In this article, Glenn Athey asks “what does the UK Government want from Local Growth Strategies?” that are currently being put together by Local Enterprise Partnerships. LEPs face one fundamental question – how they would deliver local growth better than Whitehall could?
INTRODUCTION
The ink is almost dry on your draft Local Growth Strategy, but you can’t relax just yet. Even though you’ve consulted every local authority, business representative group, man and his dog; you have taken the 200 priorities raised and knocked them into 5 priorities; and you have also prioritised projects, initiatives and expenditure which look like the will provide jobs and growth, and knocked back the ones which don’t; and you have even got your LEP board fully backing the bid – the nagging question remains – just what in h*ll does the government actually want?
Despite all the efforts, and despite the seemingly modest amount of money (initially, anyway) – the purse strings are still held by HM Government, and in particular HM Treasury, who drive a hard bargain.
This much we know from the past three years:
- Just as we’ve learnt from the ‘iterative’ processes of things like the Regional Growth Fund, and City Deals – so has HM Government
- They are a lot more wise to picking through the detail
- They are going to be a lot more demanding than city deals and Growing Places Fund in terms of evidence and rationale for local growth expenditure
And – let’s not forget – there’s an election soon. The government wants to announce thousands of jobs being created and new homes being built. It doesn’t matter that it is all on paper at this stage – it never does when it comes to these kinds of announcements.
In this brief article, Glenn Athey, Director of Athey Consulting, ruminates on what questions the government will ask, and the tactics for both satisfying the government and local stakeholders. Glenn is an experienced economic development professional, economist and senior manager available for consultancy assignments. He excels in advising on how best to pitch funding requests to government that satisfy local stakeholders, and result in high profile, high impact plans and statements of intent.
TACTICS – ACHIEVE ALL THESE THINGS AT ONCE
There are numerous challenges which you need to have the tactics in place to address. For example:
Toe the government line: how far do you play to current government policy and language? The language has been of City Deals, Localism, Jobs, Business, and Growth. Your bid needs to reflect this language and convincingly explain how your local growth strategy aid, augments, improves or sits alongside these other local initiatives and programmes. The advice – toe the line, but don’t get too comfortable. Your strategy, bid and funded programmes will need the continuity into a potential change of government. They need to be sound concepts and plans in themselves. Try and avoid them being in the bathwater with the baby when it gets thrown out the window on Downing Street.
Play to local priorities and interest: you have to win the backing of local stakeholders and key supporters. No less, that many LEPs are significantly dependent on local authority finances and resources for support. It’s a long, laborious road to consult and review proposals, but be open minded. Local interests have their own priorities, because they are important to them – they will respond to questions such as ‘name your top 3 initiatives for economic growth’ – and then ‘OK if we could fund just one of them, what would it be?’. That’s the world we live in right now – where LEPs might just be able to support the number one local or business priority and that’s it.
Press release fodder is useful for government, and for your LEP chair to stand up on the TV or brief the local press. E.g. think of what Ministers like to say – such as “we’ll build 25,000 more homes during next 10 years than would have otherwise done; we’ll seed the next ARM, Vodafone, or Autonomy by our support for 500 innovative growth businesses over the next 3 years.
Sound economics: your proposed investments must convince that they will add serious value, jobs, growth, and ‘trade advantages’. This ticks all the boxes for HM Treasury. And this time, you will definitely need to tick all the boxes.
Make the case that your local priorities, investments and programmes will do much better than central government programmes and initiatives. That’s what localism boils down to, doesn’t it? – that its going to work better than someone in Whitehall making all the design and funding decisions?
WHAT’S IN IT FOR ME?
Its an uncomfortable truth that all stakeholders will have an element of self interest or group interest – but best not forget it. Economic development is noble in cause and effort – but, even though it might be ‘business-led’ at the moment – it is a political endeavour – just like any other major policy area, be it education, health or international relations.
In other words – you will have to deal with the politics and the need to keep major stakeholders satisfied. As well as manage stakeholders who aren’t quite getting what they want. Are your ideas, plans and strategies robust enough not to get shot down as they are launched?
However, as any veteran of economic development policy and practice tells you – just because you want something doesn’t mean you need it, or your economy needs it. Evidence is your friend here – it helps you filter out those ideas which are based on wishful thinking rather than facts. With evidence, you have a good change of understanding the real priorities of your local economy and the investments or projects which are likely to make the most difference. Evidence also helps you make the best public case for your priorities and projects too. Businesses tend to like evidence-based approaches – they can be your ally in this regard.
