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Local Enterprise Partnerships (South-West)

Volume 518: debated on Wednesday 10 November 2010

A more accurate title for this debate than local economic partnerships in the south-west would be the absence or lack of local economic partnerships in the south-west. When the Government launched their flagship regional economic policy the week before last, most of the south-west was completely missing. Only Bristol and Cornwall are covered by these new bodies.

This sorry saga began with the Government’s ideologically driven determination to abolish the regional development agencies. That of the south-west, like most of those around the country, was successful. It had brought much-needed strategic coherence to our region, as well as valuable investment. It had managed to overcome the age-old political in-fighting between the different parts of the region, and the RDA could take a view as to what was in the interests of the region as a whole. I am afraid that, like so much of what the coalition Government are doing—and in spite of the Business Secretary’s support for RDAs before the election —regardless of their merits RDAs had to go, because they were a Labour creation.

Soon after the election, in preparation for the new policy, the local business leaders in our half of the region—led by Tim Jones and the Devon and Cornwall business council—started an early promotion of the idea of a peninsular local economic partnership, comprising Cornwall, Devon and Somerset. The business community felt scale and capacity were vital for these local economic partnerships to succeed, and I wholeheartedly agree. In his letter of 29 June, the Secretary of State invited local areas to come together and put forward bids for LEPs in their areas by 6 September. That precipitated a two-month period of chaotic negotiations, lobbying and planning. That happened largely behind closed doors and was led, not primarily by business, as was supposed to be the case, but by the upper-tier local authorities—in our case, Cornwall, Devon, Plymouth and Torbay. Somerset county council was effectively frozen out of those discussions. It was clear that the four upper-tier authorities in Devon and Cornwall did not want Somerset’s involvement in the discussions or in any subsequent local economic partnership for the area.

My own local authority, Exeter city council, and the Exeter business community, led by our chamber of commerce, were totally excluded from the discussions. They were never formally consulted on any of the emerging proposals. That was in spite of numerous requests to be involved as one of the two key economic drivers in our peninsula. Exeter’s exclusion was also in clear contravention of an instruction in a letter of 25 August from the Minister with responsibility for decentralisation, the right hon. Member for Tunbridge Wells (Greg Clark), to Gary Porter, chair of the district council network, in which the Minister said,

“It is essential that district authorities are included.”

He went on to say that he did not expect county councils to act as “sole building blocks”, and that

“We want to see economic geographies reflected in proposals, not just administrative ones.”

It soon became clear that Cornwall, as is so often the case, wanted to go it alone—a move unfortunately endorsed by the Government for political purposes, much to the consternation of the Cornwall business community and business leaders in the rest of the peninsula.

I have a number of questions for the Minister today. First, does he agree with me and the business community in the west country that local economic partnerships should have sufficient scale to add value and to have clout? Does he also agree that they should reflect real functional economic areas? Is it not the case that the first of those objectives has been compromised by his Government’s decision to accept Cornwall’s bid to go it alone? Is it not also the case that the Cornwall bid did not meet the criteria the Government laid down and did not enjoy sufficient business support? Will he explain how, exactly, a Cornwall local economic partnership will differ from or add value to the economic development functions of the unitary Cornwall county council? Does he also agree with me that it is vital urgently to salvage something from this sorry mess, and that the most sensible solution would be for Devon, including Plymouth and Torbay, to work with Somerset and, if they are interested, those western parts of Dorset that look west rather than east? Will he confirm that the Government have been pressing such a solution?

When questioned in the House on the day of the announcement, the Business Secretary blamed the situation in the west country on the lack of agreement between the local authorities involved. That, I am afraid, is an understatement. In spite of the fact that Devon, Somerset, Plymouth and Torbay are all Conservative-controlled councils, which one might think would make the process of negotiation easier, they have been fighting like rats in a sack. We have seen a return to the worst sort of petty political in-fighting that blighted economic development so badly in our region in the past, and was one reason why Labour set up the RDAs in the first place. I understand that there is little love lost between the Conservative leaders and the councils involved. At one stage, to illustrate the ludicrousness of the whole process, Somerset became so frustrated by Devon county council’s behaviour that Somerset suggested a tie-up between it and Cumbria, based on the nuclear industry.

