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LEPs ‘failing to convince business community of devolution benefits’

LEPs ‘failing to convince business community of devolution benefits’

🕔12.Oct 2015

Local Enterprise Partnerships are failing to take the wider business community and voluntary organisations with them in the journey towards local government devolution, a key report has warned.

While the country’s 38 LEPs have “bought in” to the Government’s proposals to hand over powers and budgets to combined authorities and metro mayors, support for the idea is weaker among the health sector, universities, housing associations, the voluntary sector and the wider business community, according to a study by Grant Thornton and Localis.

The Making Devolution Work study says the importance of having non-local authority bodies onside cannot be overstated, but the LEPs are failing to convince enough organisations that devolution can work.

The study is released as the Cities and Local Government Devolution Bill enters its Commons stage on the way to becoming law early next year. The legislation will make it easier for councils and LEPs to take control of transport and economic development through combined authorities and mayors.

The fledgling West Midlands Combined Authority and the three regional LEPs hope to follow Greater Manchester and South Yorkshire down the route of substantial devolution under a metro mayor, but council leaders appear to be struggling to conclude a deal with the Treasury.

Grant Thornton and Localis warn that “demonstrable trust and a unity of purpose” across participating organisations is key in giving the Government confidence to devolve. However many places are failing to do this.

Places need to show how they will do so in terms of growth and public sector reform through a clear, shared local vision and economic evidence base. This is particularly important where there is limited track record of joint working between local partners.

The report says discussions about forming combined authorities have in many regions been dominated by fierce arguments over metro mayors, to the detriment of their progress. The study says proposed improvements to residents’ lives should come first; governance second.

The study continues:

Areas willing to accept a combined authority and directly-elected mayor are more likely to receive the substantial powers they want. Though some within local government accept the accountability argument and are ‘biting the bullet’, others are ignoring it, and this is seen to be unrealistic by Whitehall insiders.

Ultimately devolution proposals will be judged by the Treasury against their ability to further local and national growth and productivity agendas. Alongside the need to reflect the national fiscal context, areas should prioritise meeting these in their proposals.

Meanwhile, a further report by EEF, the manufacturers’ federation, says there is a new momentum behind the principle of devolution in England and strong political backing “we are now hurtling towards new governance arrangements which will soon come with their own tailor made deals”.

But the EEF report contains several health warnings:

There will be a new face of accountability for local areas, but the process of devolution must not lose sight of the ultimate outcomes of stronger local economies, higher productivity and more and better jobs. These outcomes will be enabled by decisions made by local officials, but delivered by businesses.

As different local economies have differing policy priorities and varying capabilities to deliver change there should not be a single blueprint for devolution within England. This also means, however, that this will put additional onus on both business and local government to work together more effectively in order to identify the most pertinent barriers to growth and the remedies to overcome them.

EEF calls on LEPs to continue to play a leading role in devolution, and set out three key messages for local government and decision makers:

  • Be ambitious about local growth, but while budgets are tight avoid duplication of programmes, frequent changes in support and adding to business costs.
  • Focus early action on the aspects of the local business environment which have both a strong local flavour and can demonstrate early wins for businesses and local growth, manufacturers believe this should be transport investment.
  • Make businesses part of the devolution process, by evolving LEPs and integrating their voice into the decision-making process of combined authorities.

The EEF report continues:

Businesses will also need to provide greater clarity about the aspects of the local business environment which can be improved, enhanced and reformed to boost economic growth. For businesses keen to see the right foundations put in place in their business environment, engagement with new governance structures can no longer be seen as an option.

It predicts returns from devolution could be significant. The RSA City Growth Commission notes if the UK’s top 15 ‘Metros’ were to grow at the UK average between 2013 and 2030 it is estimated they would generate an additional £79bn in growth over that period.

EEF believes devolution will deliver a more equitable tax take across England, a more resilient business environment in all economic conditions and an increase in the tax base, leading to lower taxes overall for employees, consumers and businesses.

Three quarters of those surveyed by the LGA in February reported that they most trusted their local council to make decisions about how services are provided in their local area, compared to just 19 per cent for central government.

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