Written evidence submitted by LEP Network (LRS0071)
1.1 The LEP Network is delighted to respond to this new sub-inquiry – Levelling up: local and regional structures and the delivery of economic growth.
1.2 The LEP Network plays a central convening role, bringing together 38 LEPs on areas of shared importance, engaging with Government, facilitating dialogue with economic development stakeholders, and sharing knowledge and best practice.
1.3 The LEP Network is a not-for-profit company, part funded by government grant and contributions from the 38 LEPs in England.
1.4 The focus of the Select Committee’s sub-inquiry on ‘Levelling-Up’ reflects the core workload of Local Enterprise Partnerships across the country to secure local growth and recovery equally across all areas of the country through their Economic Recovery Plans.
1.5 The LEP Network has already responded to the overarching inquiry and many of the themes are common to both.
1.6 You have set out the key issues you are examining, and our submission responds to these points below.
2.0 SUMMARY OF RESPONSE
2.1 In summary, our key points are:
2.2 Levelling up is more complex than is currently being presented. This is not a north vs south issue and many perceived areas of prosperity have some of the worst areas of deprivation – this must be borne in mind when we talk of “levelling-up”. It would be useful for the government to define what it means by levelling up.
2.3 LEPs are unique on bringing together local partners from the private sector, public sector, HE/FE and third sector. This partnership has a direct focus on place, and identifying the infrastructure, skills, construction, innovation and clean growth interventions, LEPs form the basis of local recovery and can ensure that ‘levelling up’ is a holistic approach nationally.
2.4 LEPs have evolved their Local Industrial Strategies and having refreshed the underlying evidence base, are well advanced in producing Economic Recovery Plans for all regions in England. Such plans will be critical to a wide range of immediate decisions that local recovery will require.
2.5 LEPs are highly adaptable to working in a range of local structures – currently LEPs are working with all local government structures including: 59 unitary authorities, 22 County Councils, 236 District Councils, 36 Metropolitan Districts, and 10 Mayoral Combined Authorities.
2.6 Whatever devolved structures are put in place, it is critical that the local business voice is at the centre of local economic decision making and is able to prioritise the hard won investment in infrastructure that will continue to help build jobs, invest in skills, and continue to underpin the government’s levelling-up agenda.
2.7 Covid-19 has accelerated behavioral changes across all areas of transport, energy, work, housing and fuel consumption – this sets the framework for developing new energy models that LEPs are implementing to build a green recovery. They are already driving local action to achieve net zero emissions and capitalizing on clean growth opportunities, but this will require collaboration across many sectors and boundaries.
2.8 Local recovery also demands early fiscal stimulus that can help boost jobs, and Enterprise Zones (EZs) fit that bill well – evidence shows they could provide a critical springboard to exploiting innovation and technology in a global facing Britain, while aligning well to the principles of Freeports. This is one of our proposals in the LEP Network ‘5 Point Plan for Recovery’ which includes reference to targeted and fiscal stimuli.
2.9 Business led LEPs have a proven track record in managing major structural investment in their regions, managing and directing the funds they control – £12bn of Local Growth Funding, £900m Getting Building Fund – and overseeing the spending of £6bn of European Funding, as well as £7bn from the private sector.
3.0 EVIDENCE BASE
3.1 LEP Evidence bases are built up over years with real time economic and market intelligence and provide the platform for a ground up recovery. These Local Industrial Strategies already set out the fundamentals and identify local strengths, weaknesses, and future opportunities across a functional economic area.
3.2 This evidence base is now being developed by LEPs, in partnership with business, local authorities, HE, FE, and the third sector, as the basis of their local Economic Recovery Plans that will be critical to a wide range of immediate decisions that recovery will require.
3.3 Bringing together local partners, with a focus on place, and identifying the infrastructure, skills, construction, innovation and clean growth interventions, local plans will form the basis of local recovery and ensure that ‘levelling up’ is a priority for every region in England.
3.4 Local plans will provide insight and understanding of sector impacts and capabilities to identify future opportunities for the UK and regional economic development. They will identify local economic strengths and challenges, spot future trends and opportunities, and set out an action plan to boost
productivity, earning power and competitiveness, whether that’s improving skills, increasing local
innovation, enhancing infrastructure or driving business growth.
3.5 The evidence base will bring together intelligence from a wide range of sources, including LEP commissioned independent Business Surveys, ONS and other government statistics, think tank research, What Works Centre for Local Economic Growth, regional forecasting models and other projections, business sector reports, etc. This covers a wide range of data including:
- Employment rates and employment growth
- Local levels of innovation and commercialisation
- Level of qualifications and skills across the region, and baseline forecasts.
- Analysis of key industry sectors and sub-sectors, high tech capability areas, and levels of employment in specific sectors.
- Identifying unique local economic/industrial strengths such as automotive, aerospace, technical testing and design, logistics, food & drink innovation, agri-tech sector.
- Assessment of the challenges of global competition in its key sectors.
- Level of business start-ups and scale ups.
