Perhaps it is facile to link these contrasts. However, given the publics’ undoubted economic concerns, surely IF local political leaderships were putting forward radical, decisive and credible economic growth propositions, these would be of significant public (electoral?) interest. So, is there now a case for ‘local growth pacts’ (to match M. Hollande’s continental ambitions)? And, if so, what might these look like and how might they be delivered?

The case seems very strong. The national economy continues to broadly flat-line, but this disguises wide variation of assets, potential and performance between differing cities and communities. LEPs are now operating across the country to enable strategic economic leadership. Moreover, the very absence of new measures in the Queen’s speech means local leadership teams have a fair idea of the public policy tools and instruments likely to be at their disposal over the coming period. Beyond RGF, GPF, EZs etc. in which LEPs have a direct stake, these include (amongst others) DCLGs NPPF planning reforms and HCA housing programmes; DBIS’s renationalised skills, enterprise and innovation functions; DWP’s welfare reforms; DECCs low carbon agendas; and the Treasury-led outcomes of the Local Government Resource Review and approaches to innovative financing.

Making the most of local opportunities for economic growth, and seeking to shape national policies and programmes to contribute to those ends, is a significant and demanding undertaking. It requires a detailed understanding of the local economy today and its likely trajectories under future scenarios. A process for determining the scale and character of ambition needs to be undertaken. The likely impact of differing intervention strategies need to be assessed, and the priorities that will best progress the ambitions agreed. Then those interventions need to be delivered, performance managed, and their impact evaluated.

LEPs covering functional economic areas (FEAs) are ideally placed to facilitate these exercises, but there will be concerns that some of them lack the capacity and traditions of partnership working to bring the process to a well-founded solution. LEPs covering either more than one or partial FEAs will need the maturity and strategic awareness to decentralise and/or collaborate with neighbours.

‘Local Growth Pacts’ would focus on a small number of key drivers of growth, but, even modest interventions are likely to have physical, economic, social and financial dimensions. On the physical side, the Local Plans across the FEA will need to be updated (or adopted) for NPPF compliance, specifying scale of housing and jobs growth, and also any specific requirements of the local pact. Key strategic sites, urban functions and hierarchies, and enabling infrastructure (including ICT/Superfast broadband) investments will need to be identified, and an investment plan/framework put together to give confidence that these can be delivered.

The economic strand would cover measures for developing key high growth/high value sectors and/or technologies in which a FEA has a particular market advantage or opportunity; mainstream activities that generate or safeguard employment (e.g. retail, leisure, business services etc); and skills priorities for meeting business demand. Social interventions would connect deprived communities (of place and interest) to the drivers of growth both directly and in complementary activities.

The pact needs to mobilise public assets, and finance from public (including future EU programmes) and private sectors. There will be funding gaps. Closing these requires prioritisation and phasing, but also innovative, entrepreneurial approaches to managing risk.

Finally, the pact will need to have a low carbon character both in terms of the overall environmental footprint its implementation produces, and also in the specific exploitation of low carbon growth sectors like renewables and environmental technologies.

There are four obvious criticisms of the concept. First, and most easily overcome, is the issue of ‘language’. If the concept is associated with an incoming French Socialist President who has explicitly expressed scepticism at the primacy of deficit-reduction austerity programmes, it will have NO traction with the Coalition. Brand it as something else. Concertina the two years it has taken the coalition to rebrand ‘Total Place’ as ‘whole place community budgets’ by, for instance, using Treasury/DBIS’s ‘Plan for Growth’ terminology.

A second criticism is that there is nothing new in the concept. For the core cities and/or their LEPs, Government is already offering ‘new city deals’, which are, in effect, ‘local growth pacts’. Other areas may claim ‘we are already updating our Core Strategy for NPPF, producing transport and skills plans, providing signposting to enterprise and innovation services, agreeing inward investment propositions with UKTI etc’.

The ‘new city deal’ point is reasonable. They have superb potential, but are taking some time to emerge, and their implementation and impact remains far from assured. Many LEPs, however, are operating new partnerships, across new geographies, in new political and economic circumstances. Formulating and agreeing a robust ‘pact’ (whether as a ‘new city deal’, ‘whole place community budget’ or other arrangement) for which there is (new or refreshed) commitment to deliver, and some degree of government buy-in, will not be a wasted effort.

Thirdly, there is the argument that ‘government will just not decentralise the powers and resources to enable us to oversee a transformational growth programme’. Even the most advanced ‘new city deal’ in Greater Manchester has only actually allocated £4.4m over 3 years for improved business support. The much-lauded ‘earn back’ mechanism is for ‘up to £30mpa’ – this in an economy with an annual GVA over £45bn.

This argument is like telling M.Hollande NOT to pursue the EU Growth Pact because Germany will never agree. Local leadership teams need to know their ‘offer’ for growth and their ‘ask’ of government for delivering this. If negotiations lead to scaling back or phasing, at least the outcomes will be more well-founded than not doing the pact in the first place.

Perhaps the most compelling argument is that it’s all just too difficult. Analysing economies is complex, agreeing priorities is controversial, delivering major interventions is high risk, outcomes are uncertain.  In these circumstances we have enough difficulty, say, spending GPF wisely, to take on this much bigger task.

There is some ‘truth’ in this perspective. There may be false starts, ‘learning by doing’, and changes of course with the more comprehensive approach.  But defining what progress places want to achieve and then setting about delivering it, is the rationale of local leadership teams. It is a huge motivator for all those involved – whether politicians, professionals, or the businesses and communities which participate in a shared purpose. It is the reason I get up in the morning and go to work. And it is the reason, I suspect, why you are reading this blog. As M. Hollande might say, “Vive le pacte de croissance locale!”  

Altrincham is situated in Trafford MBC, which is ‘coincidentally’ (see last week’s blog) also a recipient of the £100,000 High Street Innovation Fund (HSIF). Such are the vagaries of HSIF that Altrincham has no idea what this means. Trafford MBC has to decide how HSIF will be spent and, for instance, the relative focus of the fund on Altrincham or similar sized centres in the Borough like Sale, Stretford and Urmston (or perhaps other types of High Street) – all of which have been heavily impacted by the growth of The Trafford Centre. Suffice it to say, the Altrincham YouTube clip features a rather scruffy ‘Hugh Laurie lookalike’ (according to The Grocer!), singing a song ‘Why Try?’, in the midst of a series of townscapes which look like the Martians landed in Altrincham before they moved on to Clacton.

