LEP bosses across the country will have more than the expected balmy British weather to get them hot under the collar this summer. For Whitehall is due to make its Local Growth Fund offers – the moneyed response to the strategic economic plans submitted earlier this year – in July.
These growth deals from a £2bn-a-year pot will dictate how and to what extent the plans set out by LEPs can be acted upon.
Investment will begin next April, with the fund settlement providing additional backing to European, public and private sector funding.
So while many businesses may be experiencing something of a summertime lull, leaders across the 39 LEPs will be working flat out on negotiations before putting plans into motion.
Roger Marsh, the Leeds City Region (LCR) LEP chair, seems pretty calm about the process when BQ catches up with him over coffee.
Perhaps his pressured recovery work during a near 37-year stint at PwC – and his time in the intensity of the Cabinet Office – have well prepared him for such challenges. But he also draws strength from what he believes is an ambitious and compelling strategic economic plan. And early murmurings from the Treasury are positive.
“It has been commented on that it is perhaps one of the top two or three of the plans that were submitted nationally. But of course, the plan is not just about today, and it will have to be adjusted and refined as new knowledge comes in and depending on the resources available at the time.”
The plan promises to create 62,000 jobs and £5.2bn in extra economic output by 2021 and save £675m in benefits to the exchequer. “We’re basically saying to Government that if you do nothing the city region will grow from its [current economic value] of £55bn by about £7bn by 2021/22. You’ll add about 50,000 jobs and that’s OK, but that’s by doing nothing.
“If you then overlay the plan on top of that, you can add a further dimension of growth and employment. By 2021 you can have an economy that’s nearly a quarter bigger than it is today and employment that, in absolute terms, is 10 or 11% higher. You can also have a benefits bill that’s nearly three quarters of a billion pounds less over the period. Most importantly, you make the transformation from a net taker to a net contributor as a region.”
A prominent strand running through LEP rhetoric is the idea of the city region as ‘the growth engine of the North’ and its potential to help rebalance the UK economy.
Marsh believes the LEP’s plan will empower the region to help drive down national debt.
“It is laudable and correct that any government seeks to balance the books on an annual basis, but that’s only the beginning of the story for me,” he says.
“It’s actually about how do we deal with the total debt we’ve got? The hope is that the economy will very soon be where it was before the financial crisis. But the country has probably approaching three times the debt it had then. So how do you tackle that?
“For me it’s about recognising there are places in this country – not just London and the South East – where you can actually deliver and encourage extraordinary growth. I believe genuinely that Leeds City Region is one of those places because of our historical assets.”
This faith in LCR’s growth potential is perhaps a product of Marsh’s many years of access to the inner workings of businesses across all sectors in Yorkshire while at PwC. His three-year tenure as an advisor to the Blair/ Brown government, meanwhile, gave him an outsider’s perspective of the region he now represents.
He is particularly upbeat about the role manufacturers might play in LCR’s push for growth – unsurprising for a former British Steel man – as well the medical industry.
“There is real potential to significantly improve inward investment. Look at some of the strengths of the city region in the health arena for example. We’ve got a long history of medical devices, leading research and the big data agenda, particularly around health informatics – and this is just one facet of the economy. If you can build on all of these areas in a cohesive way, the multifaceted nature of our economy can be an advantage to the country as a whole. Leeds is well known for its financial and professional services, but what’s less known is that this is the largest manufacturing area in the country, with 11% of the working population involved in manufacturing. Why don’t people know this? Part of our plan is to get more people to understand our strengths,” he adds.
While thriving sectors and improving conditions give Marsh confidence in the ability of LEPs to deliver to the demands of the economy, he accepts that significant challenges are ahead.
“When I joined PwC to become an accountant, for the best part of 30 years I was involved in business recovery across the North looking at all sorts of industries. When I reflect back I realise that I was part of that de-industrialisation process that took place. If we are now going to rebalance the economy south to north and create extraordinary growth in certain areas of the country and begin to attack the debt, having sorted out the national deficit, then we are going to have to re-industrialise the country. But re-industrialise it in a 22nd century way, not trying to recapture how good we were in the 19th and 20th centuries.”
How successful LEPs are in their pursuit of growth and economic transformation will be measured in numbers – like employment stats and inward investment levels. But Marsh argues that achievements must also constitute what he calls “good growth”.
“This has to benefit a wider range of the population,” he says. “It’s not just about jobs; it’s about better jobs higher up the value chain. It is about recognising that there are pockets of deprivation and that that’s just not acceptable.
“Prosperity must be more evenly distributed. I’m not saying that people shouldn’t be rewarded for working hard or if they’ve risked things. But we shouldn’t be relying on prosperity just trickling down; we should be making sure it does. With some of our business growth programme investments we have tried to consider additional social consequences. With the relatively modest amount of public money we have had, we have looked at the total impact of our investments.”
The LEP is also aiming to reduce the number of NEETs – not in employment, education or training – within its borders. Marsh insists this is doable, despite the sheer size of the NEET population currently.
“There were around 32,000 NEETs before we started doing this work over the last two or three years and now that number is certainly starting with a two. So we are on a journey.”
And it is progressing faster in Leeds City Region than in many other areas, Marsh says.
The LEP’s NEET-tackling efforts have an almost 70% success rate, he says, compared to the circa 30% by the equivalent national scheme.
In total, LCR LEP has requested £231m in local growth funding for 2015/16 and £1.2bn in total by 2020/21. This, it says, will lever in over £750m of investment into the city region in 2015-16, and £5bn over the lifetime of the next Parliament.
