businesses together to tackle the complex problems that are holding areas back and preventing good, sustainable growth.

The Department for Business, Energy and Industrial Strategy should use the opportunity of setting up new funding streams, such as the UK Shared Prosperity Fund and wider Government proposals to support further devolution of powers to the local level through the expected MHCLG White Paper on Devolution and Local Growth, to build structures that are robust, accountable and fit for the future – our recommendation is to empower Growth Boards to lead in their local areas.

Growth Boards are multi-agency partnerships with the business voice at their centre. They hold the range of resources, investment and democratic accountability to work on the broader facets of local growth. Growth Boards are the only mechanism that will allow for bringing strategic planning, transport and infrastructure together with health and wellbeing, inclusion and skills development to deliver local economic growth and ‘level up’ within areas and across the country.

Our submission proposes that:

-          Conditions for growth can be helped by targeted, streamlined local action alongside national response

-          Local structures in Surrey are overcomplicated and divisive and act as a constraint on the area

-          Businesses in Surrey have lost out on access to funds from the divided Local Enterprise Partnership structure

-          Public funds are scarce and should be rigorously assessed for value for money and impact

-          The opportunity of setting up funding streams and reviewing structures is to build structures for the future our recommendation is to empower Growth Boards.

Conditions for growth can be helped by targeted local action alongside national response

  1. The factors affecting economic growth are complex and interrelated – from businesses being able to access the right skills for a productive workforce, to the ease of moving goods and people around an economic geography. Some of these factors are driven by global forces – some are impacted by a faulty traffic light in a local traffic hotspot. What matters to the UK’s ability to build forward better following the current recession, is having the right leadership and decision making at the right level and with the agility to address and remove barriers to growth.

 

  1. Even before taking account of the Covid-19 economic shock, there were signs that Surrey’s economy was not as strong as it could be. The strong relative performance of the county against the rest of England masks inequalities across the County with pockets of deprivation and divisions across the county - GVA in the east of the county has been falling over the last 3 years, while west Surrey has seen continued growth. There are localised issues of higher youth unemployment and low jobs density. House prices and high private rents are driving a significant proportion of the skilled middle workforce (aged 25-44) out of the county - projected to decline by 7.6% by 2030. There are very high levels of traffic and congestion adding cost to businesses and accounting for 46% of all of Surrey’s carbon emissions.

 

  1. It is projected that Surrey will experience a 14.3% reduction in GVA as a result of Covid-19, representing an estimated reduction of over £6 billion. With Surrey having the second biggest economy in the country and high levels of productivity, a significant reduction in GVA in the county will significantly impact the nation’s recovery. It is therefore equally important to sustain Surrey’s ability to continue as an economic leader in order to enable the growth of the rest of the UK.

Local structures in Surrey are overcomplicated and act as a constraint on the area

  1. The capacity of the current system to create the conditions needed to drive growth and develop innovative solutions is hampered by the divisive and disjointed nature of local structures. Work to deliver the best environment for local growth is too often fragmented and restrictive.

 

  1. Two-tier government leads to piecemeal approaches to factors affecting local growth. Local government in Surrey is currently structured into two-tiers with a split of services and duties between the county council and 11 district and borough councils. Addressing cross-cutting issues such as building more affordable homes for the workforce, aligned to sustainable transport options and areas of jobs growth is hard to achieve.

 

  1. Partnership working is made more complicated by varied boundaries and different levels of capacity for engagement across the tiers of local government. Economic development is undertaken at all tiers of local government, and too often is reactive and short term.

 

Businesses in Surrey have lost out on access to funds from the divided Local Enterprise Partnership structure

  1. There are two Local Enterprise Partnerships (LEPs) serving Surrey.

Enterprise M3 – covers west Surrey and most of Hampshire, serving a population of 1.52 million people and 89,700 businesses. The west of Surrey accounts for 52% of the population covered by of Enterprise M3.

Coast to Capital – covering Greater Brighton, east Surrey and west Sussex, serving a population of over 2 million people. East Surrey residents make up 20% of the population covered by C2C LEP.