‘Why Try’ is clearly a rhetorical question to the reported 363 applicants for Portas Pilot designation. But, having expressed my scepticism of Government’s approach to town centre development and management (TCM) last week, this blog will look at the issue of ‘what to try’ for Town Teams and their partners, and offer an initial agenda for enabling growth and development.

The Association of Town Centre Management (ATCM) published an extremely useful 10-point manifesto for town centres and high streets, broadly concurrent with the Portas Review. This is a very good starting point. It covers a manageable breadth of issues – literally from visioning to public loos, with many stops in between. Updating and distilling this for the context set by government in the NPPF and 2012 Budget, produces, I believe, five 2012 action points that will set the context for ‘Town Team’ effectiveness, and determine whether individual centres will move up or down the local economic growth league tables.

First – getting the local plan ‘right’: If nothing else, the NPPF has produced an absolute imperative for local authorities to ensure their local planning framework is NPPF-compliant within 12 months. For town centre vitality, this means firming up an ambitious vision, supported by evidence, which has some delivery realism over the plan period.

Second – partnerships need to evolve to be fit for purpose: For many town centres, partnership architecture comprises a mix of very new sub-regional constructs (like LEPs), and local authority district level and local arrangements with their roots in the pre-coalition era. The 363 ‘partnerships’ that made Portas Pilot proposals is a hugely exciting phenomenon that needs to evolve. Successful Town Teams will require engagement from traditional local authority and retail supporters of TCM – but also proactive involvement of other constituencies (commercial, leisure, other public sector), local communities and ideally a wider visitor economy/catchment. The priorities of TCM partnerships will also need to be facilitated in relevant arrangements at district and LEP-levels.

Third – TCM needs dedicated resource: Frankly, it is unrealistic to expect Town Teams to achieve major step-change in high street fortunes purely on a voluntarist basis – or even as a recipient of £100,000 of Portas Pilot largesse. Local Authorities and major business interests need to be prepared to identify an element of core resourcing both to sustain the enthusiasm of a Town Team, for direct intervention where appropriate, and to leverage/influence policies of major public and private role players. There are now over 100 BIDs and this mechanism can be refreshed and extended. Elsewhere, core and programme funding needs to be identified from local authorities, but also from direct and service-user charges, and also private sector sponsors, investors and even potentially philanthropists. It will be a challenge, and may need to be progressed in phases, but comprehensive town centre ‘budgeting’ showing all major sources and applications of funds is an important planning and management process for successful centres.

Fourth – learning by doing: There is a need to get some action underway – both to reinforce the enthusiasm of town teams, and to build an informed understanding of the impact of different intervention strategies. Arguably in the past, key role players have been fixated by a search for ‘golden bullets’ of parking charges, or attracting specific large multiples, or pedestrianisation strategies etc. There is a need for some affordable ’quick wins’ to generate momentum, but these need to be within a well-conceived action-learning and evaluation framework.

Finally – looking and collaborating outward: As important as building town team cohesion is the need to look outwards – understanding the ambitions and developing synergies with neighbours (e.g. the Altrincham, Sale, Stretford, and even Trafford Centre point), and also building the national TCM community to develop these agendas  and keep them at the forefront of public (and government) attention. In this respect, I welcome the ATCM debate about how to support all 363 pilot applications, and also those high streets that did not apply. This will not be easy to resource. Beyond universal issues, there is a case for both groupings in functional economic geographies/catchments, and in, for instance, different types of high street (e.g. large city, new town, market towns, heritage-led etc). There also needs to be different approaches for thriving growing high streets, and those that are struggling or in decline.

In conclusion, it is local leadership and strategy that will determine both in which ‘league’ individual Town Teams will play, and how successful they will be in that ‘competition’. As I head off to watch the team I support this afternoon (those of you who follow my blogs will know to whom I am referring), I suspect the ingredients of success for TCM are not that different from my soccer affiliations. Doing the basics well (planning, management, resourcing), having a bit of flair (distinctive place-shaping), having leaders on (in the Town Team) and off (in the wider role players) the pitch, nurturing and developing your assets, are crucial. It would be nice to have a fair competent referee, but that is far from assured particularly when – as might be recognised in Altrincham (and by my club) – you are playing at (Old) Trafford!

Now that the dust has settled on the Budget, NPPF and Government’s response to the Portas Town Centre review, we know two things for certain about the future of our High Streets. Firstly, Government gives the appearance of not really understanding (and possibly not really caring about) the impact of what it is doing. Therefore, and secondly, the responsibility for future town centre vitality will depend almost entirely on the vigour and rigour of local leadership teams.

Government’s response to the Portas Review is both extraordinary in its thoughtlessness, brazen in its abdication of responsibility to local teams (and local authorities in particular), and concurrently provides a ‘signature’ exemplar of how they pursue permissive ‘Localism’ (as opposed to the heavily ‘guided’ variant) in practice.

On the major Portas ‘asks’ of out-of-town call-in and affordability tests, Government specifically said ‘no’,  and leaves it to Local Plans to reconcile NPPF guidance (on presumptions of approval of growth-oriented proposals, with a steer towards sequential testing of developments). This is OK, up to a point. That point is the need – in the aftermath of abolition of Regional Strategies – for there to be a mechanism for and commitment to agreeing the hierarchy of urban centres of national, regional and sub-regional  significance amongst Local Planning Authorities. Applying sequential tests to proposals in suburban-facing local authorities or on transport corridors outside the urban core will be a particular challenge.

Of the Portas recommendations on parking, licensing, markets, byelaws, use class orders, and other regulations, Government broadly said ‘yes’, but then passes the brunt (and most of the cost) of actually doing something over to local authorities. It restricts itself to consultation, designation of ‘National Market Days’ and the like.

On business rate reliefs, Government definitely said yes. However, in the context of the complex and uncertain implementation of Business Rates retention, it is unlikely anyone except the most introverted local government finance boffin will have any idea of what the financial consequences of these decisions are. And business rate reliefs apply to all businesses – not just those that impact on high street vitality.

