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Greater Birmingham Expects

Greater Birmingham Expects

🕔14.Feb 2014

As the Files Focus on LEPs concludes, Kevin Johnson and Paul Dale sum up the week and suggest that as well as more stretching job targets, we should expect – indeed, demand – more devolution from the centre and a local partnership which is ever more transparent and engaged. 

We began our series on Local Enterprise Partnerships by pointing out that LEPs had a somewhat difficult birth, having been invented on the hoof to replace Regional Development Agencies as the favoured tools of economic regeneration. In a process overseen by those strange Cabinet bedfellows, Eric Pickles and Vince Cable, giving birth to LEPs was never going to be straightforward.

A little remembered fact about the replacement of RDAs by LEPs is that the switch was primarily driven by financial considerations. The RDAs were seen, by all political parties, as wasteful, costly and inefficient. Streamlined LEPs could do the job on a shoestring, apparently, and as any incoming Government in 2010 would have had to slash spending, getting rid of the RDAs was an easy option.

Most of our contributors, with the exception of Birmingham Labour councillor John Clancy, do at least believe there is a place for LEPs.

Cllr Clancy makes the point, which apparently has some support in a certain quarter of the Labour Party, that GBSLEP has concentrated too much on “attracting and investing in the wrong kinds of enterprise”.

The wrong kinds of enterprise, according to Clancy, are “big retail, big business, big construction, big finance, big service sector”. GBSLEP, he thinks, has failed “to get anywhere with what should have been its primary aim – getting sustainable, new, small- and large-scale manufacturing going”.

Clancy is laying the groundwork for what is likely to be a lively debate in the council Labour group about the type of jobs delivered by the Birmingham city centre Enterprise Zone and the regeneration opportunities afforded by the arrival of HS2 at Curzon Street. Top-end department stores are not on Clancy’s wish list.

On the point of what kind of business, John D Turner made the valid point about Board representation by size of business, not to mention gender and race balance. Whilst it’s debatable whether small business leaders would have the time or back office resource to support their membership, it is too easy to fall into the trap of thinking big business knows best.

It is clear that GBSLEP has the continued backing of Greater Birmingham Chambers of Commerce, which is important for the LEP can only succeed if it has the business community on side. Indeed, without Jerry and his colleagues it’s arguable whether Birmingham would have been awarded a LEP, certainly in the first round.

However, Chamber chief executive Jerry Blackett made the point very clearly that his organisation’s support is based in part on the fact that LEPs “are a new game in town” and that there is no serious alternative but to offer support. The Chamber, we suspect, would secretly like to have seen Advantage West Midlands – or a version of it – continue to operate.

Mr Street, keen to downplay any disappointment in terms of the Heseltine project outcome and size of the Local Growth Fund, is perhaps putting the best gloss on the issue. Lord Heseltine is no fool and, as with elected mayors, believed Government was serious about devolution of areas like economic development. The buy in from Whitehall is some way down the track. The Institute for Government recently summed up that problem rather well.

The Greater Birmingham Project attracted a lot of goodwill, not to mention time, from the business community who didn’t turn up to endless meetings simply for fun. To suggest now that a sea change was never on the cards is slightly disingenuous. The point was never about the region being handed piles of new money with no strings, but simply taking control of budgets and powers which are currently directed from Whitehall.

The process has led to varying opinions behind the scenes on how key programmes should proceed – and who should be in the driving seat. Business support – and in particular the job of signposting businesses to the right kind of support – has been very slow to develop. A critical part of the infrastructure for making the LEP area the easiest in Europe in which to set up and run a business – and something so close to Michael Heseltine’s heart – really should have been the first thing to roll out after the Treasury spelt out its response to the former DPM’s report.

We also began this series by noting that it is far too early to make judgments about the performance of the West Midlands LEPs. It seems clear that the LEPs are in their infancy and may change out of all recognition after the 2015 General Election – whichever party, or parties, wins.

The notion that LEPs should be business-led on the grounds that the private sector is better placed than the public sector at creating jobs and investment was always going to be difficult to justify when large sums of public money are at stake.

Perhaps this didn’t matter so much when LEPs first got going, with little or no access to public money. But the Regional Growth Fund gave LEPs some of the financial backing they had been demanding, and further income streams are being identified following Lord Heseltine’s No Stone Unturned report. The obvious question arose about who exactly is to oversee how the LEPs spend the money they were given?

As might have been predicted, elected councillors from the LEP areas are taking more and more of an interest in this. The GBSLEP board, for example, is now “guided” by a supervisory body made up of the leaders of the nine councils covered by the LEP. A regional investment fund of £125 million will be set up by the West Midlands LEPs, with control of the fund effectively in the hands of council leaders.

This is quite a significant shift from LEPs in their early days. Indeed, critics of LEPs might well ask why the Government doesn’t simply devolve budgets and powers directly to councils, or possibly a regional council body in the case of the West Midlands.

We’re told by Mr Street that the fact the LEP was given responsibility for drawing up economic strategy and implementing enterprise zones is a sign of success. There’s no doubt, particularly with Mr Street at the helm, Birmingham is taken more seriously in Whitehall. But if the LEP was not controlling strategies and creating zones, what would it exist to do? More importantly, as Birmingham City Council manages the bank balance, provides the staff and its leader is in charge of supervising its works hardly positions GBSLEP as a completely discrete body.

If LEPs are to remain in place after the next election, pressure will surely mount for proper scrutiny of their performances. GBSLEP has set a target to create 100,000 new jobs by 2020. It is at least arguable that the impact of recovery from recession and the credit crunch will comfortably deliver that figure with little help from the LEP required.

GBSLEP chairman Andy Street talks about “stretching” the 100,000 target, which is welcome. But he does his case no good by stating that he has no idea whether the LEP is actually creating jobs, adding that the important thing is that “jobs are being created”.

This is a subtle distinction that is likely to go above the heads of most West Midlanders, who simply require accurate information about the performance of the LEP and want to know whether the organisation is making a difference or not.

GBSLEP has always struggled with delivering a sustainable model of business engagement. There are intense periods of communication as well as deeper involvement, such as when Tarzan made Brum his second home. As we touched on in our opening salvo, the business community isn’t yet fully convinced – or knowledgeable – about LEPs. Some rather thin newsletters and a, thus far, invisible consultation exercise around the Strategic Economic Plan are possible causes for concern. Where is the promised Strategy Portal, heralded at launch of the Strategy for Growth to monitor progress?

Jerry Blackett invited us to praise GBSLEP for its “dogged persistence” and went on to mention several achievements including a £200 million investment levered into the national automotive supply chain, the promotion of the M42 corridor (now UK Central) with £17.5 million of Regional Growth Fund money to complete the funding necessary to extend the runway at Birmingham Airport, and the growth in private sector jobs creation – which is the best of any English Region outside of London.

Mr Blackett is right to praise what has been achieved through the limited Government resources allocated to GBSLEP. The challenges, however, remain enormous if Birmingham and the West Midlands are to reach even the English average for employment, investment and job creation.

This post – and some of our earlier articles – are challenging, in part, to national LEP policy and to performance on the ground. As the organisation grows, demands for closer scrutiny will also rightly increase. As GBSLEP finalises its Strategic Economic Plan, transparency and engagement need to figure ever more prominently.

As Alex Jones argued, devolution needs to be high on the agenda for the 2015 election campaign if cities like Birmingham can make a more proportionate contribution to national economic growth. Our WM2015 series will continue to monitor, comment and input into debates around the emerging manifestos for the next general election.

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