  1. This divide has created an unequal access to local growth funding - areas in east Surrey are covered by the Coast to Capital LEP which has been awarded on average £14.83 per capita from growth deals, while areas in west Surrey are covered by Enterprise M3 which has been awarded £128.53 per capita.

 

  1. Analysis of all Local Growth Fund projects funded by LEPs in Surrey (table 3 below) highlights the investments made in FE and HE institutions in the County and support for transport improvements. This analysis also indicates the dominance of large public sector organisations who can generate the necessary match funding and have the experience and resources to engage with the bidding and funding process.

Table 3: Local Growth Funding in Surrey by project type 

 

  Project type

LGF allocations

% of LGF

Transport

£88,111,752

59%

Regeneration

£19,197,992

13%

University/Academic

£12,190,000

8%

Business Park/Centre

£11,905,775

8%

Housing 

£6,445,000

4%

FE College

£6,005,375

4%

Business Support

£2,598,619

2%

Flood defences

£3,500,000

2%

Total

£149,954,514

100%

 Source: Data for EM3 provided to SCC by EM3 LEP; Data for C2C publicly available at https://www.coast2capital.org.uk/storage/downloads/lgf_program_financial_schedule_-_november_2019-1573729633.pdf

 

 

  1. This process of awarding growth funding does not meet the needs of a significant number of smaller businesses who provide vital employment in the County. Surrey has a higher proportion (compared to the South East or England) of micro businesses with 91.3% of businesses employing fewer than ten people. The county also has relatively high proportion of self-employment (13.4% compared to the England average of 11.1%, and Core Cities average of 8.9%).

 

  1. Some of Surrey’s small businesses may have accessed information and support from LEPs through the Growth Hubs but seem to be missing out on the significant investment in local growth being made through LEP structures. This is true for the Backing Business Grant Fund, targeted at small businesses and social enterprises during the Covid19 restrictions. Despite east Surrey making up 20% of the LEP area (by population) businesses in east Surrey received just 7% of the £2 million fund available through C2C LEP – 13 businesses out of 161 supported were based in east Surrey[1].

 

  1. The disjointed structures resulting from Surrey being split between two LEP areas reduce the impact of government funding to support business growth. Many businesses operate globally, nationally or regionally – persisting with this additional layer of structure and entity for business to engage needs greater justification than the evidence of impact and investment seen in Surrey to date.

 

 

Public funds are scarce and should be rigorously assessed for value for money and impact

  1. As identified by National Audit Office, there has been little evaluation of the value for money of the nearly £12 billion in public funding distributed by LEPs. The NAO found that LEPs rely on their local authority partners for staff and expertise, and that private sector contributions have not yet materialised to the extent expected.[2] The public spending requirement of the COVID19 pandemic response, along with pre-existing pressures arising from other essential priorities for funding, such as adult social care place a particular pressure on Government to look for efficiency savings. The duplication of overhead, staffing, research commissions and support functions between LEPs and local government is not justified.

 

  1. Insufficient transparency and accountability has been a persistent concern for LEPs – despite several years of focus following the Ney Review in 2017. In 2018, the Ministry of Housing, Communities & Local Government acknowledged that “retaining overlaps dilutes accountability and responsibilities for setting strategy for places.” Yet progress has been slow – as NAO found last year “while the assurance framework is stronger, backed up by checks on compliance, it is not proven yet whether these measures will be effective in detecting and responding to governance failures over significant sums of public money.”  Government should focus its post Covid-19 levelling up policy to best support regional growth, by building on the platform of robust structures.

 

The opportunity of setting up funding streams and reviewing structures is to build for the future – our recommendation is to empower Growth Boards

 

  1. Our Local Resilience Forum in Surrey has led the response to COVID19. Through joint-working we have delivered interventions designed to support the high street to re-open safely. We have supported the micro and small business base that is the backbone of our economy by promoting and signposting to advice and support interventions as well as delivering health and safety messages. Not only has the forum organised a coordinated response to ensuring compliance with COVID-19 safety measures and addressed immediate issues in the high street but it has defined a longer-term set of priorities aimed at delivering sustained resilience in our economy.