- Detailed assessment of local infrastructure including: the transport network, transport connectivity, cross region connections, digital connectivity, broadband, housing.
- Future trends and projections including demographic changes, skills, trade, industry sectors.
3.6 This evidence is then tested with a wide range of local partners before refining them. They are then shaped into a narrative which is again tested and reshaped in line with the views of local partners. LEPs are translating this type of data into plans that drive commercial investment, particularly in relation to high tech sectors such as aerospace and automotive testing, advanced manufacturing and engineering, life sciences, and agri-tech. This involves working in partnership with government, drawing on the expertise of local universities and FE colleges, local innovation groups such as Catapult centres and identifying local research strengths that can act as a springboard.
4.0 LOCAL STRUCTURES
4.1 To deliver its levelling up agenda, government must drop down to a more granular level to ensure success. Levelling up at local level isn’t just about the north vs south. Many perceived areas of prosperity have some of the worst areas of deprivation – this must be borne in mind when we talk of “levelling-up”. For example, Norfolk and Suffolk have concentrated pockets of severe deprivation with some areas amongst the most deprived in the UK – 12.9% of lower super output areas in Norfolk and Suffolk are in the most deprived fifth nationally.
4.2 Recent research by the Industrial Strategy Council, ‘Understanding the policy-making processes behind
local growth strategies in England’, concluded that “this research demonstrates that there is value in the development of industrial policy at the local level through LEPs and MCAs, to bring together stakeholders constructively to agree on local priorities based on evidence.”
4.3 As a tried and tested existing structure, with strong governance and transparency measures in place, LEPs are a proven model. Faced with the current challenges immediate and continued delivery will be critically important if we are to build a momentum of recovery. It important to appreciate that the work of LEPs is not driven by local election cycles, or confined to single LA boundaries, but operates across a functional economic area and this helps us focus on the longer-term needs of our areas in a holistic way.
4.4 If the Government is keen to deliver greater devolution and local government re-organisation then, from our extensive experience, we must ensure that whatever devolved structures are put in place, it is critical that the local business voice is at the centre of local economic decision making and is able to prioritise the hard won investment in infrastructure that will continue to help build jobs, invest in skills, and continue to underpin the government’s levelling-up agenda.
4.5 LEPs already work with a wide range of local authority structures and have demonstrated that they can adapt to structural change – currently LEPs are working with 59 unitary authorities, 22 County Councils, 236 District Councils, 36 Metropolitan Districts, and 10 Mayoral Combined Authorities.
5.0 STAKEHOLDER ENGAGEMENT
5.1 LEPs are unique in bringing together key partners at the local level, convening and brokering solutions at pace. This includes the private sector, public sector, HE/FE and the third sector.
5.2 LEPs are also well practised at wider stakeholder engagement and collaboration across geographic boundaries, business sectors and cross LEP activity.
5.3 LEPs already engage on a wide range of levels and regularly with local stakeholders – Strategic Economic Plans, Local Industrial Strategies, and Economic Recovery Plans go through an intense consultation phases with local individuals and organisations.
5.4 LEPs utilise a different range of engagement vehicles to achieve this:
5.5 The LEP Network represents the LEP community at national level with central government being represented on Economic Recovery Group, Business Advisory Council, Local Industrial Strategy Council, and engages closely with business representative organisations like CBI, FSB, IOD, Universities UK, AoC, ACAS, etc….
6.0 SUSTAINABLE LOCAL ECONOMIES
6.1 Covid-19 has accelerated behavioural changes across all areas of transport, energy and fuel consumption – this sets the framework for developing new energy models that will build the green recovery.
6.2 LEPs are already driving local action to achieve net zero emissions and capitalising on clean growth opportunities, but this will require collaboration across many sectors and boundaries.
6.3 The focus on clean growth as set out in the Industrial Strategy must be maintained. This will drive economic recovery and growth in the right direction to meet the government’s Net Zero goals, which are essential for ensuring a sustainable, resilient future where the UK can continue to compete globally.
6.4 LEPs are already playing a vital role in facilitating collaboration with partners to change the way we work, and the way decisions are made so that clean growth is considered at all stages. But this cannot be delivered by one partner alone or by one strand of investment or actions. It is important that local partners play a role in developing the action plan to secure their buy in and for them to own their role in delivering.
6.5 LEPs want to see a five-year commitment to resourcing additional capacity in LEPs, including those with high-carbon industrial clusters, to support them to adapt to this new change, exploit local opportunities and create new ‘Green’ jobs.
6.6 This would enable existing work to continue at pace, such as the work underway on the South West. Dorset LEP is working in partnership with Cornwall & Isles of Scilly (CIoS) and Heart of the South-West (HoSW) LEPs to develop and deliver the South West Energy Strategy aimed at delivering low carbon economic growth. This includes integrating its work with Local Authorities to build on the Renewable Energy Strategy and Low Carbon Dorset programme.
