Monday, August 02, 2010

A great LEP forward? Or backwards?

Following the election, the Conservatives set about dismantling bits of the state established by the Labour government. In particular, all aspects of regionalism were sent to the scaffold - Government Office of the West Midlands, most of Business Link, the Regional Spatial Strategy all ended up on the funeral pyre. Most controversially, Advantage West Midlands joined the rest of the Regional Development Agencies in the queue for abolition, with the clock ticking away to final closure in 2012. The axe fell despite a hugely positive report from the National Audit Office, indicating that AWM's activities generate £8.14 for each £1 spent by the agency.

Of course, there are functions of the RDA that need to continue and even as Vince Cable did the dirty work dispatching AWM, they are to be replaced with Local Enterprise Partnerships, which are run by businesses and the local authorities, with the commercial sector providing the chair. Curiously, for a localist agenda, the workstreams on innovation and skills are being removed from the region and centralised in Whitehall, a short-sighted view that restricts the ability of the regional partnerships to influence key drivers for the future.

So, rather than a single organisation with a unified vision across the entire region, we will be left with a number of disparate units, bidding for funding from a national pool. The current proposals seem to indicate that there will be six LEPs across the region. Coventry and Warwickshire will form one, with Herefordshire, Shropshire, Telford and the Wrekin making up a second and both of those make some sense in terms of their size and industrial and political makeup. Staffordshire is slated to form a third, although the local authorities are in discussion as to whether North and South would be better off as separate LEPs - an unwise move. Worcestershire is under the impression that it can go it alone as a LEP, rather than doing the sensible thing and joining with the western rural arc of counties. Worst of all, though, the local authorities in the Black Country don't want to join a LEP with Birmingham and Solihull, fearful that Birmingham would abuse its power and take control of the partnership. This was always likely to be a problem in the Midlands, because of the unique issues with the size of the City of Birmingham, but the councils need their heads banging together, as this should be one region and dividing it will weaken both sides, given the interdependency of these sub-regional economies. Given that the LEPs are supposed to be led by business, the time has come for business to genuinely take a lead and form a single Birmingham, Solihull and Black Country LEP, daring the local authorities not to get involved.

None of that takes into account the hangover of AWM's assets, worth some £170 million, nor the need to retain the knowledge and skills of the West Midlands Regional Observatory, a treasure trove of useful economic data. There needs to be a legacy regional organisation to handle these assets and maintain the regional services. Additionally, the European Union likes to work at a regional level, not national or sub-regional, so some sort of regional co-ordinating body will have to exist to liaise on that level. I fully expect the LEPs to resolve themselves down from six to three or four over a couple of years and it will only be a matter of time before the idea of a regional organisation returns to prominence.

Central government has been exceptionally unclear as to what they want from the LEPs, which is helpful, as they are expecting firm expressions of interest placed by the start of September. It has to be said, that the LEPs won't fully replace the RDAs until 2012, so there is still time to iron these things out, but the middle of a recession is hardly the best time to reform the system, leaving eighteen months to two years with confusion over responsibilities and legacies. Yet again, we find ourselves in the middle of an experiment by the coalition government and yet again, it is the workers of the Midlands who are the guinea pigs. Ironically, they are the ones unrepresented on the LEPs. If this doesn't work, then we're all going to suffer.

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