Finally, Government’s direct financial commitment manages to be both derisory and totally incoherent. They announced an additional £14m (over an unclear period). To put this in context, the refurbishment of the John Lewis Department Store in Cheadle in 2011 was reported as costing £19m.

The £14m includes twelve additional Portas pilots (£1.2m), £1m for neighbourhood planning, a further £1m for some sort of competition (the details of which will no doubt come out at a politically opportune moment), £500k to help BIDs access loans for start-up costs, and £306k for Business mentors. The majority of the amount, however, comprises the High Street Innovation Fund (HSIF) of £10m, awarding 100 local authorities with £100,000 each.

Possibly the only mitigation to feeling gross outrage at the mechanism by which HSIF has been allocated is that the amounts involved are so small. Apparently DCLG used business rates data on empty premises, plus some allowance (unspecified) for areas recovering from riot damage last summer, to select the ‘lucky’ 100. Leave aside this dataset is neither a measure of High Street challenge nor opportunity. Leave aside the fact that £100k per LA suggests that LAs of widely differing size and characteristics  ‘require’ the same incentive to innovate , the resultant distribution is close to scandalous.

London and the South East between them get 31% of HSIF – including such well-known ‘hotspots’ of decline like Westminster, Reading and Reigate. The North-East gets 5%, and key centres that (for instance on the Regional Growth Fund criteria of enterprise and private sector employment performance perform in the worst five nationally) like Sunderland, South Tyneside and Redcar, are excluded.

In High Street vitality terms, the recent ‘Battlefield Britain’ report by Javelin on casualties and survivors in the fight for the High Street identifies most robust and most vulnerable major centres. Any similarity with the HSIF distribution is entirely coincidental. Eight of their 30 most robust major centres receive the fund, whilst nine of their most vulnerable High Streets do not! For district and local centres, 35 of the 40 most robust centres are in London and the Greater South East – the largest recipients of the Fund.

It is entirely possible to get angry at government’s approach, or to just throw up (one’s hands?) in despair at apparent incompetence. However, perhaps more tellingly, this ‘Town Centre case study’ embodies a pattern of behaviour that, in its own terms, is a relatively coherent (DCLG?) strategy for Localism in general and local economic development in particular.

Assume that government doesn’t really care too deeply about local economic growth. Their priorities are macroeconomic stability and deficit reduction. But they want to give the appearance of being involved and get some kudos for local economic success. They produce a relatively well-written set of policy statements that can be interpreted in many different ways and appeal to many different constituencies – hence the generally positive response to NPPF’s initial publication.

They then leave the hard work of shaping these generalities to local authorities and partners. But, to stay involved (they would call it ‘incentivise’ positive behaviour), they ‘bung’ small amounts of money at lots of local places – £100k is a nice round number! They announce ‘National Days’, launch pilots and competitions. They shift expectations for supporting delivery to bodies like (in this instance) Association of Town Centre Managers, British Retail Consortium, National Association of British Market Authorities, LGA etc – thus getting some modicum of support from these important role-players.

This is an extremely potent PR strategy (in sharp contrast for instance to coalition disarray on the Budget). Government patronage generates some short term support and activity. They can remain associated with success, but distance themselves from local hard choices and setbacks. Whether brilliant PR is a substitute for more deep-rooted strategic approaches to sustainable local economic development, however, is far more problematic.

To conclude, this blog has argued that Government’s approach to town centre development and management is effectively hands-off. Where DCLG chooses to intervene financially, it is pretty incoherent and more PR than needs or impact-based. The consequences of this for Town Teams, local authorities, BID and other partnerships are profound. How they, supported by our sector, might respond to these challenges will be the subject of next week’s blog. Beyond any comments on the government approach presented here, I welcome your thoughts on the ‘Town Team’ and partners’ response.

Will government be transparent about RGF?

On the balance of probabilities, Regional Growth Fund (RGF) is neither a ‘national scandal’ nor ‘the best thing since sliced bread’ – but you would never know this from the information Government has made available about the Programme. The Department for Business Innovation and Skills (DBIS) ‘transparency’ web page starts “BIS is committed to providing the public with information on the performance and productivity of the department”. With applications for £1bn available for RGF Round 3 closing on 13^th June, the public, and particularly potential applicants, would benefit from clear, evidenced answers by DBIS to the following ten questions.

First, how precisely are RGF applications appraised by the Independent Advisory Panel? Applicants are asked to fill in very detailed application forms. Of the six criteria for bids, four require judgements (on creating additional sustainable private sector growth, rebalancing areas dependent on public sector, would not go ahead without RGF support, offering value for money). The bids are assessed by an Independent Advisory Panel, but there is no guidance as to how these four criteria are assessed and weighted. Applicants are provided with datasets that are said to form ‘some’ of the basis upon which applicants’ impact on areas will be assessed, but, again, no methodology is suggested. To take two examples – Nottingham, has had only one RGF ‘success’ of £1.6m (i.e. 1000^th of the fund) although, on the statistics provided by DBIS, it has pro-rata 40% more welfare claimants, 30% higher public sector dependency, 30% less enterprise density than the England average, and its private sector workforce has been declining. This is one of the eight core cities! Blackpool has not yet had a distinctive RGF success despite benefit and public sector ratios 80% and 60% above national averages, and private sector ratios at about 65% and 25% below average.

Second, what recommendations have the Independent Panel actually made to Ministers? Having been appraised, applicants do not know what form advice to Ministers takes? For instance, does the panel rank bids? Does it make recommendations about amounts to be approved, conditionality etc? Does it provide reasons on bids that it recommends for rejection? This question is important because of the reportedly derisory feedback unsuccessful applicants have had on bids – which do require considerable time, effort, and expense to make.

Third, have Ministers accepted Panel recommendations, and, where they have varied the recommendations, on what basis have they done this? There has been some criticism of RGF (including in this blog) that this is centralist ‘patronage’ rather than strategic intervention to support government rebalancing and localism priorities. The transparency of Ministerial decisions is an important reassurance for applicants on this point.

