Briefing Paper to the Economic Development & Regeneration Overview & Scrutiny Committee Wards: 15 September 2014 Economy & Regeneration Landscape in the Humber Briefing Paper of the City Regeneration and Policy Manager. 1. Introduction 1.1 The coalition government from May 2010 made it clear that it would abolish Regional Development Agencies (e.g. Yorkshire Forward) and replace them with „bottom-up‟ local enterprise partnerships (LEPs). As LEPs were being set up the Government also began to create a range of new initiatives and funding streams for economic regeneration. 1.2 The Humber LEP, comprising the four local authorities in the Humber was formally recognised by Government in July 2011. Since that time the LEP has grown – both in terms of its organisation and structure and in terms of the amount of economic development funding which is now channelled through it by central Government. 1.3 Key points to note about LEPs are that they do not have statutory status and they are private-sector led. LEPs have a great deal of discretion in how their membership is composed, though they must be chaired by a business person and at least half of their members must be from the private sector.1 (Appendix 1 Provides information on the membership of the Humber LEP and its sub boards. The attached Appendix 4 - Organogram indicates the range of partners involved) 1.4 Thus LEPs are voluntary, business-led partnerships “between local businesses and local government and other key players …to take a strategic view on how best to deliver growth and jobs in their areas. They are not accountable formally constituted bodies”.2 Consequently, the LEP requires an accountable body to enter into contractual relationships and receive funding from Government. Hull City Council is the accountable body for the majority of the Humber LEPs activities. 1.5 The role and scope of all LEPs, including the Humber LEP is set to increase. This was signalled by the development of the “Local Growth Fund”, under which the Government has committed to „devolving‟ more central Government department 1 The Rt Hon the Lord Heseltine, No Stone Left Unturned, October 2012p. 34 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/34648/12-1213-no-stone-unturned-in-pursuit-of- growth.pdf 2 European Regional Development Fund: Technical Annex 2014 to 2020, May 2014. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/309662/ERDF_OP_Consultation_Technical_An nex_2014-20__1_.pdf 1 funding to LEPs. It is worth noting both major political parties have publicly committed themselves to increasing the amount of central government funding channelled through LEPs. 1.6 It should also be noted that a number of local authorities are members of more than one LEP. Of the four local authorities in the Humber LEP three are members of other local authorities; - East Riding of Yorkshire is a member of the York, North Yorkshire and East Riding LEP - North Lincolnshire Council and North East Lincolnshire Council are members of the Greater Lincolnshire LEP. 1.7 There is widespread agreement that the development of LEPs has been incremental, often piecemeal and lacking a fully thought through and coherent approach across government departments.3 The National Audit Office (NAO) in its 2013 report concluded that the Government‟s aim of achieving an orderly transition from Regional Development Agencies to the new delivery landscape had not been achieved.”4 2 The growing role of LEPs 2.1 A major milestone in the development of LEPs was reached with the publication of the „Heseltine Report‟. In March 2012, the Government commissioned Lord Heseltine to produce a report to the Chancellor and Secretary of State for Business with ideas to stimulate economic growth at a local level. His report No Stone Unturned was published in October 2012 and made 89 recommendations for economic growth and wealth creation.5 2.2 One of Lord Heseltine‟s recommendations was that there should be greater devolution of funding from central government to LEPs, so that government investment in economic development “is tailored directly to the individual challenges and opportunities of local communities” and “can be augmented by private sector investment”.6 2.3 In response to the Heseltine report, the Government‟s Autumn Statement 20127 included the following LEP related policies and recommendations: LEPs were to be asked to develop new strategic plans for local growth and the government would create a single funding pot for local areas from April 20158 2.4 The Heseltine Report also recommended that most funding for business support “should be devolved to LEPs to spend in accordance with their individual economic strategies“. Some reservations were expressed by the Business Secretary, Vince 3 Local Authorities, Local Enterprise Partnerships and the Growth Agenda, CEDOS/ADEPT, February 2014. http://www.cedos.org/publications/1403%20LAsLEPsGrowthAgenda.pdf 4 Funding and Structures for Local Economic Growth, National Audit Office, December 2013, par.3.5 http://www.nao.org.uk/wp-content/uploads/2013/12/10285-001-Local-economic-growth.pdf 5 No Stone Unturned: in pursuit of economic growth, Lord Heseltine, October 2012 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/34648/12-1213-no-stone-unturned-in-pursuit-of- growth.pdf 6 No Stone Left Unturned, p. 5. 