The Chamberlain News

Peering into the Enterprise Zone labyrinth: who decides how to spend GBSLEP’s millions?

They have only just celebrated their third birthday, but if there was any doubt about the future of the country’s Local Enterprise Partnerships even the harshest critics must concede that LEPs are here to stay.

In 2011 the new partnerships between local councils and business leaders were struggling to identify a role and failing to explain how they would be able to lead regeneration efforts without central government funding and little access to any other income streams.

But that was before the dash towards localism began to gather pace.

Lord Heseltine’s ‘No Stone Unturned’ report lent some heavyweight political support to the idea of a single growth pot of money to be transferred from Whitehall to the LEPs, and even though Hezza’s £60 billion proposal was slimmed down to £10 billion it did at least represent a beginning, and gave the LEPs a new purpose in life.

The Local Growth Fund will be increased to £30 billion if Labour wins the 2015 General Election. Chancellor George Osborne has hinted at £20 billion if the Tories succeed. One way or another, the LEPs are turning out to be as significant players as the regional development agencies they replaced.

The Greater Birmingham and Solihull LEP has been awarded £357 million of growth fund money which will help deliver a range of projects including an extension of the Midland Metro tram system, rapid transit bus systems, an advance manufacturing hub and improvements to New Street and Moor Street stations.

GBSLEP is also delivering the Birmingham city centre Enterprise Zone, where the retention of business rates will create revenue of £1.7 billion and, it is claimed, deliver 1.4 million sq m of floorspace, create over 40,000 jobs and contribute £2 billion in GVA per year to the local economy.

The potential value of the EZ has been boosted significantly by the pending arrival of the HS2 station at Digbeth, which is expected to act as a magnet for inward investment.

There are 26 development sites in the EZ with regeneration projects worth up to £275 million to be delivered by 2022-23. These are some of Birmingham’s biggest building schemes for decades including Paradise Circus and Arena Central as well as the Southern Gateway scheme around Digbeth and the Wholesale Markets.

There are positive signs that the regional economy is starting to pick up. Greater Birmingham boasted the highest figure in England and Wales for foreign investment last year with a 57 per cent increase in new projects. The number of jobs created in the GBSLEP area was up by 98 per cent to 4,481, again the best performance in the country.

Whichever way you look at it these are pretty big numbers, and, perhaps inevitably, LEPs have been criticised for not spending the money they have been allocated quickly enough.

LEPs have morphed from smallish partnerships with councils to major public bodies in their own right and it is significant in GBSLEP’s case that a supervisory board setting out broad policy and approving projects has as its membership the leaders of all the councils in the LEP area.

The initial idea, that LEPs would always have a majority of business leaders on their board remains in place, but the board’s decisions are effectively subjected to approval by the council leaders. Rather subtly, and beneath the radar, GBSLEP is now under the direct control of elected politicians, not appointed business representatives.

Not that the activities of GBSLEP seem to provoke much discussion among Birmingham’s political leadership. A lengthy cabinet report detailing an updated facts and figures report on the Enterprise Zone went almost uncommented upon and was dealt with in about three minutes.

LEPs are not universally popular with old-style Labour politicians who would much prefer to see Government financial largesse, such as it is, handed directly to councils. John Clancy, the backbencher who tried and failed to become the leader of Birmingham city council, routinely refers to GBSLEP as “the Tory LEP”. Selly Oak Labour MP Steve McCabe dismissed GBSLEP’s £357 million growth fund settlement as a “Tory bribe” designed to help the Government win the next election.

Cllr Clancy and Mr McCabe will no doubt be interested to learn of the bureaucratic, almost labyrinthine, governance arrangements being established to oversee GBSLEP’s Birmingham Enterprise Zone.

An EZ update submitted to the Birmingham cabinet sets out the proposals in some detail.

Birmingham city council is the Accountable Body for the EZ on behalf of GBSLEP, a duty for which the council is paid £210,000 a year.

The governance structure is as follows:

• EZ Executive Board – chaired by Chris Webster, LEP Board member with responsibility for the EZ. The EZ Executive Board is the key decision making body for the use of EZ resources and reports directly to the LEP Board on the basis of twice yearly update reports. Membership of the Executive Board consists of senior officials from Birmingham and the other LEP councils.
• EZ Directors Board – chaired by Waheed Nazir, Birmingham City Council’s Director for Planning and Regeneration. This Board monitors project performance, revenue collection and provides overall programme management. It reviews business cases and forwards these to the EZ Executive Board for decisions.
• EZ Portfolio Board – is made up of the Programme/Project Leads for each of the EZ Programmes. It assesses projects and the management of resources; reporting key issues and opportunities to the EZ Executive Board.

Each of these boards meets on a monthly basis.

The EZ Executive Board has delegated powers from the LEP Board to approve EZ projects. It undertakes this function in conjunction with Birmingham city council.

Priority will be given to EZ projects which:

• Trigger business rates income within the EZ (measured in net present value).
• Lever in additional public or direct private sector resources (those projects levering the greatest levels of none EZ resources being awarded the highest priority).
• Lead directly to job creation within the EZ.