Background

The Government’s announcement of their Local Growth White Paper on 28th October, set out their approach to supporting economic growth in the regions. At the same time they also announced approval for an initial 24 Local Enterprise Partnership bid proposals (business and Local Authority partnerships for driving local economic growth). Key proposals in the White Paper

1) Shifting Power to Local Communities.

• 24 initial LEPs announced from the initial 62 local bids. While their role and status will not be prescribed, they will be business/Local Authority partnerships with private sector chairs, and are likely to have roles around investment, enterprise support, planning, regulation, housing, skills, worklessness, environment, infrastructure and transport.

• Some functions will be nationally-led (business support, innovation, low-carbon economy, inward investment/international trade, tourism, skills, regeneration) but these will take into account LEP capabilities and priorities. The paper includes an annexe of how LEPs will relate to these issues in more detail.

• RDAs will be wound down by March 2012. New structure for European Regional Development Fund to be announced in Budget 2011. Assets and liabilities will be disposed of on the principles of securing the best outcome for the region whilst ensuring value for money for the public purse.

2) Increasing Confidence to Invest

• Will reform planning, including through a national presumption in favour of sustainable development, new Right-to-Build powers (enabling small scale development without the need for planning application), streamlined national policy and guidance, a statutory duty to co-operate on Local Authorities and public/private bodies critical to plan making e.g. infrastructure providers and a requirement for large scale developers to consult with the local community at the pre-application stage.

• LEPs will be able to work across boundaries to set strategic planning frameworks for economic and infrastructure issues but could potentially take on more formal activities, including processing these sort of applications, should they wish to explore this option.

• A New Homes Bonus to incentivise Local Authorities towards housing development from 2011-12, match-funding additional council tax for each new home and property brought back into use, for each of the six years after the home is built. £196 million will be allotted in the first year and £250 million for each of the following years in order to support this.

• A Business Increase Bonus to allow Local Authorities to retain business rates where growth exceeds a certain threshold enabling the increase above a certain level to be retained for six years.

• Will consider further options to enable councils to retain local business rates in the Local Government Resource Review launched in January 2011 - although any supplements should be subject to a business referendum. Prior to this, they would like views on this issue and its relationship to Tax-Increment Financing by the 1st December (consultation questions are in the White Paper).

• Would also like to reward communities hosting renewable energy projects by allowing them to keep the business rates they generate.

3) Focused investment

• A Regional Growth Fund of £1.4 Billion over three years will be used to support economic growth in the regions by delivering significant private sector investment and/or growing private sector jobs in areas heavily dependent on the public sector. This will initially breakdown as £580 million capital spending and £840million resource funding (although there will be flexibility going forward) and alignment with European and other funds will be sought.

• Bids are invited from now until the 21st January 2011 in the first phase (the second will be over a longer period and involve expressions of interest followed by invited bids). Bids from LEPs, other public-private sector partnerships or the private sector will all be considered. The minimum bid threshold will be £1 Million but bids can be individual projects or packages of projects or broader programmes (which can encompass smaller measures).

• Decisions on the funds will be made by a group of Ministers headed up by the Deputy Prime Minister but they will be advised by an independent panel Chaired by Lord Heseltine and consisting of a range of businesspeople and stakeholders. Key criteria will be demonstrable levels of private sector leverage or job growth, private sector backing, strong strategic investment plans and a demonstration of additionality. Also will need to comply with state aid rules and where possible contribute to green economic growth. Further details can be found here.

BCC Position

Commenting on the announcements, David Frost, Director-General of the BCC, said:

'Companies up and down the country tell me they are ready and willing to work with local councils to ensure that our towns and cities are open for business. In return for their time and energy, however, local businesses want to know exactly how the new Local Enterprise Partnerships will make it easier for them to tackle the problems with planning, skills and transport that stifle private sector growth.

The White Paper is a good start – but it is only a start. In order to keep business on board, LEPs will need to launch with a laser-beam focus on business growth – and concentrate on ‘getting the basics right’. This will give local businesspeople greater confidence in their area, and the chance to invest and create jobs.

At the same time, business expects a clear growth strategy from the Government – a national strategy that delivers on the Prime Minister’s recent commitment to a ‘pro-enterprise agenda.'

Going forward the BCC will be working to influence the detail of the White Paper as many of the proposals in the paper will take at least 6-12 months to implement.

Further information

For further information please contact Kevin Hoctor at the BCC Tel: 020 7654 5809.