Fourth, having announced RGF ‘successes’, why is the ‘due diligence’ process taking so long? There has been huge criticism of the delay between RGF announcements and the completion of grant procedures. As of today the BIS website reports that of the 50 projects approved over a year ago, 27 contracts have been signed and 50% of projects have started. Of the 126 approvals announced (mainly) on 31/10/11, 21 contracts have been signed, 20% of projects have started (and seven ‘approvals’ haven’t even been published!). This performance needs detailed explanation. R3 applicants need to understand the expectations of them for this part of the process. Due diligence has generally been longer than the application procedure, and, as BIS makes clear, is conducted ‘at the expense of the applicant’.

Fifth, how much RGF has actually been disbursed, and on what basis? RGF was announced in June 2010 as an ‘urgent’ measure to rebalance the economy, with the initial £1billion available for 2011/12 and 2012/13. We are therefore already over halfway through the first (largest) tranche of money. Given delays, DBIS should report regularly (at least quarterly) on how much has been disbursed, and on what basis. For instance, is the fund disbursed in advance (in which case we really don’t know what results it is achieving), or in arrears on achievement of specific results (in which case slow disbursement will be a sign of limited achievement), or on some other basis? This is crucial for R3 applicants’ planning and scheme design.

Sixth, how are the job number benefits of the scheme calculated and assured? DBIS claim the first two rounds of RGF will leverage around £7.5billion of private investment and deliver around 330,000 jobs. As has been pointed out (including in this blog – ‘RGF just doesn’t add up), these figures are hugely suspect, with 80% of jobs being ‘indirect’, value-for-money and leverage ratios varying widely, and with net cost per job not comparing well with former comparable (and independently verified) RDA investments.  With 50% of R1 and 20% of R2 now underway, we need to know what real experience is demonstrating – especially as some high profile RGF ‘winners’ have subsequently issued redundancy notices (presumably alongside the RGF-supported vacancies).

Seventh, are there clawback provisions if RGF awards do not achieve job, leverage or other targets? Related to question #6 above, this is clearly important for applicants in terms of managing risk, and for the public in terms of assessing the effectiveness and performance management of the programme.

Eighth, are RGF monies subject to financial year control totals or are underspends in one year automatically rolled-forward to future years? Given delays in getting from conditional approval to contract, it seems unlikely that expenditure forecasts in 2011/12 have been met. Are these sums (and any future ‘underspends’) available in the later years of the programme?

Ninth, how has RGF been aligned with ERDF and other public funding? One of the surprise (to me) pronouncements in the Budget (see Plan for Growth Implementation Update) was that “The Government has aligned ERDF and RGF R2”. I have yet to find any evidence of this, and it does not appear to be what those involved in projects, programme management and the Commission are saying. The potential for alignment – especially now RGF stretches into the next ERDF programming period – potentially makes this round an even more important strategic intervention for companies, cities and communities. We would all benefit from practical explanation of what alignment means in practice.

Tenth, finally, what are the plans for evaluation and lesson learning from RGF? This seems particularly important given Government’s initial goals that RGF will be a principal instrument for rebalancing (both geographically and public/private), that this ‘localist’ model would replace and better ‘bloated regional bureaucracies’ (Pickles, June 2010), and that expenditure of £2.4bn (aligned with ERDF and other public funding) is now involved. However, arrangements for evaluation and lesson-learning appear silent both on the R3 application forms, and on the DBIS RGF website.

I would love to be proved wrong, but I suspect RGF is NOT ‘the best thing (even within its own terms) since sliced bread’. I genuinely hope it is not a ‘national scandal’. As we approach the second anniversary of RGFs launch and the closure of R3 applications, government needs to work with the wider development and regeneration sector to respond to these questions, and reassure us on that second point.

Will LEPs be welcomed through the doors of council planning offices?

With the publication on 27^th March 2012 of the National Planning Policy Framework (NPPF), Local Enterprise Partnerships (LEPs) have an important (if modest) formal role in assisting ‘Local Planning Authorities’ (LPAs) to produce Local Plans that can deliver ‘sustainable development’ in their areas. However, they also have a much more significant potential to shape economic growth strategies across their and neighbouring geographies – IF (and this is surely the major challenge for LEPs over the coming period) they can mobilise and deploy strategic intelligence, policy and relationship capabilities to decisively influence the way local authorities actually put the NPPF into practice.

To deal firstly with the formal role, the NPPF is relatively muted with regards to LEPs. They are referenced in paragraph 160 as being part of a process for LPAs who should “work together with county and neighbouring authorities and with Local Enterprise Partnerships to prepare and maintain a robust evidence base to understand both existing business needs and likely changes in the market”. To do this ‘well’ is actually quite a major task and refers to the “business voice” role of LEPs which I referenced in my earlier blog (‘Sugar and Spice…..What is your LEP made of?’, 13^th March 2012). Their only other specific mention comes in paragraph 180 where they are cited as consultees (alongside Local Nature Partnerships) for LPAs cross-boundary strategic planning.

It seems to me, however, that the most important contribution LEPs might make to the Local Plan is in establishing a clear, credible strategic perspective on local economic growth that can underpin the section of the NPPF requiring local plans to promote ‘building a strong competitive economy’. This section of the framework expects LPAs to “plan proactively to meet the business needs and support an economy fit for the 21^st century” through, inter alia:-

• Setting a clear economic vision and strategy for the area
• Identifying key strategic sites for investment
• Having ‘sector policies’ which support both expanding, contracting and emerging sectors
• Promoting and expanding clusters and networks in knowledge economy industries
• Identifying priorities for regeneration, infrastructure provision and environmental enhancement
• Facilitating flexible working practices (e.g. through live/work)

There are also other areas where LEP views may be crucial – for instance in the need to reach understandings on the network and hierarchy of urban centres that underpins the national priority for developing the vitality of town centres.

All LEPs cover a wider economic geography than that of a single LPA, so their view of economic vision, strategic sites, key sectors/cluster/networks, priorities for regeneration and infrastructure etc., should be a major consideration for the LPA. This broader view can build on the formal NPPF-designated role(s) as source of business intelligence/market need evidence and as consultee on cross-boundary issues.However, this rather begs the question of how LEPS will establish their position, and then how they will advocate it through strategic relationship management with local authorities (LAs) and other partners.