Will the Minister please start banging some heads together and tell his political friends in the south-west that they must stop their childish squabbling and work together in the interests of the public and local businesses? If they cannot, or will not, do that, will he please tell them to get out of the way, and let the business community get on with it? Business leaders are keen to move forward with a partnership on the basis I have outlined.

I am delighted that the right hon. Gentleman has given this debate an airing, because it is crucial that we have LEPs in the south-west. Would he agree with me that, in the vein of what he has just said, we should put political divides aside and move forward and get an LEP for Devon, and I suspect for Somerset, as quickly as possible? I believe the business community is now absolutely behind it.

The hon. Lady is right; the business community is behind it. The point I was trying to make is that this is not about putting political differences aside, because the four local authorities involved are all Conservative controlled. They do not—or should not—have political differences but they have been completely incapable of working together on a sensible local economic partnership for our region. I hope we can see them make swift progress toward doing so now. If they will not do it, I want the Minister to tell the local authorities to get out of the way and leave the field clear for the business community, which, as the hon. Lady rightly says, is keen to make progress, so it can put in a bid. Will the Minister confirm, on that basis, that the business community is entitled to come forward with a bid—that it is perfectly possible for it to bypass the fractious local authorities? Will he assure the business community and me today that the Government would look favourably on such a bid? Will he also reaffirm the instruction of the Minister with responsibility for decentralisation: that it is essential that Exeter, which is so important for our region’s future prosperity, be included at the table? If I were the Minister here today, I would be hopping mad at Devon’s deliberate and calculated rebuff to his colleague’s instruction that Exeter should be included in the process.

As the head of Britain’s leading business organisation, the CBI, said recently, this process has been a shambles. We now know that the Minister’s own colleague, the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk), warned the Business Secretary in a letter of 14 September that the Government’s local economic partnerships were in danger of failing. I quote from his letter:

“There is a strong view amongst the business community that many LEPs lack the ambition to make significant economic impact undermining our agenda for growth. Key messages I have been made aware of include: a lack of credible business representation on LEPs Boards; negotiations dominated by local politics and a lack of a clear focus on economic growth. They also report different messages coming from Government about LEPs. John Cridland [of the CBI] specifically was concerned that the process has not been transparent, business engagement was poor overall and exacerbated by a tight timescale. He and other senior business leaders from Tesco and Ford have expressed their concern that in their view the policy is in danger of failing to aid economic growth.”

That is exactly what the Labour party warned would happen if the Government went ahead and abolished RDAs. The public and businesses of Devon and most of the south-west have been badly let down by the Government, and the Minister and the Government need to get a grip before it is too late.

It is a pleasure to speak on this subject and I congratulate the right hon. Member for Exeter (Mr Bradshaw) on securing this debate. I think that he and I first faced each other many years ago when he was fisheries Minister. In those days, he was in government and I was in opposition, but to the relief of fishermen, their friends and many other people, the boot is now on the other foot.

I thank the right hon. Gentleman for drawing these important matters to the attention of the Chamber. Creating the right framework for local economic growth and renewal in the south-west and throughout the whole country is an important issue that the Government take seriously. Indeed, it is one of our core priorities. As my Department—the Department for Business, Innovation and Skills—is the Department for growth, I am pleased to be able to respond in that spirit.

It is important to understand that as we manage growth, and as we stimulate business to deliver the additional growth that we need to move from recession to recovery and ultimately to prosperity, we take account of the economic profile of different parts of the country. Contrary to what was at least suggested in the right hon. Gentleman’s remarks, this issue is not a matter of disagreement among the coalition partners. The two partners in the new coalition Government are both committed to the principle of having a local, regional and sub-regional structure to stimulate growth; we have been committed to that principle before and after the election.

