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Liam Booth-Smith: LEPs should not lead local industrial strategies

Liam Booth-Smith
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When Localis published The Making of an Industrial Strategy in March, some in local government saw our call for strategic authorities as weighing in on one side of the reorganisation debate.

This was as predictable as it was wrong. Let me replay our argument.

Places like Greater Manchester, the West Midlands or Cornwall enjoy enhanced autonomy. The government has recognised them with a formal deal and the devolution of powers. By extension, therefore, they are, in our view, strategic authorities. Unfortunately, 66% of England doesn’t enjoy such recognition.

If, like me, you believe the rest of the country could benefit from devolution, you must hold a view as to whom power should be devolved. Localis’s view is these authorities should track the old met counties and existing shires. This is not because such boundaries are perfect; but because they already exist, are recognisable to the state, residents and businesses, and offer minimal barriers to getting on with actually doing something. I’m not pro-county; just anti-inertia.

The idea councils should be more strategic is accepted by nearly all. There is no debate about the premise of the question, only the answer. Who should be more strategic? The biggest criticism of our belief we should go with the grain of existing borders is they don’t conform to ‘functional economic geographies’. That these are largely subjective makes me smile. That our best efforts to map them are local enterprise partnerships, makes me laugh. However, it looks increasingly likely government will empower LEPs to lead local industrial strategies. I’m unconvinced.

This isn’t a blanket criticism of LEPs, but their formation and the resulting weaknesses. There are a number reasons that make LEPs the suboptimal choice to lead strategic economic planning locally. Some 37 councils in England, or 11%, are covered by two LEPs. In some areas there is a significant overlap. It seems these geographies are so functional it takes two LEPs to cover them.

Concerns have also been raised about the transparency and accountability of LEPs. The National Audit Office said they were “not as transparent as the public would expect” given the amount of taxpayer money they distribute. The Public Accounts Committee said there were “serious questions” needing to be asked about their accountability. Earlier this year communities secretary Sajid Javid told LEPs to “take a good look at your corporate governance”. Recently Cambridgeshire & Peterborough mayor James Palmer argued his own LEP was “no longer able to fulfil the purpose for which it was established.” This comment came on the back of a National Audit Office investigation into the LEP.

In spite of obvious deficiencies and independent criticism, the government seems committed to privileging LEPs when it comes to strategic economic governance. Why? Partly this comes down to government favouring its own pet projects. LEPs are a Conservative creation. Some do a very good job, with excellent people involved on boards and leading them.

However, local government carries some of the responsibility for its marginalisation. Internecine rows over unitary status, councils hiring consultants to fight proxy wars, weak collaboration on planning and development; I could go on. Perhaps the government has taken the view that local economic governance is just a bit too important to be left to local politics? This is wrong of course, but understandable.

Those who read (or hopefully re-read) The Making of an Industrial Strategy, our recent housing report and our upcoming local labour markets research, will see that if we have been weighing in on a side, it has been to strengthen the hand of local government in its fight for greater strategic economic freedom.

Crudely put, we have been on the side of councils, arguing in favour of them over LEPs. There is no reason why they can’t work together, however. Twenty-three LEPs already fit strategic authority boundaries (as Localis has drawn them up). There are clearly skills and experiences held by LEPs that would be of value. I just don’t believe they are the right bodies to lead local industrial strategies.

If, as seems likely, central government makes LEPs primus inter pares on the industrial strategy, local government should treat it as a wake-up call. Local industrial strategies will be years in the making. There is a chance to fashion further devolution of economic power. Our solution, the strategic authority idea, isn’t a ‘district killer’. Rather it is a vehicle to help the 36.1 million people who don’t live in an area with devolved economic powers.

To help create the framework for a swift transfer of power to a tier and institution that need not be created. One might describe this article as an in defence. I feel no such compulsion. The critics of the strategic authority idea, however, should consider why the status quo is preferable and write their own.

Liam Booth-Smith, chief executive, Localis

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