Tighter times

Tighter times

A lack of funding is concentrating the minds of those involved in the new LEPS. Peter Baber finds out if this is a good or bad thing.

Barry Dodd, chairman of the York and North Yorkshire Local Enterprise Partnership (LEP) has a pet project he is working on at the moment, which he likes to call a certificate of business administration. It would be aimed at start-ups, and would be a way of demonstrating that their directors do at least have the basic skills needed to run a business, so that, for example, if they go to a bank to arrange an overdraft, the bank manager can be confident that their loan will be handled professionally.

“I am having a meeting with the bank to agree on ideas on how it should run in the next few weeks,” he says. It is a pilot project he hopes will generate enough interest in other parts of the country to spread further. It is certainly a radical idea. Nothing like that was ever tried under the old regional development agency (RDA) system with Yorkshire Forward, but Dodd, who founded GSM Group in Thirsk and has since grown it to be the largest producer of industrial graphics products in Europe, is quick to point out that we are now in a “different world”, with RDAs a thing of the past.

“Yorkshire Forward employed 450 people and had a budget of £340m,” he says. “You can’t get that when you only have at most 30 people working in any sense for the LEP right now.” So instead he wants to focus on things that are small scale enough to be delivered quickly, and he thinks the certificate is a good example of that. The LEP Dodd is chairman of was only approved by central Government in February this year. It was one of three that the Government has so far approved in the region, the others being centred around the Leeds and Sheffield city regions. The development of a LEP for the eastern part of the region has been delayed by an internal squabble about whether it should cover both sides of the Humber that only looked to have been settled in favour of a pan-Humber LEP in June this year. Perhaps wisely, East Riding District Council, the more affluent part of the north bank of the Humber, has opted to join Dodd’s LEP as well.

As their name implies, LEPs are meant to be a public/private partnership that encourages enterprise and economic growth. But what their precise role is is still being determined as the Government enacts more legislation and as Yorkshire Forward is gradually wound up. In fact, Gary Lumby from Yorkshire Bank who sits on the board of the Leeds City Region LEP, thinks it unlikely that we will know the full scope of any of the LEPs’ responsibilities until the RDA is fully wound up next year.

“With the RDAs you often don’t know what you have got till it’s gone,” he says. “We will have to see how we fill the gaps, particularly on things like business support.” At the moment both the York and Leeds LEPs are involved in putting forward possible enterprise zones for approval by central Government. The zones, which have to be at least 50 hectares, will have special tax breaks to encourage enterprise. The Leeds City Region LEP chose the Aire Valley after considering a shortlist of four that also included Bradford city centre, Selby, and Wakefield and the M62 corridor. And the York and North Yorkshire LEP announced that Scarborough Business Park would be the location it would be taking forward. Dodd is determined that in other areas he will start with a small list that can be delivered quickly. The strategy took just an hour and a half to decide on at the board’s first meeting, he says.

“And I am determined it will be written out in full on only one sheet of A4.” There are, if nothing else, personal reasons for this, he points out. All of the board, he says – including himself – have theoretically only been appointed for a year. Lumby agrees too that deliverability will be the key, although perhaps not in such extreme terms. The LEP is looking for some quick wins, which is why it is helping many private companies to put in their bids for round two of the Regional Growth Fund, a special Government fund aimed at boosting the English regions. But he stresses these will not be “short-term fixes”.

“Things can’t be decided overnight,” he says. “We need a long-term plan. It is the art of the possible with LEPs – they are not RDAs and they never will be.” It is a different world indeed, when you consider the reams of strategy paperwork that used to come out of regional public sector bodies in the past before any decisions were made. But the consensus from many observers is that this situation is one of necessity, rather than choice, primarily because of the virtual complete drying up of funding.

“Just look at resources,” says Stuart Howie, a director in the public service team at PricewaterhouseCoopers in Leeds. “The RDAs as a whole had in effect £2.7bn. The LEPs don’t really have any funding. The Government has said it might allow £5m to be shared out among the LEPs, but at that scale to think that LEPs will be a copy of RDAs is unrealistic.” Amanda Beresford, legal director in the planning and environment group at lawyers Addleshaw Goddard, thinks the recently announced extra funding almost amounts to a U-turn. Certainly Dodd detects that central Government has put a lot of “political capital” into the LEPs project and so would not want to see it fail. There is probably some specific Yorkshire capital too, as Secretary of State for Communities and Local Government is one Eric Pickles. He might be MP for Brentwood and Ongar in Essex now, but he was born in Keighley and cut his political teeth as de facto leader of Bradford City Council in the late 1980s, during which time he oversaw a programme of stringent and very controversial cuts. Might he not want the LEPs to be a vindication of such an approach? James Newman, chairman of the Sheffield City Region LEP board, says he believes central Government believed the private sector would just step in to bankroll the work of the LEPs.

“This has not happened,” he says, “at least not to any significant extent.” The local authorities haven’t been willing to bankroll them either, he says – for obvious reasons – so there have been “more nods” from ministers to the idea of Government funding.

But Beresford says £5m is hardly going to go a long way, especially at it is being billed as only a one-off payment to get the LEPs on their feet.

“How helpful is this going to be as a oneoff?” she says. “You can’t, for example, rent out any office space for an LEP if you can’t do the same thing next year. There are enterprise zones too, of course. The LEPs could take on management roles there. But it’s still not much.” In any case, she says, the work central Government is steering LEPs to concentrate on at the moment is heavily concentrated on physical development in specific locations. So when it comes to the other areas that RDAs used to touch – particularly things like the skills issues, which Dodd is so keen to address with his certificate of business administration – people are going to have to be “imaginative”.