Local enterprise partnerships are a vital element in the broader reforms that we are implementing to create the new framework for local growth. They are underpinned by three important principles, which I shall outline at the outset. The first principle is that the economic geography of our country is not fixed, but changes as the character of the economy changes. It is widely understood that as economies advance, their needs—for example their skills needs—also advance. However, it is not so often said that economies also become more dynamic as they develop, and our prospects for growth will depend on creating the right framework to facilitate and stimulate that dynamism.

The second principle is that economic prospects can be transformed when enterprise is free to innovate. That additional freedom is about creating the right conditions in which entrepreneurs, businesses and commerce can thrive. I think that it would be vulgar to make too many narrow party political points, but I am not sure that even the greatest advocates of the last Government would argue that they had created the right environment for business to thrive.

The third principle is that lasting economic renewal requires civic and business leaders to feel empowered to shape their own community and its economic interests. That principle has long been embedded in our assumptions about the role of local government. At district, unitary and county level, local government has long had an economic purpose: to produce an economic development strategy and to ensure that that strategy married with the wishes and desires of local business people, as well as those of the wider population, in the interests of the common good.

I believe that private enterprise is the dynamo that will power our future prosperity and fuel the innovation that will underpin our future global competitiveness. The White Paper on local economic growth, which was published on 28 October, sets out our detailed proposals, as the right hon. Gentleman acknowledged. Those proposals are designed to promote economic development and spread economic opportunity right across the country, and they rest on four foundations.

The first foundation is the strengthening of national economic leadership for the activities that enable the UK to compete internationally: trade, inward investment and innovation. At the risk of digressing—I know that you will not let me digress too much, Mr Weir—I also will add the issue of skills, which was referred to in the previous debate by the Under-Secretary of State for Culture, Olympics, Media and Sport, my hon. Friend the Member for Wantage (Mr Vaizey). Skills are critical for driving economic growth, because if an advanced economy is to become more dynamic, its skills needs also need to become more dynamic and advanced. That is why we are putting so much emphasis on skills, and I hope that I will be forgiven for repeating the fact that we are making apprenticeships the pivot of our skills policy, with substantial additional investment. Indeed, many business people have written to the national press today to celebrate that fact.

The second foundation of our proposals is investing in crucial infrastructure such as broadband and high-speed rail. As you know, Mr Weir, the Government have already said much about that. The third foundation is establishing the regional growth fund to support jobs and growth, which is worth £1.4 billion over three years.

The fourth foundation of our proposals is to create local enterprise partnerships, which is the central issue of this debate. However, before I deal with the specific matters on which the right hon. Gentleman understandably concentrated, let me set out the case for local enterprise partnerships before I say a little about their application in the south-west.

If we are to succeed in rebalancing the national economy and kick-starting local economies, including in the areas that the right hon. Gentleman mentioned, we need a framework that recognises the economic geography of the country rather than one that is twisted to fit arbitrary administrative structures. I think that I can warmly support what the right hon. Gentleman said in that regard. I believe he said that the system should match “real” areas of economic growth and economic interest rather than being an artificial construction.

The role of LEPs in those terms will be to build genuine and effective partnerships of local business and civic leaders. Once again, I do not think that there is any disagreement between us on that point. I have already mentioned the long-standing commitment of local government to economic planning, and indeed to economic development. That idea is central to what I think is our shared understanding of the role of these new LEPs. It is absolutely right that civic leaders who identify with their area, share an ambition to grow the local economy and believe in creating jobs, wealth and so on should play a part in ensuring that measures taken by Government and other agencies match the priorities of their local area.

Given those requirements, will the Minister tell us what the Government consider should be included in the bid for an LEP, including what requirements the bid for a Wiltshire LEP is yet to meet? Will he also explain to us the timetable for the announcement of further LEPs?

