LOCAL GROWTH?

The future of local economic development in England

www.michaelwardconsulting.co.uk

1. Contents

TimelineSpending ReviewLocal Growth White paperRDAs and LEPsRegional Growth Fund

2. The Paradox of Local Economic Development Regional machinery being dismantled Local development the only show in town

BUT Unemployment set to rise Record youth unemployment Very little money Much reverts to centre

4: The timeline 2010

20108 June Start of spending review22 June Emergency Budget20 Oct Spending Review 201028 Oct Local Growth White Paper17 Nov Skills StrategyDec Introduction of Localism Bill

Local Government Finance Settlement

5: Timeline 2011

21 Jan Deadline for 1st round bids to LGF23 Mar Budget; announcement of new structures for

EU funding31 Mar End of existing welfare to work contracts01 Apr First LEPs operational

2012

31 Mar RDAs abolished

6: Spending Review

Spending Review: Protects spend on major infrastructure –

especially in London (Crossrail, Thameslink); Maintains science budget in cash terms; Increases spend on adult apprenticeships;But: Cuts in CLG funding to local government

>25%; BIS cuts of 40% in higher education, 16% in

other areas.

7: Local Growth White Paper

“new approach to local growth” (WP) “shifting power away from central government

to local communities, citizens, and independent providers.” (WP)

“The government is therefore determined that all parts of the country benefit from sustainable economic growth.” (WP)

Detail on LEPS and Regional Growth Fund; Back up economics document.

8: RDAs and LEPS I

Coalition Agreement, May 2010:“We will support the creation of Local Enterprise

partnerships – joint local authority-business bodies brought forward by local authorities themselves to promote local economic development – to replace Regional Development Agencies (RDAs). These may take the form of the existing RDAs in areas where they are popular.” (CA)

…last sentence subsequently dropped…

9: RDAs and LEPs II

Costs of RDA abolition expected to exceed £1.5bn;(RDA budget 2010/11 = £1.4bn);

Closure by 31.3.2012; Substantial redundancies this year; Assets likely to transfer to HCA in first

instance; For many RDA functions (Innovation; inward

investment; skills), main role goes to centre; Business advice from a national website and

a national call centre.

10: RDAs and LEPS III

56 LEP bids received by Sept. deadline;1st wave of 24 approved 28 October;Total of 29 announced by early 2011;Partial coverage of country;Different scale of LEPs – eg

Kent/Essex/East Sussex - pop 3.9 m (North East 2.64 m);

CLG continuing to work with partners to establish LEPs elsewhere.

11: RDAs and LEPS IV

Criteria for LEP approval:Support from business;Economic geographyLocal authority supportAdded value and ambition

12: RDAs and LEPS V

No Government revenue funding for LEPS, except for small capacity building fund;

LEPS “will be expected to fund their own day-to-day running costs”; (WP)

Limited prospects of Council funding given likely local government finance settlement;

LEPs “may wish to submit bids to the Regional Growth Fund, but will not receive preferential treatment.” (WP)

?little executive capacity or staff?

13: RDAs and LEPs VI

Critical comments I:

“there is a strong view amongst the business community that many LEPs lack the ambition to make a significant economic impact, undermining our agenda for growth….Lack of credible business representation, negotiations dominated by local politics.”

Mark Prisk, Business Minister, Oct 2010

14: RDAs and LEPs VII

Critical comments II: “Does a lump of money get thrown out there

as a sticking plaster or is it part of a long-term strategy for sustainable growth?”

– chair, Leeds LEP “James Newman, chair of the South

Yorkshire LEP, warned…[against] abandoning much needed investment too soon in many areas of England.”

- FT, 21.01.11

15: The Regional Growth Fund I

£million

2011-2 2012-3 2013-4

495 505 420

Closing date for 1st round bids: 21 January 2011

16: The Regional Growth Fund IIMin bid threshold £1million;For “projects with significant potential

for private sector growth and employment”; (CSR)

“supporting in particular those areas and communities that are currently too dependent on the public sector.” (CSR)

17: The Regional Growth Fund III“All areas of England are eligible to bid for the

Regional Growth Fund, although some parts of the country. Particularly where there is currently high employment, low levels of deprivation and a vibrant private sector, may struggle to demonstrate how they meet the second objective of the Fund.” (ie, support for areas too dependent on public sector…)(WP)

18: The Regional Growth Fund IVFirst Round RGF substantially over bid;Rumours of State Aid issues

19: Skills

“The RDA’s role in skills strategy setting and commissioning training provision will cease, and in future all public funding for adult skills provision will be routed through the Skills Funding Agency…” (WP)

No formal role for LEPs; LEPS “will not have formal powers to direct or

control the activity of skills providers”; Consultation on colleges’ business plans;

20: The Work Programme

Work Programme replaces existing programmes from summer 2011;

Framework list of preferred suppliers issued by DWP 25 Nov 2011;

Contracts to be let on a regional basis by DWP.

21: Housing and the HCA

Wider changes in housing policy – replacement of social housing by new affordable programme; end of market renewal pathfinders;

Substantial budget reductionsLondon division of HCA being merged

into GLA;

22: London is (still) different

LDA effectively being abolished by major budget cuts;

Funding only for Olympics and existing commitments;

Detail of structures in Localism Bill;LEPS – London now eligible; City Hall

and London Councils working towards a London-wide LEP; details awaited.

23: Future of European funding

Definitive announcement due in Budget; but…

Strong suggestion that core teams to be transferred from GOs/RDAs to CLG

24: Headline Messages

Deficit reduction is king;There’s still no money;Much still going to the centre;Not at all clear what LEPs will actually

do.