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Picking up the Pieces
Planning – 1 October 2010

Local enterprise partnerships look set to play a key role in economic development across England but their relationship with strategic planning remains uncertain, Mark Smulian finds

How does one carry out strategic planning without a strategically sized body to do it? How does one plan the development of "functional economic areas" when there is wide disagreement on what they comprise?

These and other riddles may be solved when the government unveils the sizes and shapes of the local enterprise partnerships (LEPs) later this autumn.

At this point, however, the 56 LEP bids submitted last month raise many more questions than they answer. Localism has been a watchword for the coalition. It lacks definition, but in theory means that decisions should be taken at the lowest level possible. It sees the regions outside London as being too large for decisions on almost anything.

This helps to explain the government's animosity towards regional development agencies (RDAs). In their place will come an unknown number of LEPs. The government has said it wants these to be formed from the bottom up. Local authorities and business partners have been asked to judge the appropriate area for an LEP. Ministers will overturn these suggestions only if there are conflicting boundaries or something demonstrably unworkable has been proposed.

Several of the 56 proposals do indeed overlap. But whatever geographical shape LEPs take, their powers are unclear beyond a general brief to promote economic growth, in particular in relation to strategic planning and infrastructure. This is where concepts of "local" become muddy and will need to be thrashed out.

LEPs may be local if they follow the boundary of a historic county, but economic geography rarely conforms to tidy lines on a map. Suppose a new road or rail line is needed across an area, or homes need to be built within commuting distance of a large town. Will the LEPs involved work together or squabble over which can get the largest economic boost for the fewest homes?

"Gone are the artificial political regions of RDAs. LEPs will better serve the needs of local business," communities secretary Eric Pickles said last month. "The bureaucracy of RDAs gave local authorities little reason to engage creatively with economic issues. LEPs are a way of tying council and business interests together and creating the conditions for business to thrive."

Maybe. But will LEPs take on the RDAs' old planning role? If so how, given that formal planning powers rest with local authorities and there is no clear view yet on whether LEPs will have their own legal status?

Pickles has said that LEPs should be joint bodies between councils and the business sector, normally with a private sector chair. How such a body could carry out strategic planning when its business members would have no democratic mandate remains to be seen. This democratic deficit was one of the main objections to the Labour government's decision to hand regional planning to the RDAs.

"It is not at all clear what LEPs' relationship with planning will be," says Planning Officers Society president Stephen Tapper. "If they expand into strategic planning and transport, it will be interesting to see how they do that if they are business-led organisations when the legal powers remain with local authorities. I would have thought that their role would have to be at a fairly high level, with local authorities or groups of authorities coming together to implement policy."

The New Local Government Network has set up a sub-group to help LEPs through their formative stages. Senior researcher Nick Hope says: "It is still all up in the air, but there is a lot of feeling that for development and economic growth there is a need for strategic planning at a scale wider than council boundaries." If LEPs do lack their own legal status and are simply partnerships between their sponsors, "it could all be very complicated and messy" if they engage in strategic planning, Hope says. "Central government has claimed to be relaxed about how each LEP runs itself, but it will be important to see whether Whitehall really lets go of powers."

Institute of Economic Development chairman Neil Robertson wonders how much money LEPs will have at their disposal, whatever their size. "The main difference we are going to see is the lack of the budgets the RDAs have had. From what I hear, LEPs are interested in being involved in transport and strategic planning, but a lot of co-ordination will be needed."

One potential source of cash for the LEPs is the 1 billion regional growth fund. Deputy prime minister Nick Clegg has suggested that this would be spent in the least economically resilient regions, but Hope sees policy conflicts in this approach. "Do you spend it there, mainly on places in the north, or do you spend it in the south where the returns will come quicker because there is more potential for growth?" he wonders.

"There is going to be an interesting tension there. It will depend on whether they are looking for short or long-term returns. If it is long-term ones, then it will get spent mainly in deprived areas."

The Centre for Local Economic Strategies (CLES) has tried to grapple with the LEPs' role in evidence it submitted to this autumn's parliamentary select committee inquiry on localism. "Because of the collaborative nature of LEPs, their emerging structures are and will continue to evolve from existing networks and partnerships. It is important that LEPs learn the lessons from the weaknesses of these previous structures, particularly in relation to accountability," it warns.

According to CLES, dissolution of the RDAs opens up a risk of a strategy and policy vacuum. "There needs to be a smooth transition to the new arrangements as soon as possible," it adds. Despite their focus on economic growth, the centre believes that LEPs would have to be aware of the clear links between successful economies and wider spatial policy in areas such as housing and health. "Any LEP which does not recognise these links is unlikely to be successful," it concludes. There is no clear precedent for LEPs. The nearest match is the old public-private training and enterprise councils, but they had little bearing on planning. Will we see smooth co-operation on local priorities or incoherent squabbling over boundaries? No-one knows. But they soon will.

Boundary Disputes

The 56 local enterprise partnership bids lodged last month include many with conflicting boundaries and many that follow historic county boundaries which, whatever else they might represent, are rarely natural economic areas.

If they secure sub-regional planning responsibilities, a few LEPs would effectively recreate local government areas dismantled in previous reorganisations. Others would cover identifiable local economies crossing current administrative boundaries. The Gatwick Diamond, a grouping of districts around that airport, is a case in point.

In the West Midlands, the Birmingham and Solihull bid also takes in East Staffordshire, Lichfield and Tamworth. The shire districts also appear in a separate submission from Staffordshire County Council and Stoke-on-Trent City Council. Representation on two LEPs is not ruled out, but it is hardly likely to generate coherence were it to become widespread.

Staffordshire leader Philip Atkins explains: "The city and county are working together on plans for a prosperous future. We aim to build an alliance of regeneration for enterprise that will place us at the centre of economic recovery." So, no doubt, does the rival bid.

The situation on the eastern seaboard is even more complicated. A joint bid from Kent and Essex County Councils is opposed by the unitary Medway Council, which wants a Kent-wide LEP despite having no support from the county council. Further north, the East Anglia and Greater Cambridge and Greater Peterborough bids would each eat into the northern parts of Essex.

Derby, Leicester and Nottingham have long worked together as the "three cities", but Leicestershire and Leicester would split from the other two under proposals from the East Midlands. Overall, discussions look set to get messy. What future will a LEP have if it is born amid boundary disputes between its sponsors that have to be settled by a minister?