The hon. Gentleman knows that I will not go into details about a timetable because he also knows, given his interest in the particular matter to which he refers, that that is very much under discussion. Indeed, representations that have been made in that area are being considered in detail by my Department. As he is probably aware, there is an ongoing discussion between the locality and the Department. However, it is reasonable to say that we do not want any undue delay in establishing the parameters of each area, because to do so would create uncertainty. The right hon. Member for Exeter is right that we need to establish the parameters within which people are going to work clearly and reasonably speedily so that we can then move forward to the next stage of development. I will therefore not give the hon. Member for Chippenham (Duncan Hames) a definitive answer now, but I think that he will understand the emphasis that I have placed on dealing with the perfectly proper intervention that he has just made.

Let me go on to talk a little about how we will assess success, because I think that that issue relates directly to the hon. Gentleman’s intervention.

I would just like to make a couple of points about LEPs. The first, of course, is that they really should co-operate with each other. I would certainly expect to see such co-operation when Gloucestershire’s relationship with Swindon—or some other relationship—is established, particularly in connection with the west of England LEP, which is of course centred around Bristol. My second point—

Order. Will the hon. Gentleman resume his seat? This debate is about the south-west. I think that Swindon might get into that region—my geography of southern England is perhaps a bit uncertain—but I think that the west of England does not form part of the debate.

May I just say that all Back Benchers in the Chamber at the moment are south-west Members? I am; the right hon. Member for Exeter (Mr Bradshaw) is; the hon. Member for Chippenham (Duncan Hames) is; and my hon. Friend the Member for Newton Abbot (Anne Marie Morris) is.

My hon. Friend is not from the south-west. Nevertheless, this is an important question, because what happens in Cornwall or Somerset affects what happens in Bristol or Gloucestershire, because they are in the south-west and all under the one regional development agency which, thankfully, will be abolished in 2012.

My second point is about the necessity for local authorities to co-operate with each other, specifically in connection with economic development, and I think that that point needs to be discussed in this debate.

I am delighted to say that my hon. Friend is absolutely right that local authorities should co-operate with each other in pursuit of that objective of economic development. We would expect them to co-operate, but the early stage will inevitably involve a process of negotiation and of bid and counter-bid. That is not unhealthy, provided that it does not delay progress unduly and Government play a helpful mediating role in assessing those representations against the core criteria, which I am about to discuss.

We announced the first wave of successful LEPs alongside the White Paper on 28 October. The first 24 partnerships—of many more, I am sure—all shared certain characteristics. Perhaps it will help the hon. Member for Chippenham and my hon. Friend the Member for Stroud (Neil Carmichael) if I describe those characteristics: they have a strong local identity; they have a buy-in from the business community; and they are a testament to the ambition and ingenuity of local people. That is what we expect of local enterprise partnerships.

In the south-west region, we received seven applications, two of which were approved. Each of the remaining five groups of applicants has been asked to do further work to develop their proposals, and we are supporting them as they do so. I understand why the right hon. Member for Exeter is making a strong case for his area—it is right that he should do so—but he should know that Devon, Plymouth and Torbay have been asked to hold further discussions with local business, civic leaders and the Government to develop the long-term vision for their partnership. In addition, they have been asked to consider in more detail their economic links with neighbours, particularly Somerset. The chief executives of Devon, Torbay, Plymouth and Somerset have embraced that feedback and are working together to secure the best outcome for their area, and we hope to say more in due course. The right hon. Gentleman will also be mindful that I have said that undue delay would be unhelpful.

I am delighted to hear what the Minister is saying. I am glad that progress is being made, and I welcome LEPs. They are absolutely the right vehicle, and the combination of local government and businesses is on point. I ask that a decision be made quickly—subject to all the bodies concerned giving him all the information that he needs—so that the deadline to apply to the regional growth fund is not missed. I hope that that will be present in his thinking and timeline, even though he cannot be specific.