LOCALISM (WHATEVER IT IS!) – ITS CENTRAL TO YOUR BID
There is a ‘spirit of localism’ test to Local Growth Strategies which asks “how does your growth strategy fit with existing ‘localism’ policy and initiatives?”. Part of this is about engagement with local interest groups, and local policies – particularly local plans and European funding strategies – as well as City Deals, use of Growing Places funds, Community Infrastructure Levy et al.
Its not going to look good if there is no tangible read through between your local growth strategy ambitions and the ambitions for European Funding, local plans or City Deals – if this happens, these bids will be marked down.
BUT DON’T FORGET THAT THE GOVERNMENT IS LOOKING AT THE IMPACTS FOR UK PLC FIRST AND FOREMOST
In the main, local projects tend to get assessed and appraised by central government on the impact they will make for the national economy. If your infrastructure project just pushes congestion into another area over your border, or takes jobs from another region and puts then in yours – then this is just a zero sum game. And then there’s the growth and international trade agenda. Government wants to increase exports from the UK and international investment into the UK. The types of jobs which are promoted by your local initiatives will need to reflect this.
DEPARTMENT-BY-DEPARTMENT
If your local growth strategy is going great guns, very coherent and looking like growth – that gets you past the first hurdle, but unfortunately you will go directly to the second hurdle where every government department contributing to the Single Pot will be looking to trip you up.
If you think about it, the rational for any civil servant or government department to ask “is this a better use of the money than keeping it in the department or controlling it from the centre?” This is a very fair question (even if you don’t like it), and if you can’t convincingly answer “yes” then difficult times are ahead for the long-term future of the local growth fund beyond 2015/16 or its variants.
HM Treasury
Let’s start with the toughest test. This is where serious questions were asked about some of the City Deal submissions – i.e. – “they sound good, but where’s the evidence that they will seriously add value to the economy, be additional in terms of not undermining competition or just displacing economic activity from one end of the country to the other?”. And then the killer question “wouldn’t this just happen if we left the market to itself anyway?”….
This is how the average Government Economist thinks – along the ‘Neoclassical’ economic view. Despite the fact that markets are dynamic and riven by imperfections in real life, they still like the textbook purity of the stuff they read as undergraduates. Besides, it’s a useful analytical and decision making tool – as long as its just one part of the decision making process.
The main economic tests (we sometimes call these the ‘economic case’ or ‘economic appraisal’) revolve around market failure rationales and economic appraisal of economic impacts:
Additionality test: Are the proposals “additional” – do they add value?
Deadweight test: What’s unique about the proposals that wouldn’t happen without the funding/intervention?
Displacement test: do the proposals simply stimulate economic activity to move from one part of the country to the other, using public funds?
Next there’s the growth test: what’s going to be the contribution of your Local Growth Strategy to jobs and growth? It will probably need to offer both short term (stimulus) and long term (enabling growth) impacts. If you think about it – is it much use to government, facing an election in under two years to announce that they are funding LEPs to realise thousands of jobs, but only after 10 years? Not really. However, we all know that priorities relating to capital investment and in particular transport – are long term investments too. Your local growth strategy needs to pander to some short term quick wins and jobs, as well as contain the long term stuff.
Finally – for the Treasury there is the realpolitik of funding test or the “you want £10m, here’s £5m” test: is your strategy scaleable, can the phasing be altered, can the government “pick and mix” between a menu of projects and options? Your growth strategy needs to be able to be cannibalised by a bunch of Whitehall Civil Servants – so they can be helpful and give you some money to do important things, but you can be helpful in realising that they may not be able to fund the whole programme. We all know the government is skint – how are you tactically going to deal with this? Perhaps it’s a matter of breaking your strategy into ‘essentials’ and ‘nice to haves’? Partial, selective support is highly likely.
DfT (and HMT)
Using existing assets – how will your Local Growth Strategy proposals enhance existing assets and activities? With several major transport investments on the cards from Crossrail just being completed to HS2, the A14 and talk of Crossrail 2 – we just know that much of the rest of spend will go on repair and enhancement of existing assets. If we think about the Local Growth Fund – at £2 billion it is not going to significantly fund major infrastructure.
