Written evidence submitted by the South East Local Enterprise Partnership (LRS0051)
Dear Select Committee Members
The South East Local Enterprise Partnership (SELEP) is delighted to respond to the BEIS Sub-Inquiry on Levelling up: local and regional structures and the delivery of economic growth.
SELEP is the largest LEP outside of London and as such we play 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 across our own economic area.
It is SELEP’s view that through this role we are best placed to lead on local growth and we have demonstrated that our LEP model, through its federated structure, works effectively across the different levels of local and regional government. LEPs must therefore be central to future delivery, including of the levelling up agenda, and will provide a consistent approach during a period of potential reform.
I would also take this opportunity to emphasise the importance of the levelling up agenda to all areas of the UK. The economic and social disparities are not only evident between the north and south of the country and it is critical that we tackle inequality across all areas. 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. 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 does benefit the South, this is mostly in the areas adjacent to the capital, rather than felt throughout the south and east and across to our coastal edges, reinforcing the reality of economic inequality within the area.
Thank you for opportunity to share our views on this important inquiry and to highlight the role of LEPs in supporting the needs of local and national economies.
Chief Executive Officer
South East Local Enterprise Partnership
Terms of reference
Evidence base: what evidence exists to measure the performance of the various tiers of regional and local government in the delivery of growth? 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? 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?
Since their inception in 2011, LEPs have delivered over £9 billion worth of publicly funded projects through their management of Growth Deals, and other policies channeled through them.
SELEP is an excellent example of how LEPs are able to provide value for money in terms of our role and impact, having consistently demonstrated significant scale of delivery and outcomes. Aligned to its federated model, SELEP operates through a lean but effective secretariat consisting of 19 staff who focus primarily on strategy and intelligence, communications and engagement, capital programmes, skill and business support (including ESIF) and Growth Hub and operations. Since 2015, SELEP has committed over £554.9m 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 Strategic Board, launched a new Skills Advisory Panel and Digital Skills Partnership and facilitated various other working groups focused on key issues such as housing, coastal and rural economies.
SELEP’s new Board, supported by our federated model, enables strong engagement across both business networks and local government structures. We are able to empower and coordinate businesses to the betterment of our area like no other organisation locally. Our effectiveness is also assessed by the Government on an annual basis through the annual performance review, where a LEP’s strategic impact, governance and delivery are evaluated.
The strategic approach and investment decisions of the Board are guided by a strong governance model (as outlined on page 3) and robust evidence. This was demonstrated for example through the comprehensive Local Industrial Strategy (LIS) evidence base which was submitted to Government’s LIS Analytical Panel in February 2020 and continues to inform our work. Ongoing economic analysis is also being undertaken to understand the impact of COVID-19, including intelligence from the COVID-19 SELEP Business Impact and Business Recovery surveys and from other local and national industry sources. This will continue to guide our response to the crisis at a LEP level, supporting the local intelligence and responses being coordinated by our local authority and federated area partners. To further strengthen this work we would welcome commitment from government to support LEPs in accessing quality economic data, particular in relation to the impacts of COVID-19 and for this data to be consistently available at a LEP level.
Local structures: what structures exists across the country and how does this compare across different regions? 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? How should local structures support delivery of regional growth across England? 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? What should local authorities do to achieve these aims? 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?
Stakeholder engagement: 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?
We feel that LEPs have a vital role to play in bringing together the views of business leaders, local authority, further education and higher education under a banner of clear governance, accountability, transparency and scrutiny. They have undergone a substantial change to respond to the requirements of the LEP Review, which was designed to underpin future local and national collaboration. SELEP already had in place robust governance arrangements and processes for managing public funding. However, the LEP Review led to changes to SELEP’s governance model, to formally recognise the local collaboration through the establishment of SELEP as a limited company – showing a strong measure of local commitment to work effectively across the area to drive economic growth.
Having been established with the specific focus of driving economic growth, LEPs also provide an effective means of engagement for stakeholders across the public and private sectors, in particular, enabling private sector partners to collaborate in a model which they can more easily relate to and engage with. In addition, the work of LEPs is not driven by local election cycles, or confined to single local authority boundaries, but operates across a defined economic area and this helps us focus on the longer-term needs of our areas in a holistic way.
The SELEP structure has proven to be an effective model which is able to successfully deliver economic growth over a large geography through strong leadership, wide engagement and an understanding of the local economic needs and challenges.