This brings me to a final point, and rounds off what has effectively become a three-part blog over the last three weeks on ‘what LEPs are for?. ‘Sugar and Spice’ identified six possible LEP roles and functions. ‘Making Local Economic Sense of the Budget’ (26^th March 2012) suggested five ‘lessons’ on what LEPs need to bring to the ‘economic growth table’ if they are to be credible, influential role players. Both these blogs imply resources, capabilities and a well-founded business strategy that many LEPs do not yet possess. Perhaps the NPPF can provide a lever to address this gap.

Over the next twelve months, local authorities are either going to have to update their Local Plans to ensure compliance with the NPPF, or (for those who have not adopted a plan since 2004) will have to move to adopt one. With the abolition of national and regional housing targets and accompanying jobs ambitions, key value judgements about the scale and character of growth have – up to a point – been genuinely localised. The ‘point’, though, is that the judgements that individual local authorities make about this need to be broadly pro-sustainable economic growth (to be compliant with NPPF), broadly consistent with the ambitions of neighbouring areas, and are likely to be hugely controversial locally with at least some significant stakeholders (e.g. local communities, landowners, development industry, special interest groups etc).

The NPPF’s strength as a relatively short simple framework, in the ‘real world’ gives huge opportunities for ‘grey areas’, differing interpretations, and challenges to local authority determinations both strategically and in major individual applications.

In meeting these challenges, local authorities will not wish to ‘fight’ on multiple fronts (e.g. with a pro-growth, pro-market national government; with local business, developers; with local communities, special interest groups etc). They, therefore, may look increasingly to business-led LEPs to provide the ‘business voice’ and market-based economic prioritisation foundations for Local Plan formulation and delivery management. To discharge those roles, the LEPs need to be self-evidently competent and effective. And to achieve this standing, they need to be resourced.

Business involvement in statutory planning has always been a hugely controversial and sensitive issue with LAs, and many LEPs may be tempted to shy away from it. However, up to a point, the NPPF now requires them to get involved.

LEP Boards need to reach an early understanding with their LAs as to how they will meet this requirement, and then agree with them how the resources and capabilities needed to deliver the agreement will be mobilised and deployed. How NPPF is dealt with in emerging LEP strategies and 2012/13 business plans will be a very pertinent indicator of the character of LEP an area will have for the 2012-15 period.

That concludes the (unanticipated by me!) three-part series. Next week, I promise NOT to mention the L-word…

My last blog questioned ‘What are LEPs for’, and made suggestions about how to organise to deliver different LEP roles and functions. Last week’s budget was somewhat disappointing in helping to clarify these important issues. Government is still (in Vince Cable’s own words) ‘lacking a compelling vision of where the country is heading’, and nowhere is this more evident than in government’s approach to local economic growth.

A close analysis of Budget announcements to date reinforce the impression of LEPs as a convenient occasional vehicle for channelling government patronage through modest ad hoc funds like RGF and Growing Places Fund (GPF) which received a £270m boost (£70m of this for London), and through bespoke incentivised programmes like Enterprise Zones (EZs).

Indeed most instructive in terms of how central Government thinks LEPs are to this agenda is found in the Treasury/DBIS Plan for Growth March 2012 Implementation Update. This details progress on the 235 measures that government considers will deliver long-term sustainable balanced national economic growth.

The Implementation Update is worth a blog in its own right, but suffice it to say, LEPs are mentioned three times. On Measure #192 Leeds City Region and New Anglia LEPs’ imminent networking and capacity-building events to raise the profile of mid-size businesses are signifiers of progress on this measure. On Measure #214 the five Rural Growth Network pilots are asked to ‘test mechanisms by which LEPs and local authorities can support growth in rural areas’. Whilst in Measure #230, Visit England is to work with local tourism bodies to develop stronger links with LEPs. On the National Infrastructure Plan delivery update (of the forty most nationally significant infrastructure investment programmes) LEPs are promised consultation by the Highways Agency on ‘smaller’ bottleneck schemes, and the report confirms that GPF funding has been provided.

Almost as worrying is the low prominence given to local government in both documents. On the Plan for Growth, local authorities’ role is focused on implementation of the NPPF planning reforms – which are clearly hugely significant – and then on issues like reducing SME regulation, night-time deliveries, snow clearance etc. On the National Infrastructure Plan, beyond normal transport funding mechanisms, the one specific mention is that local authorities are looking at the contribution they can make to the proposed Oxford-Bedford railway proposals.

None of this marginalisation by the economic departments of government is to underplay the positive work that LEPs are developing (in line with the roles outlined in the earlier blog), nor the strategic importance of some measures that are geographically focused (e.g. the interesting and innovative Manchester ‘Earn Back’ scheme). However, it does somewhat reshape the way LEPs need to discharge their roles if they are to be nationally influential and significant.

My own view is that the 2012 budget suggests local economic leadership teams need to focus on five specific dimensions of how they do their business.

Firstly – LEPs, self-evidently, need to continue to be alert to and opportunistic in how they deal with the ad hoc government interventions, notwithstanding these still offer far less than a compelling vision and coherent approach to supporting local economic growth. With RGF Round Three, new GPF allocations and other occasional patronage-based interventions, LEPs do have opportunities to attract resources and attention to strategic priorities in their areas.

Second, Government interventions now overwhelmingly require private sector match (if not majority) funding – whether in sector programmes (housing, innovation/R&D, infrastructure etc.) or in mechanisms like TIF, BIDs etc. LEPs‘ abilities to leverage the market, through either strategic relationship management or investment-ready propositions, is a crucial component of their potential value-add and influence.

Third, there is a massive issue of understanding and managing the complexity of the landscape, and shaping it locally. To give, a well-rehearsed example, Manchester’s city deal is hugely exciting – but how will ‘Earn Back’ actually work? And how do we manage it for optimum economic returns alongside the local authority-based business rate retention regime, the Enterprise Zone business rate and capital allowances incentives, and the wider skills and national (place-indifferent) innovation ‘systems’. And what capacity and economic intelligence does the Greater Manchester LEP and partners need to influence these agendas and assure delivery capacity is in place?

Fourth, strategic relationship management is crucial. This has already been mentioned with respect to the market, but goes much wider. Business/Public/Community relations need to be mobilised behind local strategic priorities, and these need to be articulated and mediated with wider organs of government who are NOT as attuned to place as LEPs/LAs, and across geographical boundaries with neighbouring areas for major strategic interventions.

