It's the (real) economy, stupid

Having spent the past week driving around the south east of England on holiday, I was struck by how daft it seemed to lump the likes of Brighton, the Isle of White, Hastings, Canterbury and Rye et al into one region, with one strategic economic development agency (In my defence, I was also struck by other things too, like how beautiful that part of England is).

Cities, towns and villages of great diversity, with different strengths, weaknesses needs and wants, could hardly be adequately catered for by the South East of England regional development agency, no matter how hard it worked it engaging its local authority partners. Put simply, the arbitrary boundaries of the region were too expansive and were not able to properly account for real economic areas.

From regions to sub-regions

This much has of course been recognised by the coalition government in its plans to scrap the RDAs and replace them with Local Enterprise Partnerships - essentially sub-regional consortia of councils and businesses that will take charge of driving forward economic development in their area.

The idea being, of course, that sub-regional entities can better represent real economies and therefore can better coordinate plans for regeneration, housing growth, transport and other key economic development functions, such as employment and skills strategies, than much wider and less focused regional bodies.

Economic development professionals - and many key urban policy think tanks, such as Centre for Cities and the New Local Government Network - have long argued that sub-regions are the best spatial level to deliver many core economic development functions. With the coalition’s invitation to councils and businesses to put together their proposals for LEPs, that argument has now clearly been won.

However, there is now cause for concern that local government is about to blow the opportunity it has been handed. In recent weeks it has become increasingly clear that in some regions councils are becoming engaged in increasingly fractious disputes about who they ought to partner with as they put together LEP proposals ahead of the 6 September deadline.

Boundary disputes

The Local Govenrment Improvement & Development have now produced what they consider to be the most up to date - though not definitive - map of the emerging geography of LEPs, which largely coheres with what LGC has been told over the past weeks.

What is alarming about the map (attached below) is the large tracts of yellow, orange and white, which represent areas that have yet to sort out their geography (it should also be noted that the green only represents “reasonably certain” proposals, not confirmed partnerships). In short, only a few weeks out from the 6 September deadline many councils are still considering the who, rather than the what.

In Yorkshire and Humber, for example, early plans for four LEPs - based on the Leeds and Sheffield City Regions, along with North Yorkshire and a Hull & Humber Ports partnerships have come unstuck after Hull City Council and East Riding of Yorkshire Council said they wanted to form their own LEP rather than partner with North and North East Lincolnshire on the south bank of the Humber estuary. This despite business support for a Humber-wide LEP, which business groups say would better represent the real economy of the sub-region.

Elsewhere, Leicestershire county council leader David Parsons wants, quite sensibly it would seem, for the Leicestershire and Leicester partnership to look at joining with Northamptonshire and Rutland to form a south midlands LEP. Mr Parsons says this would represent a more natural economic area than just the county boundary. But in this case, however, Leicestershire business groups are opposing the plan, wanting a county-wide LEP only. The dispute has yet to be resolved.

County-council take over?

Meanwhile, in the north west, Lancashire County Council is putting pressure on its districts to join a county-wide LEP and is opposed to the existing Pennine Lancashire and Blackpool and Fylde Coast partnerships forming LEPs based on their multi-area agreements.

Indeed, LGC has been told that Lancashire has said it would go so far as to not cooperate with a Pennine Lancs LEP if its bid for a Central Lancashire LEP (without East Lancashire) failed. This despite the fact that the county council area fails the key test of being a functional economic geography.

Elsewhere, and in the Greater South East particularly, county councils are emphasising less the partnership in the LEP name and more the local, by putting forward proposals for LEPs over their own county council boundaries, as is the case with Hertfordshire, Suffolk and Norfolk, or in partnership only with their unitaries, as is the case with Kent and Essex.

The move for county council LEPs is based, one assumes, on a notion that it will enable the new entity to avoid messy boundary disputes - and difficult compromises as decisions are made on the allocations of resource across sub-regions - but also an assumption that county councils represent a real economic area.

It’s the (real) economy, stupid

For instance, Oxfordshire County Council leader Keith Mitchell is of the view that the administrative boundary of Oxfordshire is a natural economic area and wants to submit a single county LEP rather than forming a wider Thames Valley partnership that could take in the area from Swindon through to Heathrow.

But basing a LEP on a county boundary in this way simply replaces one arbitrary administrative boundary (that of the region) with another (that of the county) - albeit a smaller one - and wholly misses the point of the reform: to focus economic development activity on a real economy.

It now seems there could be a real danger that some councils will blow the chance been handed to them. So while Sheffield and its neighbours have put together thoroughly sensible plans that include neighbours in the Derbyshire and Nottinghamshire, Peterborough failed to convince Cambridgeshire to let it form its own LEP with its hinterland, rather than becoming a part of a county-wide partnership.

Worryingly, the more councils get bogged down in arguments about geography, the less time they are spending on actually thinking through what a LEP should be for. As Neil McInroy, chief executive of Centre for Local Economic Strategies, argues here, so far form is definitely not following function.

Indeed, as one legal expert who has been liaising with councils on LEP plans told LGC, it is as if councils are playing pick up on a school sports field, choosing who is to be in their team, without yet deciding on what game it is they will play.

And with ministers likely to smile upon proposals that convincingly represent real economic areas and have clear set of functions and objectives, it could be the case that a whole host of these new entities are still born, becoming talking shops with no powers to actually make an impact on their local economy. That would be a huge lost opportunity.