 

  1. The One Surrey Growth Board is vital in providing oversight of this longer-term Covid-19 recovery work, bringing partners from across government and business together and helping to shape and drive economic growth and inclusion as part of a long-term economic plan. Growth Boards are key to delivering growth by considering the wider determinants of health and driving inclusive economic growth as well as improving productivity by designing tailored interventions which reflect our local business base.

 

  1. The Surrey Growth Board is able to draw on evidence and insight from leading individuals, businesses and academic institutions. Through the Surrey Futures Commission, chaired by the Rt Hon Phillip Hammond, The One Surrey Growth Board is developing a programme of work underpinned by robust research undertaken by the University of Surrey and ARUP. This research focuses in on the competitive advantage of the Surrey economy by focusing on the opportunities presented by our knowledge economy, international business base and strengths in professional, technical and science-based industry as well as our relationship with London and the wider south east. Through this work the Growth Board will be better placed to grow Surrey’s economy further and through its actions, support the UK economy to recover.

 

  1. To deliver the local growth agenda and succeed in levelling up areas within and across the UK, a broad and inclusive approach to local development is needed. This includes ensuring the health and wellbeing of people is supported and improved. Recent changes in policy are showing that intervening early, in a co-ordinated approach can deliver positive outcomes – such as the housing first approach to homelessness and supported employment provision to increase the proportion of young people with learning difficulties who gain employment. In Surrey, the devolution of health has empowered a thriving local network to work together to address the wider determinants of health.

 

  1. LEPs have not made the impact on the social inclusion agenda which has, from the outset been part of their agenda. More can be achieved by changing local structures for growth, to empower partnerships with the range of resources, investment and accountability to work on this broader agenda. Growth Boards are the only mechanism that will allow for bringing strategic planning, transport and infrastructure together with health and wellbeing, inclusion and skills development to enable a more comprehensive approach to growth and development.

 

  1. By empowering Growth Boards, local areas will be better equipped to drive growth and tackle the complex issues necessary to deliver more inclusive growth. Where Growth Boards are created within the Local Authority structure, this has the advantage of being recognisable and accountable to taxpayers – both residents and businesses. Growth Boards will be based on entities that have the assets, resources and capabilities to deliver long term projects. And local authorities are stable to allow for evidence-based assessment of impact and return on investment over the lifetime of investments.

For further information on any of the points we have raised, please contact Flora Holmes.

About Surrey County Council

Surrey County Council’s aim is to make a positive difference to the lives of our residents every day. Surrey is an area of unique opportunity with its proximity to London, strong economy and natural advantages such as its beautiful green spaces. Surrey County Council delivers services to 1.1 million residents, combining county-wide strategic delivery with local services in peoples’ homes.

 

Annex: Data on Surrey Districts by Local Enterprise Partnership

West of Surrey Districts and Boroughs in Enterprise M3

 

GVA 2018 (£ million)

Population 2018 (persons)

GVA per head 2018

Elmbridge

5,818

136,626

 

Guildford

4,853

147,889

 

Runnymede

6,214

88,000

 

Spelthorne

3,153

99,334

 

Surrey Heath

3,481

88,874

 

Waverley

3,187

125,610

 

Woking

3,387

101,167

 

Total

30,093

787,500

38213.33

 

East of Surrey Districts in Coast to Capital LEP

 

GVA 2018 (£ million)

Population 2018 (persons)

GVA per head 2018

Epsom and Ewell

1,678

79,928

 

Mole Valley

3,747

87,253

 

Reigate and Banstead

6,147

147,757

 

Tandridge

1,778

87,496

 

Total

13,350

402,434

33173.14

 

September 2020


[1] https://www.coast2capital.org.uk/backing-business-grants ; https://www.coast2capital.org.uk/storage/downloads/backing_business_grant_fund_infographic-1595586373.pdf

[2] https://www.nao.org.uk/report/local-enterprise-partnerships/