ANALYSIS ECONOMY & ENTERPRISE

Will a new South West industrial strategy deliver what it promises?

Our business-led Local Enterprise Partnership appears committed to a new approach to driving growth which its CEO describes as 'game-changing'.

Heart of the south west lep Local industrial strategy

The Heart of the South West Local Enterprise Partnership’s (LEP) new local industry strategy featured prominently at its annual conference in Torquay on 4 November despite it not yet having been published.

It has been signed off by all the partners and seen by other stakeholders, but will remain otherwise unseen until it receives ministerial-level clearance in Whitehall.

What are Local Enterprise Partnerships?

In 2010 the Conservative/Liberal Democrat coalition government published its blueprint for managing local economic growth. It abruptly replaced the nine appointee-led and locally unaccountable regional development agencies in England with 38 LEPs, which were to be business-led and reliant on local authorities and academic institutions for support.

The blueprint was very much a do-it-yourself affair, part of the coalition’s initially warm words towards devolution of decision-making away from Whitehall.

LEP boundaries were not prescribed centrally, which led to the idiosyncratic patchwork of LEPs that now blanket the country, often owing as much to the politics of local identity as to functional economic areas.

The purpose of a LEP is to bid for money for its area from various central government funding streams, such as the local growth fund, and to use this to leverage local match funding. If successful, the LEP then allocates the money to local projects in line with the commitments given to central government and its own assessment of priorities.

Heart of the South West Local Enterprise Partnership annual conference promotional material Heart of the South West LEP annual conference promotional material

The LEP for the “Heart of the South West” covers the local authority areas of Devon, Somerset, Plymouth and Torbay. To date it claims to have pulled in over £323 million from central government and a further £460 million in locally raised match funding, which includes local public sector sources.

For publicity purposes, and as set out in its 2019 annual report, the Heart of the South West LEP likes to imply that it is itself responsible for achievements such as building 4,431 new homes in the region.

However in reality the LEP neither lays a single brick nor grants planning permissions for housing developments.

Various reviews by central government, the National Audit Office, parliamentary committees and other organisations have highlighted concerns about the performance of LEPs, while recognising that central government support has at times been inconsistent with devolutionary principles.

For example, LEPs have to reconcile their view of local investment priorities with central government policies which themselves pull in different directions, such as the deregulation of the planning system versus the need to control carbon emissions.

They have also been accused of a lack of transparency and accountability, and of paying insufficient attention to the social and environmental impacts of their decisions. Many of the Heart of the South West LEP’s projects thus far have been road transport development schemes.

Local industrial strategies

In 2018, central government instructed all LEPs to prepare local industrial strategies. A handful have already been published following government approval.

The unpublished Heart of the South West local industrial strategy was described at the LEP’s annual conference by David Ralph, the chief executive appointed in June 2018, as a “game-changer”.

His justification for this claim was that the strategy would focus on growth which was both “inclusive”, in the sense that its proceeds would be distributed more equitably among the area’s population, and “clean” because low carbon projects would be favoured.

In other words, the LEP’s approach is no longer to promote economic growth for its own sake. Instead, growth will follow a net zero carbon route map.

Heart of the South West Local Enterprise Partnership annual conference Local Industrial Strategy panel discussion Heart of the South West LEP annual conference panel discussion

Perhaps the most striking indicator of this new approach was a presentation by Charlotte Aldritt, director of the Centre for Progressive Policy and formerly a key player in the RSA’s inclusive growth project.

Aldritt argued that the traditional measure of economic success - GVA, a shorthand for gross value added - is no longer fit for purpose, as it reinforces an economic model based on achieving growth first then deciding how to distribute its proceeds later.

A high GVA figure for a city may be caused by highly skilled inward commuters, who are rewarded commensurately, while disguising the presence of residents who are excluded from earnings benefits. The persistence of low wages, as in Exeter, is evidence that this model does not work towards eliminating inequality.

In contrast, Aldritt argued, investment should also encompass social infrastructure, such as education and skills, which tends to be excluded from the conventional view of infrastructure as physical provisions such as roads and broadband services.

Factoring in social infrastructure investment enables a wider range of people to participate in the opportunities created in changing economies. GVA therefore needs to be reframed as an indicator which measures the quality of growth, including the extent of its distribution and improvements in the quality of jobs.

Heart of the South West LEP compared with other areas Heart of the South West LEP compared with other areas

Charlotte Aldritt’s argument is not new, since progressive analysts have been encouraging changes of this sort for several years. What is significant is its deployment as the keynote speech at this year’s LEP conference.

CEO David Ralph said that he intended further collaboration with Charlotte Aldritt. She said she judged the unpublished local industrial strategy to be “superb”.

On the evidence of this conference, the Heart of the South West LEP considers combining inclusive growth with clean growth to be a winning strategic formula.

Is this a promise to deliver real change or simply some Whitehall-friendly window dressing? The answer will come in three parts.

First, the extent to which local people and the councils that represent them recognise that the LEP is more than a businessmen’s club.

Second, the continued ability of the LEP to attract funds from central government, local public sector bodies and the private sector.

Third, and most crucially, the projects to which LEP funding is channelled in future and the criteria by which their success will be judged.



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