Finally, LEPs/LAs value-add and influence will be immensely enhanced by innovative and creative approaches to planning and managing growth. For instance, it is fascinating that four LEPs and Birmingham City Council obtained a £25m provisional RGF Round Two approval for their Advanced Manufacturing Supply Chain initiative in the automotive sector. This has now been picked up by the Technology Strategy Board (TSB) in a £125m national initiative for which submissions are currently open. It is a good example of LEP-led innovation shaping national policy although a possible down-side is this now appears to be run by TSB centrally.

If LEPs and their LA partners can begin to actually demonstrate delivery of results from RGF, GPF, EZ and other opportunistic-based interventions; if they can leverage the market, manage complexity intelligently, establish credible strategic relationships with key role-players; and if they are creative in the way they intervene; then I believe we will see positive examples of local economic development over 2012/13 and beyond. No doubt, government will take the credit for this – but, in a sense, so what? The important prize is both local economic success and a much more prominent place at the top table of national growth policy formulation and decision-taking. And the evidence of national influence will be a much stronger LEP and LA profile in future Progress Reports of the Plan for Growth and National Infrastructure Plan.

It is important that LEPs do ask themselves those questions – ideally in that order – because my observation is that we are seeing LEPs take on widely varying roles and functions. These require quite different resourcing, organisation arrangements, and responses/support from local authorities, business and other partners if LEPs are to be effective.

Most LEPs seem to have a role as a ‘business voice’ and advocate for articulating the public policies and priorities that businesses would wish to see in their area. Doing this effectively probably requires a LEP that can engage with and animate business representative organisations (Chambers, IoD, CBI, EEF etc), reach key strategic businesses bilaterally, and get a feel for those SMEs who are not active in representative organisations.

A number of LEPs are now formulating economic (growth) strategies for their geographies, and acting as the partnership board for strategic intervention prioritisation.  These types of exercise consider whether the focus should be, for instance, on employment generation, key sectors, differential roles and opportunities of specific places within the LEP geography etc. This type of LEP activity requires both the ability to construct and analyse the evidence base robustly, and to facilitate deliberative exchange that determines future options and choices.

A third LEP role (that has been seen for instance in some LEPs engagement with UKTI and PA for inward investment) is as ‘owner’, developer and promoter of the area proposition in global and UK markets. This type of role requires the LEP to have marketing, communications and relationship management capabilities with a range of public and private sector organisations, together with the understanding to genuinely flesh out a distinctive credible ‘brand’ proposition for their geography.

All LEPs have now, de facto, taken on programme commissioner and potentially delivery (including performance) manager roles with regards to specific programmes (RGF, EZs, GPF etc) ascribed to them by government. Commissioning responsibilities can be extended if partners like local authorities ask them to take on additional areas of work (e.g. skills, employment, transport, enterprise etc). Discharging these roles well requires LEPs to be an ‘intelligent client’ able to specify, ‘procure’ (actually or virtually) and performance manage activity from partners and/or contractors.

LEPs can potentially be the fixer/honest broker for facilitating conflict resolution that impacts on growth in their geographies. If, for instance, two local authorities were competing as locations for investment (e.g. town centre/out of town), a LEP perspective and facilitation might be important in working through the issues. This might also occur between public and private sectors, between local and national, or with neighbouring areas. LEP Chairs and Board Members in particular will need to give their time freely and have strong process and relationship skills to be effective in this area.

Finally, perhaps the greatest ‘prize’ for LEPs would be a respected, valued ‘seat at the top table’ of strategic planning for their geographies. This is not only about Core Strategies and LDFs (although this would be a part). LEPs could have a major role in ‘new city deals’ (or any non-metropolitan variant), in local authority policies for Business Rate Retention, TIF, CIL, innovative financing and public sector asset deployment, in Local Transport Consortia, Employment and Skills Boards etc. LEPs are stepping onto this territory quite cautiously, and not all local authorities are or will be welcoming. This is partly because the LEP would require strategic capabilities in a breadth of areas to convincingly and consistently argue for controversial (presumably pro-growth) policies in these types of Forums.

So, in response to the question ‘what is our LEP for?’, there is clearly no single ‘right’ answer. As we would expect under localism, each partnership needs to find its own appropriate solution. A first issue for LEPs, local authorities and partners, therefore, is whether you are satisfied that you have put in the ‘norming, forming and storming…’ time to consider and reach agreement on the immediate (i.e. 2012/13) focus for LEP roles and functions.

If you have, the second question (what are LEPs made of?) comes into play, as partners have to determine how to resource and organise the LEP to discharge their responsibilities effectively. One worry is that where LEPs duck these two exercises and move straight to debating “how shall we use ‘our’ Capacity Fund (or other Start-Up) allocation?” they will end up as marginal talking shops, somewhat detached from the main thrust of local economic growth decision-taking.

I accept this is rather contrived, but asking what your LEP is for, and what, therefore, it should be made of, is like the most enduring of nursery rhymes – the questions appear sweet and innocent, but always have a darker undertone!

The nursery rhyme that inspired ‘Sugar and Spice…’ is also a much more sinister reference in Polanski’s ‘Rosemary’s Baby’. When Rosemary is given a drink to nourish her as yet unborn child, the seemingly kind elderly neighbour jokingly tells her its contains what little boys are made of – ‘slugs and snails and puppy dog tails’). The neighbour turns out to be the leader of a Witches coven, and Rosemary eventually gives birth to a devil-child. It is to be hoped that none of our LEPs have a similar outcome as they move from the first full year of their birth (2011/12) into childhood.

Need to do more than 'follow the money' to deliver local economic growth...

As we approach a pivotal Budget next month, now is an important moment to consider whether  government’s local government finance reforms will really provide the powers and resources to stimulate local economic growth. This analysis can shape the steps local authorities (LAs) and Local Enterprise Partnerships (LEPs) need to take to realise returns from any of these changes.

With the deficit reduction prerogative, the renationalisation of most enterprise, innovation, regional growth and EU programmes, and the destruction of the RDAs and their +/-£2bn p.a. single capital pot, government has been highly effective at reducing money available to local leadership teams to promote growth and development in our local economies.

