House of Commons - Regional development agencies and the Local Democracy, Economic Development and Construction Bill

Regional development agencies and the Local Democracy, Economic Development and Construction Bill - Business and Enterprise Committee Contents

6 SUB-REGIONAL COLLABORATION ON ECONOMIC DEVELOPMENT

Initial SNR proposals

143. The SNR sought to promote collaborative working at sub-regional level on economic development and regeneration policy, as part of the proposed increase in the role of local authorities. The Government particularly highlighted collaborative working in the areas of transport, spatial planning and skills and employment policy.[132]

144. The SNR recognised that local authorities faced a number of difficulties in collaborating on economic development issues and highlighted the recent development of Multi-Area Agreements (MAAs) as an effective mechanism for addressing these. MAAs are voluntary groupings of local authorities with collective targets, performance indicators and pooled resources, with a maximum life span of three years.[133]

145. The Government recognised, however, that local authorities might wish to collaborate on a broader range of policy issues than those currently covered by MAAs and on a more permanent basis. The SNR proposed statutory partnerships between local authorities which could pool responsibilities for economic development policy areas beyond transport and on a permanent basis.[134]

146. The SNR consultation document stated that the proposed statutory sub-regional arrangements would:

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147. The consultation document also stated that any sub-region wanting to adopt these arrangements would have to adhere to four fundamental principles:

collaboration between elected members of existing local authorities;
funding costs must be met by partners;
cost-neutralality, the costs should be covered by efficiency savings created by joint working; and
accountability.[136]

Revised SNR proposals and Part 6 of the Bill

148. The consultation showed support for formal collaborative arrangements, particularly at sub-regional level on transport, skills provision and community regeneration. The Government, therefore, proposed to establish statutory sub-regional authorities for economic development, known as Economic Prosperity Boards (EPBs)[137].

149. Clause 83 of the Bill, EPBs and their areas, provides for the establishment of EPBs, with subsections (2) to (6) setting out the conditions that must be met before a Board can be created. These include that no local authority within the Board is separated from the other authorities within the Board (condition B) and that no local authority not in the Board is surrounded by authorities that are (condition C). Under clause 86, Exercise of local authority functions, local authority functions can be exercised by the EPB instead of (clause 86(4)(a)) or concurrently with (clause 86(4)(b)) the local authority. EPBs will be voluntary but clause 90, Changes to boundaries of an EPB's area, makes it clear that any subsequent changes to membership will only be possible if the Secretary of State agrees and if the conditions set out at s83 are still met. Clauses 98 to 108[138] make similar provisions for combined authorities, which are groupings of authorities which can take over transport and economic development and regeneration functions.

150. It was intended that the legislation would set out a framework for EPBs but, within this, each EPB would have the flexibility to propose its own functions for approval by Ministers on a case by case basis.[139] Clause 92, Review by authorities: new EPB, provides that sub-regions would be required to show, through an initial review of economic development across the area, that the proposed functions are appropriate for delivery at sub-regional level and do not duplicate existing programmes.

151. Clause 64(2), Partner authorities, lists EPBs as a partner authority which must be consulted by a lead local authority in undertaking an economic assessment.

152. The Government provided a policy document on the options for sub-regional co-operation in the Bill in January 2009. The document sets out the rationale for greater co-operation at sub-regional level, as well as detailing the process for establishing an EPB. The document states that, before any changes to an existing EPB can be made, a new review must take place and a revised scheme must be published.[140]

Issues raised in evidence on both the initial and revised SNR proposals

153. The Minister told the Committee that:

In the end there is quite a simple idea behind this, which is to get the different bodies, who are not the national government but at a smaller level than the national government in a particular region, working together for the economic good of that region.[

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154. There was relatively little comment on this proposal in the response to the Committee's initial call for evidence, although the majority of the witnesses agreed that greater collaboration at sub-regional level was desirable in order for economic development policy support better to mirror functional economic areas.

