The Chamberlain News

Council chief execs turn on ‘talking shop LEPs’ and urge Government to back localism talk with action

The Government must turn its “localism rhetoric into reality” by giving councils the powers they need to borrow more money and invest in new infrastructure, senior town hall officials have urged.

(SOLACE) questions whether Ministers in the coalition government are really committed to decentralisation and suggests that most Local Enterprise Partnerships have failed to drive economic growth and are little more than  “talking shops”.

The document – Local Roots to Growth – argues that councils are best suited to create jobs and wealth and must be granted wide-ranging powers to borrow and levy local taxes.

SOLACE argues that the Heseltine No Stone Unturned report, which called for redistribution of funding from Whitehall to cities and regions and resulted in a £10 billion single pot growth fund, merely disguises serious cuts in public spending which are leading to a “spiral of decline”.

The document is the latest contribution to a lively decentralisation debate in the run-up to next year’s General Election. This week Labour leader Ed Miliband promised to double the single pot to £20 billion if he forms a government and invited LEPs and councils to draw up plans for bids.

The SOLACE report takes a sceptical line: “The localism agenda pursued particularly in early stages of this parliament pointed towards greater accountability at a local level. However with disproportionate spending reductions imposed on local government, pro-growth schemes such as infrastructure and skills investment have not been given the support they have needed.

“Realignment of funding through the Heseltine ‘single pot’ has effectively disguised further centralisation of funding allocation; proposed growth incentive funding streams have merely backed up where previous funding has been lost.

“The reduction in central government resources allocated to pro-growth schemes has meant that councils have had to look elsewhere for funding, and given financial and legal restrictions, the lack of investment has been holding back the potential for growth.

“Government now needs to turn the localism rhetoric into reality. Local government is best placed to understand needs of local economies. We are becoming increasingly sophisticated at working across administrative and sectoral boundaries to understand and maximise economic potential across functional economic geographies.

“Central government needs to agree outcomes with areas and trust councils to deliver.”

Recommendations in the policy document include:

– Councils must be granted greater freedom of borrowing to invest particularly in infrastructure; this is seen as the area most able to provide economic growth for localities in the short term and for the future.

– Central government must give councils greater control over the finances of tax and spend through the development of local treasuries.

• – Pro-growth initiatives must continue to be invested in despite obvious financial restrictions to ensure that international competitively is maintained throughout the recession.

The report indicates that council chief executives and senior officers are split over the effectiveness of LEPs, with 44 per cent believing the organisations had not delivered while 40 per cent thought they had been successful.

A quarter of those responding to the survey had no confidence whatsoever in LEPs, believing them to be “talking shops for the public sector” with little in the way of business sector engagement.

The report warns: “The argument can be made on the one hand that LEPs are still in their infancy, and given time will represent themselves as effective bodies to encourage private-public partnership and develop joint strategy across the area. Where the LEP follows existing partnership boundaries, such as for Association of Greater Manchester Authorities (AGMA), successes have been more profound, and no doubt this situation represents a proportion of councils in support of LEPs.

“However, it is also true that LEPs must be effective in such a critical economic period, and this failure over the previous two and a half years has represented a lost opportunity for growth.”

West Midlands councils were by far the most supportive of LEPs, with 79 per cent of chief executives and senior officials believing the partnerships had been effective in promoting economic growth. In the East Midlands, though, 63 per cent thought LEPs had been ineffective.

SOLACE warned that a major problem for LEPs was that some of the partnerships did not represent a functional economic area.

“Overlapping, oversized and out of place LEP areas have resulted in delays and wasted opportunities for collaboration local growth agendas. It must be noted that some areas have been supportive of the role of their LEP, where the board has been effective and the area fits with the function. Other commentators have experienced them as insignificant and ineffective.”