The structure is headed by SELEP’s Strategic Board which is business led, provides clear strategic leadership, sets the shared SELEP priorities and is the main SELEP interface with government. Formal financial decision-making is through the SELEP Accountability Board which approves all funding decisions and oversees programme delivery. The SELEP federated model includes local Federated Area Boards at each of the four geographical areas which allows for decision-making and project prioritisation at a local level.
This structure enables us to effectively align strategies, supporting projects identified at a local authority level as well as major infrastructure of regional and national significance, and providing a single coordinated case for investment to central Government.
SELEP has also established thematic and sector working groups which lead on targeted activities and strategies to address common issues across the wider geography. This includes for example the recent development of a Major Projects Group, responding to the scale of large infrastructure and growth projects that are due to be delivered across our region and galvanising the SELEP role in supporting collaboration to increase efficiencies and deliver greater benefits by working together on issues such as skills and supply chains.
Across a wider geography, LEPs also come together to act as a single voice to government on issues of regional and national significance. The collective contribution that LEPs can make has been demonstrated for example through the production of the tri-LEP South2East Local Energy Strategy for decarbonisation, our work with neighbouring LEPs as ‘Catalyst South’ on cross cutting issues, as well as nationally through the LEP network.
LEPs are therefore well placed to continue to inform government policies and investment to drive regional growth, with effective engagement and delivery across a range of geographies. This will also provide critical insights to inform the levelling up agenda, which must address inequalities within local and regional geographies and not focus only on the North-South divide.
Sustainable local economies: how could a green economic recovery stimulate local economies and embed upskilling at a regional level? 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?
SELEP are committed to supporting the development of a clean and resilient economy and harnessing the environmental opportunities that have arisen through the COVID-19 pandemic.
Throughout the development work for SELEP’s draft LIS, the importance of embedding clean growth principles to secure the shift to a net zero carbon economy was clearly recognised, including by growing our capacity for sustainable energy production and transport and investing to help our region mitigate the impacts of climate change which impact upon our communities. LEPs have demonstrated a strong leadership role on this issue, including work across the tri-LEP area SELEP, Coast to Capital and Enterprise M3 to develop the South2East Local Energy Strategy.
By placing a higher priority on a green economic recovery there are also significant opportunities to deliver innovation, growth and jobs. We are ensuring investment in business support programmes to help businesses to decarbonise and become more energy efficient, and to grow the low carbon and environmental good and services sector; for example through programmes such as Low Carbon across the South East, I-Construct, Transportation and Logistical Efficiencies and, in response to the pandemic, the proposed Digitising Business component of our COVID-19 Business Support Fund.
SELEP also plays a constituent role within the South East Energy Hub, providing strategic direction on investments to decarbonise and to increase the number, quality and scale of energy projects.
Much of this work is overseen by our Clean Growth Working Group, with representatives from the energy industry, local authority, business, environmental and nature conservation agencies, academia and community groups. This collaboration allows us to identify and champion our over-arching clean growth principles as well as shape regional and/or sector specific initiatives and investment. SELEP has a strong infrastructure to deliver against skills priorities, through its Skills Advisory Panel and Digital Skills Partnership which can provide leadership on this agenda and clarity in terms of the need and opportunity going forward. This work aligns with our leadership role on business support and Growth Hub provision.
Targeted regional investment: how could ‘shovel ready’ growth projects in England drive local growth and jobs? How could clustered R&D investment support local growth? How should priorities be agreed across the regions?
To date, SELEP has delivered over 42 projects as part of its Growth Deal with Government, with a further 66 projects underway.
Through working with local partners, government agencies and the private sector, SELEP has created new employment space in locations which had struggled to attract and retain businesses due to poor commercial space provision, improved access to our global gateways and key employment centers through investment in improved transport infrastructure, and enabled the provision of new further education courses through capital skills investment.
As the largest LEP area in England outside London, SELEP makes a vital contribution to the national economy by generating nearly £90bn of economic output each year, equivalent to around 5% of the UK total. The critical mass of economic activity taking place within SELEP leads to positive agglomeration effects as businesses, employees and world leading innovation assets benefit from local proximity, efficiencies and knowledge spill overs. Targeted investment to drive growth across the SELEP area and to support those towns and communities that are facing economic and social challenges, will therefore deliver benefits on a local, regional and national scale.
LEPs are well placed to respond to project calls from central government for ‘shovel ready’ schemes. Within a two week window, SELEP was able to identify and prioritise 34 projects for the new Getting Building Fund, ranging from a new rail station in East Kent, new skills and training hub in Newhaven, bringing greater connectivity to rural areas, a new solar farm to power up the railways in East Sussex and new cycle network infrastructure in Essex. This investment of £85m will deliver over 9,000 new jobs.