THE WORKABILITY OF THE PROPOSED ECONOMIC PROSPERITY BOARDS

155. During the Minister's evidence, the Committee asked about the membership of EPBs and, in particular, the process by which local authorities could leave the partnerships. The Director of Planning from CLG made it clear that, following their creation, local authorities would only be able to opt out with the consent of the Secretary of State.[142]

156. In his supplementary submission, Dr Benneworth argued that EPBs would have greater capacity to be effective if local authorities were obliged to collaborate, rather than encouraged to volunteer. He wrote that the voluntary nature "reduces their [the EPBs'] capacity to deliver 'real' joining up of participants' strategies which are driven by statutory requirements".[143]

157. The Minister confirmed that the EPBs could operate across regional boundaries[144] and this was confirmed in the policy document published in January 2009.

158. Consideration of the Bill as far as it relates to EPBs was begun at Committee stage in the House of Lords on 24 February 2009. A number of concerns were raised, mostly relating to their status within the existing structure of regional and sub-regional bodies and the procedure that must be followed in the event of a local authority wanting to withdraw. Lord Greaves described the current provisions as a "strait-jacket which, once you are in it, you will find it difficult to get out of".[145]

AN ADDITIONAL LAYER OF BUREAUCRACY?

159. A number of comments from the private sector highlighted concerns about creating additional bureaucracy through an extra layer of governance. In his supplementary memorandum, Dr Paul Benneworth agreed, arguing:

it must be recognised that this arrangement is being created in a light-touch way in an institutional environment already extremely tangled with statutory local performance frameworks and agreements. This might undermine the willingness of partners to participate actively in the EPBs and undermine any potential effectiveness this innovation may have.[

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160. The CBI made a similar point when it argued "we question whether it is necessary to have another new body to deliver this"[147] whilst Essex County Council told the Committee that "there would need to be clarity concerning the additional benefits that a Board would bring as compared to any existing arrangements".[148]

The Committee's conclusions and recommendations

161. The Committee's inquiry has found that there is significant support for collaboration on economic development issues at sub-regional level and, in principle, the Committee welcomes the Government's attempts to encourage this. The Committee notes, however, the concerns of witnesses that Economic Prosperity Boards (EPBs) might be an unnecessary addition to the plethora of organisations and strategies which operate at local, sub-regional and regional level. The Committee shares this concern and recommends the House consider this issue as the Bill progresses.

162. The Committee recommends that the Government provide further information on what use, if any, the Secretary of State will make of the review required by clause 92 when deciding whether to make an order establishing an EPB. The Committee also notes that the Bill is silent on the role of RDAs in relation to this review.

163. The Committee is concerned that there is a potential for conflict between the requirement for collaboration to be flexible, to adjust to possible changes in local authority leadership and direction, and the need for a certain amount of stability to make collaboration across local authority boundaries meaningful. The SNR explicitly envisages that EPBs will provide this stability, by stating they will "bind in local authorities to long-term decision-making" (see paragraph 146).

164. The Committee is concerned about the process by which local authorities or combined authorities can leave EPBs. It notes the conditions placed on local authorities when applying to create an EPB or combined authority and believes that these will circumscribe the decision of the Secretary of State when considering an application from an authority to withdraw. The Committee is concerned that an authority might be prevented from withdrawing from an EPB, even though it no longer wished to participate; considerable disruption could be caused if one of the members of such a body was no longer a willing participant. Moreover, the Bill does not state whether those authorities who wish to leave will be able to reverse clause 86(4) and re-gain control of powers that have been ceded to the EPB. The Committee also notes that orders to change the boundaries of an EPB or combined authority can only be made if all the councils concerned agree and it is unclear what the consequences will be if unanimity cannot be reached. These points, and the consequences for local democracy if there is no change, must be clarified as the Bill progresses.

132 SNR1, paras. 6.66 - 6.69 Back

133 ibid, paras. 6.72 - 6.78 Back

134 ibid, para. 6.80 Back

135 SNR2, para. 5.36 Back

136 ibid, para. 5.39 Back

137 The statutory sub-regional partnerships in the SNR consultation were re-named Economic Improvement Boards in the consultation response. These have since been re-named Economic Prosperity Boards. Back

138 Clauses 98 - 102, Combined authorities and their areas and clauses 103 - 108, Requirements in connection with orders about combined authorities. Back