Modest compensating amounts have been allocated through, say, Regional Growth Fund (RGF), Growing Places Fund (GPF) and pilots like the (derisory?) £1m for town centre ‘Portas Pilots’, but these sums are smaller than hitherto, and distributed more as centralised patronage than as part of a coherent locally-led strategic prioritisation process.

More significant longer-term instruments to support local economic growth are awaiting the Local Government Resource Review (LGRR) retention of Business Rates, establishment of Tax Incremental Financing (TIF), new value-capture planning instruments like Community Infrastructure Levy (CIL), and freedoms and flexibilities trailed in ‘new city deals’ and community-based budget pilots.

Outside Westminster/Whitehall, it is difficult to find anyone who believes the Business Rates retention scheme on offer from government will achieve its overt objectives to incentivise local authorities to promote development on the basis that they will retain additional business rates accruing. This intuitively simple and attractive principle has then been caveated heavily. The starting point (of the 2012/13 national business rate distribution) means LAs that generate large business rate surpluses pay a ‘tariff’ to ‘top up’ local authorities (who generate business rate deficits) to maintain local authority financial stability. The Treasury then takes a proportion of business rate revenues (including ‘excessive’ increases), and periodically (perhaps for the next spending review and then every ten years) ‘resets’ the baseline.

As an incentive, therefore, the change is unlikely to achieve the desired outcome. The tariffs , top ups and Treasury top-slice mean it is less simple and provides much smaller amounts to LAs than a ‘pure’ scheme; whilst the periodic resetting provides less certainty of long-term revenue streams.  This uncertainty also undermines the attractiveness of TIF (1) where LAs borrow to fund enabling infrastructure against future business rate (and other?) receipts as an extension of the existing prudential borrowing regime. TIF (2) where this borrowing is ‘protected’ through periodic resetting requires central approval and will only be given in a small number of cases.

As a source of new funding for local economic development, the reforms are undermined by the overall expenditure totals to be available to LAs under the deficit reduction programme until at least 2017/18. Given overall totals will continue to fall, any modest business rate increase will be needed to sustain existing spend (e.g. on adult social care) rather than providing an ear-marked resource for growing the economy.

The complexity of the emerging ‘system’ will be immensely challenging. Complexity will be a major concern for (rapid, decisive) delivery. Take an example of putting together an attractive investment-ready package for a transformational development in one site of a multi-site Enterprise Zone (EZ). The appraisal and development team will need to consider (and ‘sell’ to the market):-

• A business rate approach that meets EZ criteria but which sits within an overall business rate retention approach for the LA (and possibly whole LEP) area
• Whether the development needs enabling TIF-funded infrastructure and whether they can carry the risk (of resetting before the loan is repaid) under prudential borrowing or whether central guarantees should be sought
• If LA/public sector assets are involved (or if the public sector is providing anchor tenancy-type underpinning to the scheme), the terms of involvement will need to be determined
• The planning context will need to sit within an overall CIL (and residual S106) approach
• EU, RGF, GPF and other funding might be sought to address ‘market failures’ and provide ‘gap-funding’
• Any indirect skills, employment, transport, broadband and related interventions need to be considered and resourced
• The impact (and opportunity cost) of the investment on neighbouring sites and on growth in the wider economic area will need to be assessed

Up to a point, one can argue that this type of complexity is present in any transformational investment. And it is this argument that needs to inform how local leadership approaches the coming period and responds to LA finance reforms.

Put simply, local economic growth priorities cannot be determined by ‘following the money’. LAs and LEPs need to set priorities based on a well-founded (in evidence and analysis terms) long-term assessment of the roles and functions their area can and should play in the global, national, and sub-national economy. The opportunities and challenges in developing those roles; the specialisms, clusters and relationships that need to be nurtured; and the resulting catalytic hard (e.g. physical) and soft (e.g. enterprise, innovation, skills, community) investments that can unlock the opportunities and address the challenges can then be developed. The local economic growth strategy must ‘lead’ the money, not the other way round.

I accept that it is unrealistic not to expect LAs and LEPs to be opportunistic and to ‘game play’ financial reforms and funding programmes in the current climate. But to establish and operate a new local economic growth ‘system’ that has integrity and coherence, opportunism and game playing must be tactical and rest on firm strategic foundations.

The most encouraging basis for elaborating and agreeing these strategic foundations is probably the ‘new city deals’ whereby government will agree freedoms, flexibilities and some resourcing with ‘well-led’ local cities/city regions. The response of government to Liverpool’s decision on adopting the elected mayor model (where Greg Clark has agreed this goes a long way to meet his governance criteria) is also encouraging – again up to a point. As I have argued previously, new city deals need to be extended beyond Core Cities and their regions, agreed and delivered effectively.

With deficit reduction’s primacy extended into the medium term, Government’s financial reforms reinforce a ‘do less with a lot less’ ethos to LA and LEP economic teams. Only a clear strong local economic growth strategy, underpinned by a robust local planning and CIL-regime, and operationalised by a ‘new deal’ agreement with government, will enable LA and LEP leadership teams to devise a ‘do more and do it differently with less’ approach, and realise positive local economic growth outcomes from it.

Horse and Cart, Clacton War of the Worlds 1952 (EAFA 1990)

When I read Grant Shapps’ announcement (4^th February) of a competition to select 12 local pilots to test ‘Town Teams’ recommended by the Portas High Street Review, I googled ‘putting the cart before the horse… town centres’. I am delighted that I did.

The day of the announcement was my mother’s 79^th (she says 74^th!) birthday, and I have always remembered her telling me of her summer trips in the 1950s to Clacton to work on her uncle’s fairground stall on Clacton pier. My google search took me to the most wonderful East Anglian Film Archive (EAFA) restoration of an amateur production of ‘War of the Worlds at Clacton’ – a 32 minute 16mm short produced in 1952. It shows a vibrant, busy, diverse town centre before the martian carnage. EAFA notes, exquisitely, ‘ Unaware of the invasion the council chamber sits as normal, likewise folk drink in the pub, sit in the barber’s shop and the library, all without a clue of Clacton’s fate’. Indeed….

Government has ‘put the cart before the horse’ with its Portas Pilot announcements, but, the competition nevertheless represents an interesting challenge for ambitious town centres, and a real opportunity to produce a 21^st century equivalent of the images and endeavour displayed by this 1952 Clacton jewel.