My hon. Friend, like me, will want to ensure that the criteria are applied robustly and consistently. The right hon. Member for Exeter made the good point that we need to be certain that the marriage between local authorities is right, as is the link between them and business. I repeat that I share the view that the construction of areas should reflect their economic profile. That seems fundamental to making the scheme work well.

The right hon. Gentleman mentioned Cornwall, so I will give him a straight answer. Cornwall made a powerful argument for a local enterprise partnership covering Cornwall and the Isles of Scilly, making it clear that it was a functional area. The Department examined it closely and we decided, in the end, to support the partnership. I know that counter-arguments will be made, but as he knows from his long experience as a Minister, the Government sometimes have to take decisions. We took that decision, and I think that we can justify it based on the criteria that I have outlined. People from Cornwall would certainly argue that the area’s profile is very particular. The right hon. Gentleman will know the economic challenges that face Cornwall. Its issues include skills, employment and the character of the local economy, which legitimises the case that Cornwall made.

South-west Members, including the right hon. Gentleman, understandably make the argument that they do not want the south-west to be left behind. I assure him that we are keen to see as many local enterprise partnerships taking root as possible, both across the whole of England and in the south-west. We do not want any part of the country to be left behind, so as soon as a bid can demonstrate that it meets the assessment criteria, it will be given the green light.

I will say a word about Exeter in particular, as the right hon. Gentleman would expect me to do. I am aware that he is worried that his constituency might suffer disadvantage and that it will not be able to bid to the regional growth fund because it is not part of a partnership. Let me reassure him that although we expect many LEPs to submit project bids to the fund, it is not a prerequisite that applications for funding must be submitted by partnerships—any public-private partnership may apply. Exeter’s business community and local council—along with other potential partners, such as the city’s excellent university, which he and I both know—may work together on an ambitious plan for economic development and then apply for funding accordingly. Indeed, I take this opportunity to encourage them to do so. I know that the right hon. Gentleman, as a diligent local Member, will work with them to make it a success.

My concern was not simply that Exeter would not be able to access the funds; it was more about the whole process. Devon county council has deliberately excluded Exeter, for which it was criticised by the hon. Gentleman’s ministerial colleague in the letter that I quoted. Will he deliver a message to Devon today that Exeter needs to be at the table?

Although the right hon. Gentleman probably did not know it, he was quoting a letter to the leader of my district council, Councillor Gary Porter, who also holds national office. I know that Councillor Porter was anxious to ensure that district councils played their part.

The Government’s position is clear and resolute. We want local government to play a part. Local government is, as I said earlier, district, unitary and county government. Circumstances will differ in different parts of the country, and that encourages—indeed necessitates—different approaches. We do not take a vanilla-flavoured view about what will emerge, although we are clear that the criteria must be met. The criteria should be consistent, but the character of local partnerships might be different, given that the local economic profiles of various parts of the country differ. We want all partners to be involved. As I think I have suggested, there is a degree of permissiveness about who may bid.

Given that enterprise, investment and innovation are the south-west’s route to lasting prosperity, as is the case in other parts of the country, we are clearing away the panoply of failed quangos that we inherited and replacing them with local enterprise partnerships as part of our new framework for economic growth and renewal. The new framework will recognise functioning local economies rather than imposing arbitrary boundaries. It will offer civic leadership and a genuine partnership between local businesses and councils instead of assuming that Whitehall knows best. It will be less about targets and micro-management, and more about the inspirational qualities of local businesses and local people. It will combine a strong voice for business with democratic accountability to local people. It will also have the flexibility to respond to local economic priorities.

The Government are determined to make the next decade the most dynamic and entrepreneurial in Britain’s history. Britain’s future can be as great as its past, and local enterprise partnerships have a vital role to play in making our ambition a reality.

Sitting suspended.