It is why, she thinks, the next few months are going to involve a lot of private sector individuals, and local authority councillors, giving up their time to the project on a voluntary basis – almost like David Cameron’s Big Society project. She herself is heavily involved in a planning reform group, which feeds into the Leeds and North Yorkshire Chamber of Commerce, which in turn, she believes, would influence what the Leeds City Region LEP is thinking. Lumby certainly agrees that voluntary contributions are going to be crucial.

He says there is no more than a handful of people working full-time at the Leeds City Region LEP secretariat – all of whom have been seconded from elsewhere. They include Ian Williams, policy director at the Leeds and North Yorkshire Chamber of Commerce.

“This is not Business Link,” he says. “There are a lot of volunteers, including myself and most of the board.” But, apart from funding issues, what are likely to be the key problems facing such an arrangement? Iain Hasdell, head of local and regional government at KPMG in Leeds, believes one key issue will be the need to overcome local politics – a tricky issue, he says, particularly when each LEP board contains local councillors from virtually every district council included in the area. This has always been an issue dogging regional development, he says.

“I was involved in setting up eight of the nine English RDAs,” he says, “and there was always a myth about how they operated. They always operated sub-regionally, never regionally. They spread the cash to make sure each sub-region got a fair share of it.

“No-one ever looked at projects for Yorkshire as a whole, for example. In the last 10 years the most important project for Yorkshire in terms of the amount of value added it would have brought to the economy would have been the creation of a rail link to Immingham Dock. But because of the representation on the RDA board this never happened. I suspect it will be a similar story with the LEPs.” Both Lumby and Dodd are keen to defend the behaviour of their own councillors from such an attack.

“I have been to two board meetings so far,” says Lumby, “and they have been functioning very nicely. These meetings are very much private sector led, with Neil Mclean (the chair man and former managing partner of DLA Piper in Leeds) carrying the casting vote.” There is, however, the potential problem of the three Yorkshire LEPs, together with the Humber LEP when it is up and running, pulling in different directions. Dodd, who had been active in various public sector and funding committees in the Yorkshire Forward days, was initially in favour of a pan-Yorkshire LEP when the LEPs were first mooted, precisely to overcome such a problem.

“We realised we wouldn’t get backing for it,” he says. “But we put together a list of things we wanted doing on a pan-Yorkshire level and at each of their first board meetings I am glad to say that the three LEPs have incorporated a statement based on those ideas. I am already meeting informally as well with Neil Mclean and James Newman (chairman of the Sheffield City Region LEP).” He is also hopeful that the amount of overlap there is between the LEPs, particularly with York being in both organisations, could encourage collaboration. The smaller business sector might also wonder what part it can play. The projects that won funding in the first round of the Regional Growth Fund, including an extension of sweet maker Haribo’s factory in Pontefract and more investment for David Brown’s in Huddersfield, seem distinctly aimed at larger businesses. Lumby says that was inevitable, because the first round was all focused on deliverability.

“We have spent a great deal of time working with the private sector in bringing things forward for Round 2,” he says. “The minimum bid has to be £1m, so we are looking at small companies working together.” What about representation? Both Lumby and Dodd insist that applications to join their LEP boards were oversubscribed, and many applicants went away disappointed. So some might wonder why, four months into the project, the York and North Yorkshire LEP is still looking for a representative from the tourism sector to join the board. Dodd, who was himself appointed by a panel made up of the chief executives of Severfield- Rowen and Nestle UK and the leader of North Yorkshire County Council, says that is only because three successful applicants in a row turned out not to be suitable because of conflicts with their day-to-day business. He is currently looking to “co-opt someone”.

In all, Beresford thinks that the LEPs have between six and 12 months to make a difference, before people start to lose interest. Howie agrees that the “honeymoon” is coming to an end. If nothing is achieved, says Beresford, it will be “tragedy of a missed opportunity”.

“There will only be ad hoc proposals coming forward with no view to long-term strategic thinking,” she says. She is already worried about clauses in the localism bill that might encourage separate councils to opt for elected mayors. She claims this would inevitably lead to a clash of interests and personalities with the LEPs. It has to be said that the recent history of elected mayors in Yorkshire has not been good. Most of the first and second terms of Martin Winter, the first directly-elected mayor of Doncaster, were mired in controversy and infighting with his own local Labour party – to such an extent that he served out the last two years of his second and final term as an independent.

However Peter Davies, English Democrat mayor of Doncaster since 2010, is on the Sheffield City Region LEP board, and Newman says he has made a useful contribution in its five meetings so far. He commends the councillors on his board for their professionalism.

“The larger LEPS from metropolitan boroughs will have councillors who have had much more responsibility in the past than the likes of Oxfordshire or Peterborough, for example,” he says. Dodd, however, says it will be “terrific” if in a year’s time people can look back and say his LEP made a difference. In the meantime, he thinks this idea of pared-down government might be catching on.

“I was discussing with Richard Flinton, the chief executive of North Yorkshire County Council, that this may be a better way of working for a public/private interface,” he says.

“North Yorkshire is totally aligned with the LEP.” If that sounds alarming for people who are used to big government, Dodd is not bothered.

“Success is normally measured by business growth,” he says. “That can but doesn’t always have to mean jobs growth. People worry too much about size. Let’s look at content and collaboration instead.”