How far will the impacts of your proposals stack up against other LEP areas? DfT used to formally analyse expenditure decisions this way – is it really any different now? How will the local transport schemes in your strategy stack up in a national ranking? This is not just in terms of growth and jobs, but in terms of the overall impact and benefit of the scheme. These kinds of assessments tend to mean that there is a predisposition towards funding transport schemes in or between dense urban areas.
Again – LEPs will need to have a sense of realism within the current financial settlement – project scale and feasibility bwill have to be within current capital budgets.
Department of Business Innovation and Skills
There are a number of useful tests to assess how well your Local Growth Strategy aligns with BIS’s portfolio and priorities.
The business impact test is important. Will your proposal significantly enhance for business growth? Is there a business dimension to your proposed projects, even if they are not directly benefiting business? Are the proposals backed by business interests?
The international test: do your proposals offer enhancements or impact significantly for global business – i.e. inward investment or export development?: does the local work/offer fit within UKTI’s sector based approach? If you haven’t discussed the major growth sectors or industries in your local economy, you probably should.
Beyond skills governance test: many city deals and LEPs have established skills boards in one form or another with the mission to make skills provision more employer-relevant. However – LEPs and local partners will need to start to articulate how this will happen. It is not enough to have a governance structure in place. Do not underestimate the challenges that this brings – as it has eluded most policy makers for the past 50 years. Only the devolved nations (Scotland, Wales, Northern Ireland) seem to be getting this right – and they have invested in major institutions with a decent amount of continuity over the past 30 years.
Department for Communities and Local Government
Housing impacts test: probably the most vexing question on the desks of officials at DCLG is how do we speed up the delivery and scale of housing supply? This is probably the main mission of local growth strategies in terms of housing – to speed up house building on sites within existing planning arrangements, or the forthcoming new local plans.
Obviously DCLG is still flying the flag for localism and wishes to see how different local funding streams can be joined.
Department for Communities and Local Government (pre-2010)
There was a time when CLG had a mission for community, cities and urban regeneration – which has largely disappeared under the coalition (some of it is the job of localism apparently). Whilst CLG is much less active in this arena – the need for community cohesion, regeneration, and sustainable and successful cities have not diminished, and I am pretty sure that we will see some of this coming through in the Local Growth Strategies. The kinds of questions that many of us (if not HM Government) will be asking is – where are the Regeneration benefits? Community benefits? And are the opportunities shared – are there benefits for those in disadvantage, poverty, or exclusion?
The Cabinet Office
Finally its worth saying that the Cabinet Office has a significant role in all of this – in attempting to tie all of the local, city and subnational policies and activities together into a coherent government proposition. The Cabinet Office does indeed have a Local Growth Team. Tactically, their burning question is probably “does this/can we make this stuff look like a coherent policy?” for HM Government as a whole?
THE “STAND OUT FROM THE CROWD” TEST
There are 39 LEPs, up to 22 City Deals, and 245 local authorities in England. You know what, if I was a civil servant who had to read through these things in government, I’d be getting pretty bored reading about how “big data” has been dropped into the debate from seemingly nowhere for the 25th time. But if there is a unique, different, and potentially highly rewarding application of Big Data to a major area of investment or public service – now that is interesting.
Your Local Growth Strategy will need to stand out from the crowd. Yes it will have to be credible, but it helps if there are also some new or sound ideas – yes innovation – contained therein. The key questions you will have to answer if you want your Local Growth Strategy to stand out from the crowd are – is your proposal Unique? Different? Making advantageous use of local resources, institutions, expertise? better than other LEP areas? creating long term advantage for UK PLC?
SIMPLE ENOUGH, EH?!
As most LEPs will have realised over the past three years – they face multiple agendas which aren’t always in agreement. Even with outstanding evidence and business cases behind investment priorities – there is still a job of public relations and politics to do of persuading local and national stakeholders to back these and invest. And you can’t keep everyone happy – there will always be another important sector to a particular constituent, however small, or a local transport bottleneck, however low the volumes and traffic flows might be.
Localism is new – and let’s face it, government doesn’t trust it yet. Trust is earned, and not given. To be in the game of localism for the long term, you need to play to rules that exist now. So – as a start – take the agenda and list of questions I’ve mentioned in this article, and see how your current draft plans succeed or fail and then make plans for your next iteration.
NEED A HAND?!
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Glenn Athey, Athey Consulting