7 Autumn Statement, HM Treasury, December 2012 pp.40-41 https://www.gov.uk/government/news/autumn-statement-2012- documents 8 In addition, the Government said it would make available a new concessionary public works loan rate to an infrastructure project nominated by each LEP. 2 Cable, who has argued that big decisions on funding must be administered from Whitehall on the basis that some LEPs had very small numbers of business people on their boards, were not publicly accountable and unsuited to manage large amounts of money.9 2.5 Strategic Economic Plans: The 2013 Spending Review clarified aspects of the 2012 Autumn Statement and asked LEPs to prepare multi-year strategic economic plans, which would be used for negotiations on „Growth Deals‟ with the Government. These Strategic Economic Plans would also be used as the basis for allocations from the £2 billion a year Single Local Growth Fund that was created in the Spending Review.10 Lord Heseltine‟s report was clearly a major catalyst for the enhancement of the role of LEPs and one of the first manifestations of this enhanced role was the announcement in late 2012 that LEPs would be given responsibility for delivering a large part of the new round of European Structural and Investment Funds for 2014-2020 3 Funding and initiatives for economic development and regeneration: 3.1 There are (currently) six major economic initiatives and funding streams which are (or will be) channelled through LEPs: i. Regional Growth Fund ii. Enterprise Zones iii. The Growing Places Fund iv. City Deals v. EU Structural and Investment Funds vi. Growth Deals (Local Growth Fund) 3.2 Regional Growth Fund - The purpose of RGF was originally described as being “to help areas and communities at risk of being particularly affected by public spending cuts”11 Guidance from BIS provided more detail and specified that the objective of RGF is “to stimulate private sector investment by providing support for projects that offer significant potential for long term economic growth and the creation of additional sustainable private sector jobs”.12 The first round of the Regional Growth Fund was announced in June 2010, subsequently the Government has launched a further five rounds of RGF. Rounds 1-4 were open to both public and private sector organisations. LEPs were eligible to apply for funding from the first four rounds but did not receive preferential treatment in the bidding process. LEPs were not allowed to bid into Round 5 and 6 of the RGF (these were specifically for private-sector companies). 3.3 A Round 1 RGF bid by the City Council and partner Keepmoat secured £8m of grant funding to unlock £118m of private sector investment in the City‟s housing market. 3.4 Hull and East Riding Councils had previously successfully bid into Round 2 of RGF and created a £27m “Green Port Growth Programme” to assist businesses to develop a local supply chain for the renewables industry in Hull and East 9 Labour Attacks Cable‟s comments on LEPs, The Northern Echo, 01 May 2013. http://www.thenorthernecho.co.uk/news/10389955.Labour_attacks_Cable_s_comments_on_Local_Enterprise_Partnerships/ 10 Investing in Britain‟s Future, HM Treasury, June 2013. p. 9 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/209279/PU1524_IUK_new_template.pdf 11 BIS press release, “£1 billion fund to help regional business, 29 June 2010 https://www.gov.uk/government/news/1-billion- fund-to-help-regional-business 12 Consultation on the Regional Growth Fund, HMG, July 2010 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/31508/10-1078-consultation-regional-growth- fund.pdf 3 Yorkshire.13 To date, across Hull and East Riding, the Green Port Growth Programme has invested £2.167m RGF which has levered in an additional private sector contribution of almost £1.5m and a further £1m+ from the public sector. At June 2014, the Programme had been responsible for creating 245 additional new jobs in Hull and East Riding; funded over 240 new higher level apprenticeships through its innovative employer-led skills strand and has supported more than 50 businesses to undertake business audits, as well as providing small amounts of capital funding for expansion projects. 3.5 The Humber LEP successfully bid into Round 3 of the RGF and this has produced a “Growing the Humber” programme worth £30m which is designed to help grow businesses in the Humber area. (£7m of this funding is ring-fenced to support the renewables industry in North and North East Lincolnshire).14 This programme started in February 2013 and Hull companies have successfully accessed £8m (including pipeline projects).