To deal with government first…the pattern of their approach to economic development has now been clear for some time. In default of a coherent strategy, they come up with an ad hoc announcement, with derisory funding, to give the appearance of leadership.

‘Town Teams’ are probably a sensible evolution of a lot of partnership working that has been going on for decades in town centre management, Business Improvement Districts (BIDs) etc. Some extra resources to develop the concept further in the new economic development landscape are welcome. But, as usual, why ‘12’ pilots (especially when government is seeking to cover nine different types of ‘high street’ – large, rural, coastal, market, and new towns; villages, suburban, parades and ‘other’)? What do we really think £1m between them (i.e. around £80k on average over an indeterminate period) will really test? And of course, government has not suggested how the ‘pilot’ will be run and the lessons considered and disseminated.

The (in this case miniscule) ‘cart before the horse’ approach arises, because the Portas Review recommended some very major ‘asks’ of government – a National Planning Policy Framework (NPPF) presumption in favour of town centre development, Secretary of State call in of out-of-town retail-led applications, ‘affordable shop’ quotients in retail developments, new legislation for landlord participation in BIDs, greater CPO powers, new business rates regimes etc.

Instead of briskly and seriously answering these questions, Shapps bungs £1m at two non-controversial recommendations (town teams and pilots). The problem for pilot propositions is that they will have to be formulated without knowing what the bigger national policy picture will be (which of course will shape a local strategy). The fear is that announcements in March (budget time) on NPPF, Local Government Resources Review (business rates) etc., may not be as unequivocally supportive of the high street as Shapps’s self-congratulatory February 4^th sound-bites.

Nevertheless, the ‘Portas Pilots’ proposition is interesting, and I hope towns like Clacton will put forward propositions.

Firstly, this is one of the few economic development initiatives that is not explicitly ‘big city’-led. Margate (a Portas reference point but with a vacancy rate above 36% in the latest Local Data Company Vacancy Report) has as strong a case for inclusion (perhaps stronger) as, say, Manchester.

Second, the scale of the challenge is significant and important. Portas identifies around 5400 ‘high streets’ in the UK with retail spending shares dropping from 49%-39% from 2000-14 compared to impressive growth of out-of-town and non-store (i.e. internet-based) over the same period. 25000 high street stores closed in the last decade with a 10% reduction in footfall.

The need to define and embed new distinctive roles and functions in our town centres – Portas’s ‘social hubs for shopping, learning, culture, health, wellbeing, creativity, socialising and having fun – does require intervention, and her proposition that ‘once we invest social capital in the heart of our communities, economic capital will follow’ needs testing and development.

Third, the town centre management and BID-models appear intuitively highly relevant to the grain of new local economic development – partnership-based with additional income streams and limited core public funding. However, the model does need to evolve and go to places it hasn’t yet reached. The DCLG February 2010 list of around 90 successful BIDs in England showed by far the most numerous (22) in London but only three in the North East and two in Yorkshire and Humber. Since then there appear to have been a further 22 new BIDs established in England, mainly in Greater Birmingham (6), the East Midlands (7) and South West (5). There have been none in the three northern regions – all of which have vacancy rates over 16% compared to an England average of 12%. There needs to be a serious debate about the role of town centre management and development in economic ‘rebalancing’, and it might be useful if Portas Pilots helped test some propositions on this.

Finally, the invitation to post a Youtube clip with the Portas Pilot application submission is potentially an exciting exercise. What is perhaps even more striking than the bustling town centre about the 1952 ‘War of the Worlds in Clacton’, is the fact that the amateur film was ever made at all. Led by the Youth and Day Centre, including lots of young people but also Police, Fire Service and a range of other partners – this is surely the type of innovative expression of civic energy that can build the social and thereafter economic capital of many high streets over the coming period.

If you have a spare 30 minutes and want to smile, I do recommend this archive piece. However, rejuvenating our town and village centres is a much longer and more serious endeavour. Portas is probably right when she suggests the traditional high street is not at war with out-of-town and on-line. But turnaround and reinvention will be a struggle. Yet again, it will be local leadership – not government – that can turn the Portas Pilots into positive and useful contributions to this process.

Regeneration and Renewal, and this blog in particular, has previously (November 2011) questioned government’s approach to Regional Growth Fund (RGF) and their claims for its effectiveness and value-for-money. There is virtually no transparency in the process by which applications have been appraised and approved, and scant assurance on the manner in which jobs created/safeguarded and private sector leverage have been calculated.

With bidding for the next round of funding (worth up to £1billion) due to be launched in February, it is now an appropriate moment to return to government to demand a transparency and accountability for RGF decision-taking and implementation that matches their rhetoric and purported values.

The announcements last week of a further four awards throws no further light on the questions surrounding RGF. Three of the awards – amounting to 98% of the amount allocated – are Round One decisions made in April 2011. There has been much criticism of the length of time it takes between RGF ‘decision’ and completion of due diligence and confirmation of grant. If it takes 10 months (and longer for those round one successes still awaiting approval) to verify an application, one has to question the original decision-making process and the basis upon which some bids were passed and others rejected.

Looking at such details as government and the companies have made available also throws up issues. The largest award – to E2V of Chelmsford – is of £6.25m, leveraging an apparent £3.70 of other investment for every £1 of RGF invested. This is significantly below the much publicised 5:1 ratio lauded by Nick Clegg as evidence of the value for money of the fund. The second largest announcement of £1.69m is to Bentley, and boasts a £2.70:£1 ratio and, according to the company web-site is to maintain and enhance skills of the existing workforce, whilst the DBIS press notice couples this with increasing job numbers. One Round Two success received approval – but this is for a relatively modest £200,000 and is only a component of the much larger Leeds City Region proposal rather than for the complete package.

The current position on RGF, therefore, remains as before:-

• The criteria for success remain unclear and inconsistent (and the feedback for at least some unsuccessful applicants has been minimal)
• The appraisal process both for initial ‘success’ and for due diligence is lengthy
• The benefits in terms of job numbers – both direct and indirect – and for private sector leverage remain to be proven
• The conditionality of the awards (e.g. if job numbers, leverage or indeed other factors change during the life of the project) has not been announced

Government should choose to address these issues seriously and thoroughly concurrent with the launch of the February bidding round. LEPs should demand this. And potential applicants deserve it.