Behind the economics, though, is also a push for more devolved powers for the region. Requested measures include a results-driven transport investment programme and a number of conditions that support the creation of a true single pot for investment.
“This country is one of the most centralised in the western world and we are on a journey to release that,” Marsh says. “Do I think that should be done in a faster way than it is? Yes, but then I would say that. We genuinely believe that local focus, local control, and being properly accountable of public money, will deliver better results.”
Skills shortages dominate LEP doctrine as they do industry debates, white papers and politics. LCR LEP’s skills-boosting measures including link building between industry and academia and helping businesses to invest in training.
Engineering and manufacturing are particularly hamstrung by a lack of skills, but Marsh takes encouragement from growing numbers of apprenticeship hubs and training academies.
“But there is another part of the equation in terms of the lack of people who have ambitions to go into these sectors,” he says. “There is an improved role that schools have to make in careers guidance and information. It’s also about how you tell the story. The word engineering feels a little grubby but mention building aircraft, robotics of working on the space agenda and that’s a different story.”
Infrastructure, like skills, is another key area LEPs are striving to improve. The high speed rail issue looms large over those regions which will be directly impacted by the scheme, including Marsh’s patch The LEP chair has had a front row view of the evolution of HS2 and the ongoing debate.
He was part of the HS2 Growth Taskforce set up to advise Government on how to maximise economic growth and job opportunities. Anecdotally at least, Marsh reckons Yorkshire is split 50/50 on the issue But his mind has been made up – and he believes a dose of context might persuade others to share his views.
“Let’s say HS2 will cost about £50bn in round terms. Over a 10 to 15 year period that is a lot of money. But when you match that against the nation’s debt and an annual interest bill that this year will nudge £60bn, and then you start to put it into context. For me this is a must have, not a nice to have.
“I think one of the challenges has been that it was initially launched on the basis that it would reduce journey times. This is true but it never should have been the leading argument. It should have been about connectivity, capacity issues and a must have investment to position the country as a truly global competitor to the developing world.
“China is developing high speed rail at a mind-boggling pace. How do we expect to attract the world’s best, who are used to things like high speed rail, if we haven’t got it?”
Speaking on a regional level, he adds: “We have to make sure that infrastructure is as enabling to business as possible. This isn’t just about high speed rail alone, or roads, airports and housing. It’s a cocktail of all of these things.
“In Leeds, the HS2 station will come right into the heart of the city under current plans and there is a whole urban regeneration agenda. Once it’s kicked off, it will probably be one of the biggest urban regeneration projects anywhere in Western Europe and will create
all sorts of opportunities.”
While Marsh anticipates a busy summer ahead, he has much to fill his time – including his seat on the LEP’s investment panel which hands out grant and loan funding.
“We have supported several hundreds of businesses to date and we have shown that we can invest relatively small amounts of money usefully and meaningfully. The question now is whether we can do that at scale, and my answer is ‘yes’.”
Marsh also continues to spread the word about exactly what a LEP is and isn’t for and how they should be approached. “If you did a straw poll of the 106,000 businesses in Leeds City Region and asked them what a LEP is, what it does and how it can help them, I would be pleasantly surprised if 10% knew. “My aim is that, in the next few years, we are talking about how to capture the last 10%.
“I think there probably is a lack of understanding of why they are relevant regionally and nationally and it is my personal ambition that they are seen as part of the enabling – what can they do to enable business growth. It’s part of our mission to better engage with businesses and we are looking to enable them to grow faster and build on our assets.”
An unexpected journey to Westminster and back
In the latter months of the Blair era the Government turned to an unassuming accountant from Teesside to help overhaul finances and operations in the Cabinet Office.
“I wondered why they would want a grammar school-educated lad from Stockton to work at the heart of Government with all those people from Eton,” recalls Roger Marsh.
He was originally seconded from PwC to join the Cabinet Office for just six months to become director-general of strategic finance and operations in January 2007.
However, nearly three years, one leadership change and a few “incredible” experiences later he returned to his desk in Leeds. When he arrived in Westminster the Government’s garden was relatively rosy – then came the credit crunch and the onset of recession, with the nation under the stern leadership of Gordon Brown.
“It opened my mind to the public sector and public services and I feel incredibly privileged to have had that opportunity,” Marsh says.
“I got to see what really goes on behind the headlines. For example, you might feel pretty safe sat here right now. But I’ve seen what really goes on around us, above us, to keep a country with a 70 million population safe from threats and it’s incredible.”
He met Gordon Brown on one occasion and reflects: “He very much believed in what he was trying to do and you can only admire people with that conviction. I think the challenge is not why or what you think, but how you portray it.”
When Marsh finally returned to his post as a senior partner at PwC, he “began thinking about a nation which was out of balance economically”.
“The concentration of finance services in the south was great in the good times, but when the top came off, boy did the rest of the country know about it. At the same time there was this latent capability in the regions, but the situation we were in was untenable.”
He went on to head up PwC’s government and public sector practice and worked with a think-tank to produce an influential report on how the economy could be rebalanced. He took up his current post at Leeds City Region LEP last summer.
Beyond Whitehall and the LEP, career highlights include the diversity of his business recovery work.
He says: “Business recovery broadens your mind because you cover industries across the spectrum. I’ve worked on everything from a power station in insolvency to a cathedral. Eventually you stand back and say ‘what’s left’, which led me to the Cabinet Office.”