6.7 The challenge for the south West, like all areas of the UK, is an ‘energy trilemma’. The UK is legally committed to reduce its greenhouse gas emissions by at least 80% by 2050, it is also committed to tackling fuel poverty, and it must ensure the security of the energy supply. So transforming the energy infrastructure and building sustainability over the next decade is critical to achieving those aims.
7.0 TARGETTED REGIONAL INVESTMENT
7.1 Focussing on local strengths and opportunities with targeted investment is what has helped LEPs deliver transformative projects.
7.2 The Hertfordshire LEP has been developing a cell and gene cluster of growing global significance with links to the academic centres of excellence in London, Cambridge and Oxford. This includes the Stevenage Bioscience Catalyst’s Spark Building, which opened in March 2020, providing accommodation for cell and gene therapy companies.
7.3 This innovative work has led to the Government announcing Stevenage Bioscience Catalyst as one of six new locations awarded Life Science Opportunity Zone (LSOZ), helping to leverage in further investment.
7.4 Such innovation is key. Similarly, investment in more catalysts and catapults could drive an early recovery, if focused on those sectors and capabilities that will have the greatest impact. Investment in the capital equipment in these facilities helps to remove barriers to entry for small firms and gives them faster growth and a more successful trajectory.
7.5 While Ideas and innovation are important, existing models should not be forgotten. Other forms of fiscal stimulus already exist, such as Enterprise Zones which evidence shows could provide a critical springboard to exploiting innovation and technology in a global facing Britain.
7.6 They are a tried and tested model, able to hit the ground running and evidence demonstrates they are a significant driver of private sector investment, bringing an estimated £7bn of private investment to the regions.
7.7 EZs have been key in promoting the formation of innovative clusters, R&D and other sectors key to stimulating regional recovery and going on to become economic engines of the local economy. Standout examples include: Offshore Energy at the Great Yarmouth Enterprise Zone – a centre of excellence on the East’s all-energy coastline; the Space to Innovate Enterprise Zone in 10 sites across Norfolk and Suffolk – helping to create 18,500 jobs over the next 25 years; and Ceramic Valley Enterprise Zone, Stoke-on-Trent – winning Regeneration Project of the Year in 2019.
7.8 The cost per job is estimated at £8,000 - this compares very favourably with other interventions that are nearer £20,000 per job created. We simply cannot ignore such a vitally valuable recovery stimulus and LEPs stand ready to re-invigorate and extend the current model.
8.0 REGIONAL FUNDING
8.1 Business led LEPs have a proven track record in managing major structural investment in their regions, managing and directing the funds they control – £12bn of Local Growth Funding, £900m Getting Building Fund – and overseeing the spending of £6bn of European Funding, as well as £7bn from the private sector.
8.2 Outside of MCA areas, existing local LEP structures should be used to allocate funding using local strategies, evidence and governance mechanisms which provide a high level of assurance and ensure funding delivers economic returns to every region.
8.3 Once funding is delivered to the regional level, then better alignment of capital and revenue funds is important and will enable swift actions and investments to have a quicker impact. Much of the activity that is needed to support people and business require revenue funding which is scarce. Currently the main source of revenue funding is European Structural Investment Funds. Therefore, certainty of how the UK Shared Prosperity Fund will work is urgently needed.
8.4 In order to prioritise and drive investments all LEPs need an appropriate level of future funding to stabilise resources and enable effective planning to support recovery and focus regional investments. The current LEP funding model is no longer fit for purpose, whereby LEPs receive funds ‘just in time’ for the year ahead, which exposes them to a high degree of fragility. This means a multi-year settlement, commensurate with the task at hand.
8.5 A recent BEIS LEP Capability Paper acknowledged this and recommended a “slight increase in LEP revenue funding” to support their strategy setting activity and for programme delivery and management activity. A sentiment echoed by the Industrial Strategy Council which said “in order to conduct robust evaluations and build in-house analytical teams, LEPs require long-term funding.”
9.0 PROJECT SPEED
9.1 To effectively deliver the levelling up agenda, government must drop down to a more granular level to ensure overall consistency across the UK and ensure that no area is left behind.
9.2 LEPs have a strong pipeline of projects waiting to go – with hundreds of ‘shovel ready’ projects lined
up behind the £900m worth of projects that were awarded, with more capital developments being
planned, all of which will deliver massive potential impact for jobs and economic growth and resilience across the country if funded now.
9.3 LEPs working with local private and public partners are in a strong position to help identify and distributing growth opportunities into communities across the country at pace and have ready made governance and structures to enable them to do this.
9.4 The strong working relationship which has been built across business, education providers, public and the voluntary sector has been key to delivering success at speed. The ability to work together effectively has enabled LEPs to draw on the immediate range of capabilities and capacity.
9.5 That said, the LEP workload has increased considerably over the last decade - providing longer term assurance over core funding for LEPs and their Growth Hubs would ensure sustained delivery of recovery and growth of local areas. A lot of wasted time and effort is spent on securing survival and sourcing funds to maintain the staffing levels.
The LEP Network