The South East is home to world-leading innovation assets including nine universities and a cluster of key innovation assets of national and international significance, including Enterprise Zones and science parks. Harnessing these opportunities will be crucial to support further R&D investment and SELEP will lead this work through our established U9 group, which brings together our extensive higher education capabilities.
Ongoing engagement with LEPs will support government in prioritising and making investment decisions which are based on economic need, opportunity and capacity to deliver. We particularly support recommendations in the recent BEIS LEP Capacity and Capabilities Assessment for regular direct engagement between LEPs and senior policy makers in government to increase government’s understanding of local strategy and economic priorities.
Regional funding: how should the UK Shared Prosperity Fund be specifically targeted to replace EU Funding and address regional inequality? What role should local structures play in allocating funding to best achieve regional growth? What role could the British Business Bank have in the post-Covid-19 levelling up of regional economies?
The UK Shared Prosperity Fund will be vital to enable LEPs to deliver on the priorities identified throughout the extensive LIS development process and the emerging Economic Recovery and Renewal Plans.
To effectively manage these funds to drive local growth, there needs to be full local freedoms and flexibilities on how the funding is deployed. Where funding is targeted to replace EU funding it must be simplified and accessible, ensuring monies remain available to support the more disadvantaged
The funding should include a mix of revenue and capital funding, to enable public sector organisations to support project development and operations where needed.
Current challenges mean that unemployment numbers have increased significantly and a continued focus on those furthest from the labour market (as currently addressed through ESF) is vital. SELEP is well placed to provide the evidence of need in terms of deploying such funding and also ensuring strong engagement with local stakeholders and partners in deciding priorities. Funding should also be proportionate and take account of specific LEP challenges, such as the lower than average workplace earnings in the SELEP area, lower than average skills levels and high volumes of benefit claimants compared to other LEP areas.
Providing accessible and impartial support to our businesses remains key to our economic recovery and growth. ERDF currently provides a broad suite of support programmes to our priority sectors such as creative and cultural, manufacturing, knowledge exchange, inward investment and international trade, as well as targeted funding to deprived areas through Community Led Local Development schemes. This provides essential additionality to the Growth Hub service and our business support landscape. SELEP has been instrumental in ensuring the drawdown of this funding and making sure that investments fit with the strategic needs of the region, provide value for money and additionality. We have the established governance structures and relationships in place to continue to convene and coordinate strategic partnerships to access and administer UKSPF that aligns with Government objectives and priorities whilst enabling local flexibility and adaptability.
LEPs are also well placed to ensure that funds are targeted to address regional inequalities. We know, for example, that our coastal communities are currently 15% less productive than the rest of the SELEP area and face high barriers to growth and prosperity. However, with the right investment, SELEP and its Coastal Communities working group are well placed to guide the interventions needed, as set out in the South East Coastal Economic Prospectus, including opportunities to grow new sectors such as energy and maritime and to increase the productivity of ‘traditional’ sectors.
LEPs are uniquely positioned to focus solely on the economic growth agenda and therefore have robust evidence and strategies to most effectively direct investments based on need and opportunity. However, LEPs’ capacity to support projects depends on the level of funding made available by central Government. Core funding is required to enable SELEP to perform effectively, including administering large pots of funding, the prioritisation, commissioning and delivery of programmes, implementation of appropriate governance arrangements and the provision of support to board members. As recognised in the BEIS LEP Capacity and Capabilities Assessment there is a need to increase revenue funding for LEPs and to guarantee longer-term multi-annual revenue funding to support their capacity in these areas.
The British Business Bank has played a crucial role in the national response to COVID-19, with over 256,000 businesses across the South East and East of England regions benefiting from the two biggest government Coronavirus loan schemes. Given the significant demand for financial and practical support for businesses in post-COVID economies, it could continue administer blanket business loans from central government where local engagement is not required. Continued dialogue between government and LEPs and other business organisations to advise on the ongoing finance needs of our businesses should inform these activities and priorities.
Project Speed: 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? What should the balance be between Whitehall decision making and local decision making? Do we have the capacity and capabilities at local and/or regional level to do this work on behalf of central government?
The economic needs of the country are best served by empowered local decision making. The levelling up agenda – as it applies across the whole of the country – requires insight and advice from private sector drivers of the economy working together with public institutions. LEPs provide precisely that forum and outlet, and empowered LEPs, with longer term resource and ongoing, meaningful and senior sponsorship from Whitehall should continue to be a central part of the solution to a once-in-a-generation crisis.